Low prices under fire
Lan Xinzhen

In a trade transaction earlier this year, Xu Qinghua made essentially nothing. In that trade, as his competitors quoted zero-profit prices to buyers, Xu had no choice but to sell a batch of textile products to his foreign partners at cost.
Xu said it was not the first time that he has been hit by unfair low-price competition. However, he had to follow suit in order to maintain the market share of his company.
Xu, a boss of a textile import and export company in east China’s Zhejiang Province, has been in the business for about 10 years.
When he heard the news that the Ministry of Commerce is going to crack down on unfair low-price competition and that a new regulation will be issued, he got very excited. He has been keeping an eye on the draft regulation since May this year, when the Ministry of Commerce began to solicit the opinions of the public.
To straighten out the order of export business, the Chinese Government appears to be seriously seeking resolutions domestically, including targeting low-price exporters. That has hard consequences for these business people. While some say only the fittest will survive, others simply say the new measures are blatantly unfair. Still others like Xu who have been hurt by local rivals are pleased with the news.
“I believe the new regulation will definitely curb the vicious low-price exportation,” Xu said.
Xu explained that with the continuous growth in the quantity of Chinese export commodities in recent years, the competition is becoming increasingly fierce. It is a common practice for traders to offer viciously low prices to foreign purchasers in an effort to grab a market share and squeeze out their rivals.
The price war is on not only in the textile industry.
Exporters of many other commodities are also subject to unfair low-price competition. Vehicle spare parts and mechanical and electrical products are just a few categories.
The Chinese Ministry of Commerce considers unfair low-price exports to be illegal, noting that the new regulation will clearly define unfair low-price exports and set out corresponding punishments. All the export commodities that are produced, manufactured, processed or assembled in China, or whose place origin is China would be subject to investigation.
Once a company is accused of an unfair low-price export practice, the company and its legal person each will be fined each up to 30,000 yuan, and the investigated product will be suspended from exportation for 12 months.
Many are victims
“With regard to such unfair low-price exports, many tend to concern themselves with the interests of the enterprises in the target countries. However, few of us have actually attended to the harmed domestic companies,” said Li Haiming, who had an apparel import and export business in Beijing.
Li’s company, having no production workshops but possessing the right to do overseas trade, mainly exported goods for those who didn’t have the right to export. In early 2005, one of Li’s long-time overseas partners sent Li a contract provided by a clothes manufacturing company in Guangzhou, capital of south China’s Guangdong Province. To his great surprise, the price quoted in the contract was very low, with that of a woolen suit being only $13, which, Li found, would not make ends meet for him. Soon he had to retreat from the export business. Li’s withdrawal brought huge losses to his domestic partners, with one of them shutting down his business.
“The price war first disturbs the order of the export sector,” stated Yang Danhui, a research fellow with the Chinese Academy of Social Sciences.
Yang pointed out that from 2002 to 2005, China experienced a “wool war” and a “silk war,” both of which stemmed from unfair low-price competition. In 2004, Yang said, the export volume of rare-earth products was eight times more than that of 1990, with the average price decreasing by 46 percent. China’s annual output of fresh water pearls accounts for 95 percent of the world total, but the income is no more than 10 percent.
Yang noted that at the beginning, small and medium-sized enterprises and private companies with low technology level were major players in low-price exports. Lacking sufficient quality-control systems and effective measures to expand into the overseas market, they heavily depended on their low-price edge. Some of them, having no sense of social responsibility, did not strictly follow the rules and regulations on labor, environmental protection, social security and safe production, which won them a competitive edge in price. In addition, many of them were eager to expand into the international market not long after beginning to do business. In order to grasp a piece of market share, they exported even at a price lower than cost.
Foreign-invested companies are also major participants in unfair low-price exports. They not only enjoy favorable policies provided by the Chinese Government, but also low cost of labor, raw materials and land in the country, which have greatly reduced their export cost and enabled them to compete in the international market with a much lower price. Moreover, some foreign business people, taking advantage of the low resource exploitation cost and the loopholes in export restrictions, exploited and processed products derived from resources at a low price, which gives rise to and exacerbates vicious low-price competition in the exportation of such products.
The vicious low-price export competition eventually produced two consequences: First, fast-growing export volume is buttressed only by meager profit for a vast number of enterprises, which are also confronted with dumping accusations in the international market. Second, the fierce price war exerts a negative influence on the development of export companies, which attend more to cost and profit while ignoring the importance of technological innovation.
“The government has the responsibility and obligation to safeguard the fair foreign trade order,” said Rong Min, an official with the Department of Treaty and Law of the Ministry of Commerce.
Pros and cons
The investigation and punishment of low-price exports to a great extent aims to reduce anti-dumping frictions with target countries. Low-price exports have already harmed the interests of domestic enterprises at large. The first overseas anti-dumping accusation against Chinese products occurred in 1979. Last year, Chinese products were accused of dumping 663 times, ranking first in this category worldwide.
Mei Xinyu, a research fellow with the Ministry of Commerce, acknowledged, “The purpose of enacting this regulation is to reduce the risks of being accused of dumping in the overseas market. As a matter of fact, exporting countries don’t have the obligation to do this. If we were not doing this to reduce the accusations of dumping, there would be no need to enact such a policy.”
Textile exports are a major source of China’s trade surplus, but are also a focus of low-price competition. After the new regulation takes effect, the textile industry will be hit the hardest, resulting in an increase in textile export prices.
Statistics from the China Chamber of Commerce for Import and Export show that in 2005, the total export value of China’s apparel and clothing accessories reached $73.89 billion, a rise of 19.9 percent from the same period of the previous year. However, in Guangdong Province, the largest exporter of textiles, the average quoted price of a piece of clothing was only $1.19. Xu Qinghua said only large companies with technological advantages can maintain a profit if their products are sold at such a low price. However, as for small companies with backward technologies, they are just building castles in the air.
Xu Qinghua estimated that after the new regulation takes effect, the export price of textiles may increase by 8 to 10 percent, which should be a rational price at present.
“To maintain the textile export price at a reasonable level may help reduce overseas trade frictions and enable enterprises to spare more time to carry out technological innovation and develop new products,” said Xu.
Officials from the Ministry of Commerce believe that to investigate and punish those who conduct unfair low-price exports will also enhance the self-discipline of companies. Moreover, the new regulation will help prevent some companies from reducing costs through illegally using cheap labor, spoiling the environment and depleting natural resources. Companies that shoulder considerable social responsibilities will benefit.
But some enterprises are against the new regulation. Ma Weitao, who is in the mechanical and electrical export business, argued that the new regulation actually violates the rule of free trade.
“The right to price products should be with the enterprise, and the government shouldn’t intervene,” said Ma.
Ma noted that every company has its own operational strategy, which is created for profit. The market judges whether the price should be higher or lower.
“If a company goes bankrupt due to a low price, it only proves the company is not competent,” said Ma. “The government shouldn’t punish competent companies that can offer a relatively low price to consumers.”
“Cost” an elusive word
“The regulation may be well-intentioned, but it is impractical,” noted Yuan Gangming, an economics professor at Tsinghua University.
Yuan contended that it is difficult to identify which price is “unfairly low.” According to the new regulation, there are two important indexes: the price of investigated products and the average cost. However, the regulation does not specify which average cost, either the company’s average cost or the average cost of the whole industry, should be referred to as the mentioned “average cost.” As Yuan noted, the company’s “average cost” can easily be falsified, while the estimation of that of the whole industry will probably lead to an arbitrary decision-making.
“The fundamental reason for the low price is that the production cost of Chinese enterprises is actually very cheap,” Yuan said. “But this kind of ‘cheap’ is not driven by market competition.”
Yuan said that many costs are not counted in the price of a product like resources, energy and land, which are used by enterprises at almost miraculously low prices. Meanwhile, various favorable policies enjoyed by export companies also help reduce the cost, eventually resulting in low prices.
Among all favorable policies that encourage exportation, the export tax rebate is most significant.
In September, China readjusted the export tax rebate policy and reduced the rebate for certain export commodities. It is believed that the readjustment also will help curb low-price exports.
“Some companies don’t even care about cost when they price their products, because they just want to earn the export tax rebate,” added Yuan.

(The Daily Mail-Beijing Review  Articles Exchange Item)

Women’s empowerment: What a farce?
Amjed Jaaved

The UNFP, in its several reports, has told Indian government that female foeticide still continues in India (The UNFP is acronym for French expression le fond des nations unies pour la population). The fund’s current programme of assistance to India provides for outlay of US $ 100 million for the period 1997-200).
Embarrassed by the UNFP’s criticism, the Indian government has decided to hold a series of seminars in various Indian states to increase awareness about the baby girls’ rights.
In this connection, a national conference was held in New Delhi on ‘Role of Women in Nation Building: From Panchayat to Parliament’. While addressing this conference, India’s prime minister Manmohan Singh told chief ministers ‘to stop the unacceptable crime of female foeticides using modern technology, and ensure protection for women against domestic and social violence, including rape, eve-teasing and sexual harassment’.
The miserable plight of the girl child is well reflected in the booklet, titled ‘Missing...Mapping the Adverse Child Sex Ratio in India’, published by UNFP (released in New Dewlhi on October 21, 2004). This booklet inter alia indicates that the number of girl children (in the age group 0 to 6) in India’s total population has declined during the last decade. The booklet highlights the ‘grim reality of the missing girl child’. Girl children are considered a liability. As such, they are killed before birth in womb
According to the UNFPA, the reason for the decline is ‘determination of the sex of the unborn child or foetus and eliminating the foetus when found to be female’. The UNFPA says 70 districts in 16 Indian states and Union Territories recorded more than a 50-point decline in the child-sex ratio in the last one decade.
India’s Health Minister (on occasion of release of the book) admitted that ‘the report revealed the discrimination that had permeated across society. It has spread across all religions, in rural and urban areas, among the rich and the poor.’ She promised, ‘Large-scale awareness programmes would be initiated to remove the growing discrepancies in the ratio’.
The national average dropped to 927 girls per 1000 boys in 2001 from 945 per 1000 in 1991. Punjab, Haryana, Gujarat and Himachal Pradesh had a child sex ratio of less than 800 girls for every 1000 boys.
The ratio has declined even in India’s most prosperous regions. The report states, ‘‘The ratio stands at a mere 770 in Kurukshetra district of Haryana, 814 in Ahmedabad and 845 in the south west district in Delhi, which are among the most prosperous regions in the country.
Punjab represents the worst case with average of 793. None of its districts recorded more than 850 girls per 1000 boys. Ten of its 17 districts recorded a low of less than 800 per 1000 boys, with the lowest 754 per 1000 in Fatehgarh Sahib. Haryana comes next with five districts recording less than 800 girls per 1000 boys and the state average falling from 879 in 1991 to 820 in 2001.
In Gujarat, the situation worsened in Mehsana where the ratio declined to 798 per 1000. The Gujarat average too has fallen from 928 in 1991 to 878 in 2001. Rajkot has shown a sudden decline from 914 in 1991 to 844 in 2001.
Delhi ranks fourth with the average-ratio decline from 915 in 1991 to 865 in 2001. Delhi’s south west district is the worst affected with the ratio dropping from 904 in 1991 to 845 in 2001. Overall, the ratio in every Delhi district has declined. North-west has a CSR of 854, West 858, South 886, New Delhi 882, East 868 and North-east 867. Till 1991, no district in the Capital had a ratio of less than 900.
Himachal Pradesh, Rajasthan, Maharashtra and Tamil Nadu recorded state average of 897, 909, 917 and 939 respectively. The ratio in Mumbai too is below the ideal mark, at 898. However, in Chennai, it is desirable 968.
In Haryana too, the situation has worsened since 1991. Almost all districts have a CSR of less than 850.
According to sociologists, the sliding girl child number speaks volumes on Indian psyche. They regard a girl child as a liability from cradle to grave. “Not only are women unsafe in Delhi, even the girl child is in danger”. A child sex ratio (CSR) of less than 900 girls for every 1,000 boys, as recorded in most Indian states, is considered undesirable. The ideal ratio — the number of girls per 1,000 boys in the 0-6 age group — is 940-950 girls per 1,000 boys.
Indian government anticipates rise in crimes against women because of the falling girl-child number. Registrar General and Census Commissioner J.K. Banthia said that the government would soon make birth registration compulsory to ensure that all births could be monitored, and no girl foetus is killed.
Like Manmohan Singh, former Indian prime minister Vajpayee had expressed concern over the adverse sex-ratio and lack of security for women in the country_ He said, “It was not enough to venerate women as Durga, Kali, Lakshmi and Saraswati. Education was necessary to empower them”. But, neither Vajpayee nor Manmohan has done anything solid to stop girl foeticide, and protect women’s rights.
Indian government is just talking about giving 33 percent seats in parliament to women (Pak parliament already has given 74 seats, 46 per cent, to women in 342-member house).
Indian government did nothing to prevent women’s harassment. However, in August 1998, India’s Supreme Court passed a landmark judgment wherein it laid down broad guidelines to be followed by organisations in cases of sexual harassment (Vishaka Vs State of Rajasthan) [All India Reporter (1997) 6 SSC page 341].
Vishak was subjected to sexual harassment when she tried to prevent a child marriage in an upper caste household. In the judgment, the Supreme Court, for the first time, defined behaviour that can be considered sexual harassment. The Court’s Guidelines on Sexual Harassment are:”...sexual harassment includes such unwelcome sexually determined behaviour (whether directly or by implication) as: Physical contact and advances: a demand or request for sexual favours, sexually coloured remarks, showing pornography or any other unwelcome physical, verbal or non-verbal conduct of sexual nature”.
Section 354 of the Indian Penal Code (IPC) says that whoever assaults or, uses criminal force on any woman, intending to outrage or knowing it to be likely that he will thereby outrage her modesty, shall be punished with imprisonment of either description for a term, which may extend to two years or with fine or with both.
Despite the Court’s decision, attitude of the Indian society to women remains unchanged.


Regime change in US
Claude Salhani

THE outcome of Tuesday’s midterm election in the United States is as much a victory for the Democrats as it is a vote of no confidence for the Bush administration. It is in fact a censure of the Bush government and what is largely perceived as a failed policy regarding the Iraq war, the economy and the government’s abuse of power. This political shakeup amounts to a demand by the American people for regime change in... Washington. The Republicans who controlled the two chambers of Congress lost 28 seats to the Democrats in the House, giving them the majority in the lower chamber. As of Wednesday morning the Democrats had gained four Senate seats splitting the upper chamber 49-49, with two states still not called. To dominate the Senate, Democrats would need to win both remaining Senate seats.
The loss of confidence in the Bush administration’s ability to handle the Iraq war was a major contributor to the defeat of the Republican Party. Interestingly, disappointment in the administration’s performance was not only manifested from the expected opposition, such as Democrats and Liberals, but from once-ardent Bush supporters, too. Interestingly, just days before Election Day a number of hard-line neoconservatives, including a one-time Pentagon adviser and a main architect of the Iraq war spoke out against the way the US was conducting the war in Iraq, calling it a “disaster.”
In an interview to Vanity Fair magazine Richard Perle, said if he had been able to see how the war would turn out, he probably would not have pushed for the removal of Saddam Hussein. “I think if I had been delphic, and had seen where we are today, and people had said, ‘Should we go into Iraq?,’ I think now I probably would have said, ‘No, let’s consider other strategies for dealing with the thing that concerns us most, which is Saddam supplying weapons of mass destruction to terrorists,” Perle is quoted by David Rose in the Vanity Fair article.
Perle added: “The decisions did not get made that should have been. They didn’t get made in a timely fashion, and the differences were argued out endlessly.” Responding to the magazine’s accusations, a White House spokesman said, “The president has a plan to succeed in Iraq....” Campaigning for the Republicans right up to Election Day, the president kept repeating the same line, that he has a “plan” for Iraq. Well, if indeed Bush has a plan that would win the war, just what is he waiting for? But Bush loyalists, including Perle and other former White House insiders cited in the Vanity Fair interviews, claim they were quoted out of context and that the magazine is playing politics, hoping to influence the elections.