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Chinese imports put local nail manufacturer at risk

Published: Mon 6 Dec 2010 05:04 PM
Chinese imports put local nail manufacturer at risk
By Paul McBeth
Dec. 6 (BusinessDesk) – Chinese nail manufacturers are undercutting a New Zealand producer who has called in the Ministry of Economic Development to probe the sector’s pricing.
Wireplus Ltd., one of two domestic producers of wire nails in New Zealand, has successfully appealed to the MED over the price of imported Chinese nails, claiming the rival goods are being dumped on the local market, according to an official’s report lodged on the ministry’s website.
The MED concluded there’s enough evidence to warrant an investigation Chinese-made wire nails were dumped on the local market with margins 25% lower than usual in the first six months of this calendar year. It didn’t release an estimate on how much Wireplus’ prices were being undercut.
If the dumping continues, Wireplus claims it “would be forced to close its galvanised nail operation which would also necessitate the cessation of manufacture of bright and other types of speciality nails,” the report said.
The company, which falls under the privately held United Industries Ltd. group that services New Zealand’s construction industry, hadn’t been able to compete on price due cheaper production costs in China, where manufacturers can use less costly packaging, the report said. Wireplus claimed Chinese exporters have an advantage with cheaper energy pricing, and lower occupational health and safety requirements and environmental costs.
New Zealand has grown closer with the world’s second largest economy over the past two years after China’s first Free Trade Agreement with an OECD nation came into effect. Since John Key swept to power in 2008, he has made improving
New Zealand’s relationship with China one of his foreign policy priorities.
Exports to China rose 27% to $4.5 billion in the 12 months ended Oct. 31, while imports increased 3.4% to $6.5 billion in the same period, according to government data.
The nail market has changed over the past two to three years, with most product sold by trade resellers and retailers, where in the past manufacturers had access to trade customers, the report said. This meant major vendors such as PlaceMakers, Bunnings and Carters, who buy their product through head office, go to market when they can get it cheaper than their existing supplier.
“Wireplus said that it has not been able to compete on price” and has been “excluded from most of the retail market,” the report said.
(BusinessDesk)

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