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RUSSIA
Chinese Tyres get to the Eurasia Union Bypassing Defensive Customs Duties
According to local market reports, the import of Chinese tyres into the Eurasia Economy Union (EEU) is once again putting pressure on the new tyre and retreading industries in Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan since importers discovered the possibility of bypassing defensive customs duties.
In the period 2011-2014, several Russian retreading companies complained about the dumping of Chinese tyres. Basically, their cost even after the devaluation of the Russian ruble at beginning of 2014 appeared to be half that of new Russian tyres and about 25 per cent lower compared to retreaded tyres. As a result, several dumping complaints were filed in to the government by manufacturers and retreaders of truck tyres, including Belshina, Yaroslavl Tyre Plant, Omskshina, and Niznekamskshina. These became a basis for the introduction of anti-dumping duties,
in addition to the existing import duty of 10 per cent for truck tyres. The rate of anti-dumping duties ranges from 14.8 to 35.4 per cent of the customs value depending on the company.
However, this system of duty estimations left a loophole for Chinese suppliers, as, according to representatives of Cordiant, many of them started to mark lowered prices of tyres at the custom clearance. Cordiant, alarmed at this situation, appealed to the Russian government in the middle of 2016 with the request to enhance custom control for Chinese tyre production.
According to data from the Federal Customs Service last year Russia imported nearly 1.94 million tyres, with nearly 40 per cent of all supplies accounted for by China. At the same time, according to the company’s report nearly half of Chinese supplies in 2015 took place with a cost at the custom clearance 20-25 per cent
lower than the actual cost of production. Moreover, for 100,000 tyres, primarily truck tyres, the actual cost at the customs clearance was lowered nearly by 100%, according to company information.
Particularly noteworthy, according to Cordiant, is that nearly 71 per cent of truck tyres imported from China with the customs value lowered by two times or more is entering the country via five customs posts, namely four posts in Vladivostok and one in Nakhodka in the Russian Far East. These posts are located closer to the Chinese border than any others, but still this situation may suggest the presence of corruption, even though Cordiant says that the main problem is the lack of competence of customs
lowered. Also most officers of the Customs Service have no expertise in identifying attempts to import tyres with reduced payment of import fees. Another crucial issue is that most imports of Chinese tyres are carried out by so-called fly-by-night firms, which have non-transparent management systems and no executives that can be found. According to spokespersons of Cordiant, this seriously complicates the litigation process, since after the beginning of any legal trials, these firms simply disappear.
According to Cordiant, this situation poses a real threat to various segments of the country’s tyre industry, and in the last year alone it has caused direct losses to the state
Chinese tyres just keep coming despite the anti-dumping duties
officers.
As stated by representatives of Cordiant back in the middle of 2016, it is hard to prove that the actual cost of production has really been
budget in the form of non-paid fees of US$ 20 million. Preliminary estimations by the company say that this year this figure will most likely rise by at least 10 per cent.
At the same time, market participants have noted that the general flow of Chinese tyres to Russia and other members of the Eurasia Union has reduced compared to 2011-2014, as they have lost part of their competitiveness over the last couple of years.
“In general, the problem of Chinese tyres in the Eurasian Economy Union really exists, and it takes place even after introduction of protective duties,” explained Alexandr Frolov, sales manager at Wholesale Tyre. “As a comparison the price of an Aeolus tyre at the moment is nearly RUB 6,650 (US$ 110) per unit in size 285/70 R19.5, which is still significantly lower compared to the tyres imported from Europe such as for example Kormoran Roads 2D 285/70 R19,5 146/144L at the country’s market costs nearly RUB 12,000 (US$ 170). Goodyear 285/70 R19.5 REG. RHD II will cost you RUB 24,000 (US$ 400).”
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