Aokang's Six-year Persistence Wins Reward

With determined and unswerving efforts Aokang Group Co Ltd (Aokang), China's leading shoe manufacturer, ended this six-year unfair trade protectionism on a triumphant note at last. On Nov. 18, the European Court of Justice ruled on a trade dispute between Aokang and the European Commission, and overturned the six-year-long anti-dumping duties the European Commission imposed on Aokang on the ground of a lower court incorrectly dismissing the manufacturer's appeal. During the past six years, Aokang's great efforts on innovation and enhancing capacity of IPR made Aokang not only win this law case but also earn dignity for the company.

Persistence in the legal process

In July 2005, EU launched an anti-dumping investigation with a value of 700 million USD involved against the leather shoes imported from China. Then Aokang set up defenses against EU during this legal battle of law application, enforcement, explanation and investigation procedure. However, the leather shoes imported from China were subjected to a 16.5% anti-dumping duty ruled by the EU on October 5, 2006 which lasted for two years. Before the expiration in 2008, EU launched a sunset review of anti-dumping against the Chinese leather shoes. EU then determined to extend the anti-dumping duty for another 15 months which could be postponed to March 31, 2011. On April 1, 2011, EU canceled the anti-dumping duty imposed on Chinese shoes.

Aokang and other four Chinese major shoemakers, on October 23, 2006, sued the EU at the General Court of the EU on the ground that the anti-dumping tariffs on Chinese shoes violated EU laws. The General Court of the EU rejected the petition of the five Chinese shoemakers and upheld the European Commission's decision on March 9, 2010. The disgruntled Aokang then appealed to the European Court of Justice alone on July 12, 2010.

The attorney representing Aokang maintained that European Commission violated the Article 1 of anti-dumping tariffs on calculating the injury margin and the five-day evaluation period was also not in accordance with the law imposed of ten days. Chairman of Aokang, Wang Zhentao, held that over the past six years, the EU had not treated Chinese firms fairly while it carried out the anti-dumping investigation. The situation Aokang faced had become intolerable whether in the period of imposing anti-dumping duty or the loss of China's shoe exports. That is why Aokang continues the lawsuit. Eventually, with the persistence of Chinese government and enterprises, the anti-dumping duty was cancelled.

Adhering to the innovation

The dwarf firms dominate Chinese shoe manufacturers, where the concentration is low and the competition is fierce, which also provide an excuse for EU's investigation. Concerns for high cost in the marathon legal process have prevented Chinese SMEs from embarking on the uncertain long journey of the lawsuits. During these years, the EU's punitive action had already affected the export of Chinese leather shoes severely. With the weak recovery of European and American manufacturers after the financial crisis and trade protectionism being upgraded unceasingly, Chinese enterprises are facing more and more complex anti-dumping investigations. Li Jian, a researcher from the International Trade and Economic Cooperation Research Institute of the Chinese Ministry of Commerce pointed out.

Aokang has set a great example for other Chinese manufacturers by winning the lawsuit. Aokang's case has reassured Chinese local manufacturers and encouraged them to take bolder moves to defend themselves through legal means, which will bring them justice. With the development of China's legal system, China would set up a sound response mechanism towards anti-dumping investigation. In addition to Aokang's persistence in the marathon legal process, this legal victory can not be separated from the concerted efforts made by authorities and industry associations.

"We consider the anti-dumping investigation to some extent a good thing, which has provided a chance to better understand international trade rules and the laws of other countries and apply them more effectively. During these years, Aokang has made great effort on improving the structure of products and technology. The average export unit price reaches 20 USD with the highest at 50 USD." said Wang. Aokang has never stopped encouraging innovation. Aokang filed 50 patent applications in 2007. In 2008, the patented products accounted for over 40% of the total sales revenue and Aokang was identified as a patent model enterprise in Wenzhou, which effectively enhanced Aokang's brand value and competence, Wang added. 

(China IP News)