Five Chinese magnesia brick manufacturers submitted a petition last Friday against the largest refractory material maker in the world to a Chinese court for violation of China's Anti-Unfair Competition Law.

The five Chinese companies, all from Northeast China's Liaoning Province, sued the Austria-based RHI AG at the High People's Court of Liaoning saying it violated Chinese law by fabricating stories and causing economic losses to Chinese counterparts in an anti-dumping case it initiated in the European Union.

This lawsuit is the latest reaction by the Chinese enterprises in this anti-dumping case. It is the first time Chinese enterprises accused of dumping have fought back with Chinese laws.

The EU launched the anti-dumping investigation against 57 Chinese magnesia brick makers, including one subordinate joint venture of RHI, on July 13 this year. The case was initiated by an industrial council of European refractories makers, RHI, and a Germany-based magnesia brick maker, LWB GMBH.

Eight enterprises, which included the five that filed the suit, answered the case and submitted documents appealing for market economy status. But the EU granted this status to only two, who were founded respectively by a South Korean factory and a British factory.

The EU took Turkey as a substitute country for price evaluation in this case.

But experts said the cost for the production of mag-carbon bricks, one kind of magnesia brick and the major product of Chinese refractory companies, is at least 20 percent higher in Turkey than in China, because both the magnesite and labor costs are higher in Turkey.

"This anti-dumping case is totally a conspiracy of RHI AG because it is planning to kick its Chinese counterparts out of the European market," Fu Donghui, a lawyer from Beijing Allbright Law Offices, said on behalf of the plaintiffs.

"Chinese enterprises are not afraid of free competition with overseas rivals, but we strongly oppose the behavior of unfair competition by using anti-dumping charges as a tool," said Fu.

He said the Chinese side had put forward detailed information to the court to testify what RHI did was definitely unfair competition behavior.

RHI AG recently established its second magnesia bricks factory in Dalian, Liaoning.

"RHI's actions are self-contradictory because it is taking the advantages of low material and labor costs in China while blocking the expansion of Chinese enterprises at the same time," said Yu Yi, a senior official with Yingkou Qinghua Group, one of the plaintiffs.

The plaintiffs claim RHI AG should withdraw its anti-dumping appeal to the EU so as to bring the case to an end; otherwise it will be asked to pay high compensation to the Chinese companies.

In case a penalty tariff is imposed on all mag-carbon bricks from China, it will be a blow against Chinese private enterprises in this sector, which rely on exports, while its influence on RHI will not be remarkable, for the multinational giant may take other measures to shun the duties.

"It can export its products out of China to the European market and sell products originating from China to other parts of the world," Fu said.

(China Daily December 20, 2004)