Tuesday, May 7, 2013

The levy of the anti-dumping tax can greatly help the development of China's potato starch industry

As the import volume of potato starch from the EU represents a large proportion of China's total import volume, with the proportion ranging from 70.5% to 98.3% during 2007-2011, the levy of the anti-dumping tax can greatly help the development of China's potato starch industry.  
Since China imposed the anti-dumping tax on the EU's potato starch from Feb. 6, 2007, the domestic total import volume of potato starch sharply decreased to 9,971 tonnes in 2007 from 66,908 tonnes in 2006. After the anti-dumping tax ratio was adjusted in 2011, the total import volume also fell significantly to 23,147 tonnes in 2011 from 142,383 tonnes in 2010 (Figure). Besides, the profit of domestic potato starch enterprises increased from USD4.1 million in 2007 to USD15.0 million in 2011.
Currently, the domestic potato starch industry is quiet vulnerable, since it has a low rate of return on investment and the domestic market can easily be affected by imported products.
The domestic price of potato starch is almost in step with the EU's (Figure). In 2008 and 2009, the price of the EU's potato starch decreased, and then the domestic price also decreased. In 2011, the price of the EU's potato starch increased due to the adjusted anti-dumping tax rate, and once again the domestic price followed and rose.
According to the MOC, the domestic potato starch enterprises have been positively expanding their capacity, but the rate of return on investment decreased continuously from 2007 to 2009, becoming even negative in 2009. Although the rate recovered slightly from 2009 to 2011, it still remains low, which may hurt investors' confidence and in turn negatively affect the development of the industry. During 2007-2011, the rate of return on investment was 1.68%, 0.20%, -3.08%, 2.19% and 3.19% respectively.

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