China hopes for solution to EU shoes spat

HURT ALL ROUND

Zhejiang Saina is one of China's biggest leather shoe makers. It can make more than 4 million pairs a year and sells about half of its output to Europe.

Chen said his firm has a profit margin of 5-10 percent and gets no breaks from the government except the rebate of value-added tax on exports -- the same treatment EU firms enjoy.

Slapping on duties would hurt his firm but would also hurt European consumers, Chen said.

"If the anti-dumping duties are finally imposed, we will have no choice but to pass them on because we have no room to reduce our production cost," he said.

Industry sources say Brussels plans to exclude sports shoes and children's shoes from the possible anti-dumping measures, which the European Commission says would add less than 1 euro ($1.20) to a pair of shoes that cost 35 euros or more.

Zhu Feng, chief secretary of the Wenzhou Shoe Industry Association, said the threatened duties could send a lot of smaller companies to the wall. Wenzhou, south of Shanghai, is one of the main shoe-making centres in China.

"The anti-dumping tax would have a big negative impact on Chinese shoe makers, but it would be even greater on EU shoe retailers and buyers," Zhu said.