A recent study, sponsored by the Southern Africa Stainless Steel Development Association (Sassda) and undertaken by Mintek and fourth-year University of Pretoria students, has revealed that a range of imported Chinese stainless steel pots do not conform with the SANS 998 standard.

These pots, available at a variety of retailers, have a significantly lower resistance to corrosion than locally made pots.
Sassda executive director John Tarboton says the study, undertaken amid an onslaught of Chinese imports on the local market, aimed to prove that locally made pots and pans are superior in terms of corrosion resistance.
The Chinese-made pots were manufactured from stainless steel that has a lower content of alloy to save costs, but which subsequently increases the rate of corrosion.

He says that instead of having a “healthy percentage” of nickel in the stainless steel, foreign manufacturers use a higher percentage of manganese, which is cheaper than nickel, but has lower corrosion resistance. Although pots and pans can be manufactured from this lower-grade stainless steel, the products will not have the same corrosion resistance, as manganese reduces corrosion resistance.
Unfortunately, substandard Chinese imports are merely a symptom of a far bigger problem, says Tarboton, adding that the global stainless steel playing field is not equal. “The main culprits . . . are certain factories, mainly in China, that continue to use unfair labour practices to ensure their continued dominance in the global market.”

He points to a recent undercover investigation by international nonprofit organisation China Labour Watch, which exposed numerous violations of labour regulations and human rights in five Chinese cookware factories supplying to top brands and retailers such as Macy’s, Walmart, IKEA, Cuisinart and Tupperware. The factories implicated in the report are all located in Guangdong province, collectively employing more than 5 000 workers.

According to the report, research and worker interviews revealed that the factories are plagued by illegal and unfair working conditions, which include labour contract violations, a lack of paid leave or the required insurance, mandatory overtime without additional pay, unpaid wages, fines on workers, poor occupational safety measures and inadequate living conditions.

The report further highlights that these practices are used as cost-cutting measures to increase profits for factories and, in turn, multinational buyers at the expense of workers. For example, workers at a Chinese factory, where a moderately priced IKEA 365+ Series stainless-steel frying pan is made and retails for about $20, earn $0.06 to $0.14 for manufacturing each pan. This is 0.3% to 0.7% of the market price.

Unfair Subsidies
Another key aspect contributing to China’s unfair advantage is the massive subsidies the Chinese government offers its stainless steel industry, which include export incentives, electricity subsidies of up to 80%, free land and exemption from rates and taxes.
Tarboton says these measures stem from the so-called “favoured status of the stainless steel industry in China”, in light of its pivotal job-creation role in the country’s current five-year plan, which ends next year.

“The Chinese stainless steel industry continues to benefit from massive direct and indirect subsidies,” he says, adding that these subsidies are likely to continue unabated, as the Chinese government recently sanctioned an official policy that requires it to continue subsidising its metallurgical industry, which includes stainless steel producers.

“The consequences of these actions have been profound. The growth of the Chinese stainless steel industry to a point of excess capacity has been at the expense of its international competitors,” states Tarboton.

China’s share of stainless steel production grew from 13% in 2005 to 26% in 2008, and to 52% in 2014, according to figures from the International Stainless Steel Forum.

However, despite these challenges, he says Sassda is continuing to make strides in pursuit of its overarching mandate to grow the Southern Africa stainless steel conversion industry.

In terms of possible trade remedies, he says the concept of local designation – in which State-owned companies are required to buy locally manufactured products – is a possibility, albeit difficult to enforce. Previous efforts, such as the local manufacture of solar geyser systems, resulted in companies fronting as manufacturing entities, which were actually importers from China.

In this regard, the South African Bureau of Standards (SABS) is mandated to audit companies supplying designated products; however, the costs of SABS audits has to be borne by the manufacturing company.

To curb foreign imports, Tarboton says there is the possibility of increasing import duties by applying to the International Trade Administration Commission to increase the applied rate to the bound rate, which is between 0% and 30%, depending on the product. Antidumping duties and countervailing duties could also be applied for.
 

“Sassda has an excellent relationship with the ferrous metals desk at the Department of Trade and Industry and it will continue to lobby for designation and protection of the stainless steel industry to ensure fair competition.

“We are also continuing our communication campaign, free technical advice, educational activities and marketing the exports of South African- manufactured stainless steel products,” concludes Tarboton.