Sail across the sea

Chapter 579 also requires vigilance.

Luo Shenrong, deputy director of the Ministry of Foreign Trade, entered Xu Ying's office and reported to her on the situation regarding the Japanese Ministry of International Trade and Industry's request for the Chinese side to explain whether fluorite was being dumped.

The State Economic Commission had informed the Ministry of Foreign Trade a few weeks ago that Japan might initiate an anti-dumping investigation into China's fluorite exports, and requested that the Ministry of Foreign Trade inform the State Economic Commission as soon as it received such information.

When Luo Shenrong first heard about the demands from the State Economic Commission, he was somewhat puzzled. The Ministry of Foreign Trade was specifically responsible for foreign trade, and it should have been the first to know whether Japan would target a certain Chinese export product. How come the State Economic Commission had heard the news while he was unaware?

Today, Luo Shenrong was stunned when he received a fax from Japan's Ministry of International Trade and Industry. He immediately summoned the section chief in charge of this matter and gave him a severe dressing-down, saying that they had been negligent in their work and had failed to keep abreast of developments abroad, to the point that the State Economic Commission had to issue them a warning in advance.

The section chief was criticized and felt quite aggrieved. Only after the deputy director had finished venting his anger did he carefully take the fax to the deputy director and explain that the fax from the Japanese side was actually just an inquiry letter, and was still a long way from formally initiating an anti-dumping investigation.

"You mean, the Ministry of International Trade and Industry has no intention of initiating an anti-dumping investigation?" Luo Shenrong asked the section chief suspiciously.

“Absolutely not,” the director said. “We’ve been dealing with the Ministry of International Trade and Industry for many years, and we know their style of doing things very well. Judging from the wording of this inquiry letter, it should be just a routine matter for them. We just need to give a reply stating that there is no dumping, and that’s it.”

Luo Shenrong, having served as a section chief himself, had some experience in this area. He had simply been confused and misunderstood the section chief earlier. After hearing the section chief's explanation and rereading the fax, he realized the section chief was right; it was indeed a very ordinary official letter, and the other party had no intention of pursuing the matter further.

There are many reasons why this might happen. For example, sometimes your boss hears something and asks you to investigate. Even if you know it's completely unfounded, you absolutely cannot say anything immediately, because that would make your boss seem incompetent.

The safest approach is to pretend to investigate and then report back to your boss. There are some techniques to this report: you need to make your boss understand that the matter doesn't exist, while also emphasizing the necessity of their vigilance; otherwise, your boss will appear incompetent.

This kind of tactic for dealing with superiors is no longer a secret among industry peers. Therefore, the other party will send an inquiry letter, subtly hinting at how to handle the situation. What you need to do is provide a thorough response to the investigation results, stating that there is no dumping, but that some companies have indeed acted improperly, and that you have ordered them to rectify the situation.

Once the other party has received such a reply, they can report back to their superior.

The two sides have played this game many times before, and they already have a tacit understanding, so there is no need to explain it.

Understanding this didn't ease Luo Shenrong's mind. He informed the section chief that the Economic Commission had already warned about this matter a few days prior. Upon hearing this, the section chief frowned, completely puzzled.

"Here's what we'll do. You should have someone look into this matter. Don't rush to reply to the Ministry of International Trade and Industry. Let me consult with the Economic Commission first," Luo Shenrong finally instructed.

After listening to Luo Shengrong's report in her office, Xu Ying gestured to the tea her secretary had brought and said, "Director Luo, thank you for your hard work. Please have some water. I'd like to know how your foreign trade department usually handles situations like this?" "Since the Japanese side has already sent an inquiry letter, we certainly have to give a response. We've looked into the issue of fluorite exports before. It's true that the price of fluorite exported from China is more than 30% lower than that from Mexico, but this is because our country's labor costs are lower, and the cost of mining fluorite is much lower than in Mexico. This cannot be considered dumping in international trade."

"Therefore, we only need to provide the Japanese side with the domestic fluorite trading price to prove that the export price is not lower than the domestic trading price, and the Japanese side will not have any objections."

"As far as we know, the Japanese metallurgical industry welcomes the low-priced fluorite from China. Japan itself does not produce fluorite, so the extremely low price of fluorite is only beneficial to Japan and has no disadvantages whatsoever."

"Since Japan doesn't produce fluorite and welcomes Chinese fluorite, why must we sell it at a low price? Even if our export price is the same as Mexico's, importing fluorite from China is still more advantageous for Japanese companies, isn't that right?" Xu Ying asked.

“In this situation…” Luo Shenrong smiled bitterly.

Price wars between different regions during exports are now an open secret. The central government has repeatedly issued orders prohibiting such price-cutting during exports, but which region will heed the orders?

Take, for example, the "raw silk war" a few years ago. In order to export more raw silk, various regions drove the price of exported raw silk down to a level lower than that of silkworm cocoons. Despite being the world's largest exporter of raw silk, China should have had the right to set prices for raw silk. However, due to infighting, Japanese companies gained a huge advantage.

The Ministry of Foreign Trade has a wealth of information on this topic, and fluorite is just one insignificant item among them.

"Since the Japanese side has already begun to question whether we are dumping, the foreign trade department cannot take it lightly. It should inform all fluorite exporting companies of this situation and require them to immediately raise export prices to avoid violating international trade rules. Director Luo, what do you think?" Xu Ying asked with a smile.

"Does the Economic Commission mean that they want us to control fluorite exports?"

Luo Shenrong immediately understood Xu Ying's subtext. Recalling the reminder from the Economic Commission a few days earlier, a conspiracy theory immediately surfaced in Luo Shenrong's mind.

"The export of fluorite in China is too chaotic. Taking advantage of the opportunity of the Japanese Ministry of International Trade and Industry's anti-dumping investigation against China, we have a legitimate reason to rectify fluorite exports. In addition to fluorite, the export of other mineral resources should also be strictly regulated."

"Next, we will formally join forces with the State Planning Commission, the Ministry of Geology and Mineral Resources, and your Ministry of Foreign Trade to further consult and formulate a plan to gradually reduce the export of important mineral resources. You can make some preparations in advance in this regard," Xu Ying instructed.

"Understood, Director Xu, we'll get on it right away," Luo Shenrong replied.

(End of this chapter)