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The Canadian glass industry fights back against un fair practices.

October 25, 2013  By Patrick Flannery

There are 30 Chinese government programs providing subsidies to Chinese
unitized curtain wall manufacturers, and another 142 that may be
providing indirect or “upstream” aid, according to the Canada Border
Services Agency.

There are 30 Chinese government programs providing subsidies to Chinese unitized curtain wall manufacturers, and another 142 that may be providing indirect or “upstream” aid, according to the Canada Border Services Agency. The assistance is in the form of direct grants, tax breaks, rebates, awards, passed-through price discounts and forgivable loans. How many Canadian programs are extending similar benefits to your business?

Where is the Canadian building envelope? Unfair trade practices by foreign governments could threaten the very existence of our industry as high-profile projects are snapped up by low-cost overseas fabricators.
Photo courtesy of Michael Elkan.


The gap between the assistance Chinese exporters receive and that which you receive is what constitutes unfair trade. There is a myth floating around that Chinese companies are more competitive because of their low labour costs. Anyone who has ever tried to staff a manufacturing plant with people from the lowest economic strata, even here in Canada, can see the hole in that story. Poorly educated, disadvantage people with reduced access to life’s necessities do not make good workers. If the Chinese companies’ only advantage were cheap labour, Canadian fabricators would be able to run circles around them in terms of quality and service to the contractor, while still being competitive on price. Instead, about five years ago, Canadian architectural glass companies started to see unitized curtain wall products coming in from China at prices comparable to half-inch window wall. They smelled a rat, and joined together to fight against these practices which were causing price depressions so steep as to threaten the very existence of the Canadian industry. This fall, those efforts bore fruit when the Trade Tribunal reached a preliminary finding that Chinese unitized curtain wall manufacturers were engaging in dumping and being subsidized by various levels of the Chinese government. In response, the CBSA has slapped  provisional duties of 30.3 and 36.3 percent on imports from two companies –  Jangho Curtain Wall Canada and Yuanda Canada – and 57.3 per cent on all other Chinese importers. It has also applied countervailing duties to offset the rate of subsidy amounting to 3.1 and 4.6 per cent on Jangho and Yuanda, respectively,  with a 34.3 per cent countervailing duty applying to all other Chinese importers. At press time, it remains to be seen whether these tariffs will become permanent. Here’s how we got to this point.


The Canadian glazing industry started to push back against the threat from Chinese curtain wall module imports in 2012 by launching a complaint alleging dumping and subsidizing by 64 Chinese unitized curtain wall manufacturers with the CBSA. The list of nine complainants is a who’s who of the largest companies in our sector.  Complaints of this kind are heard by the Canadian International Trade Tribunal, a federal government agency that adjudicates trade disputes on Canadian soil. That first complaint failed on the grounds that the tribunal did not see sufficient evidence that the Chinese unfair trade practices had caused “injury” to Canadian architectural glaziers. According to Paul Arnold of Starline Architectural Windows, one of the complainants in the case, the problem was essentially one of missing information and the investigation was halted on a “technicality.” By January of this year, the group had compiled the necessary documentation and filed a new complaint. This complaint satisfied the tribunal and it ordered the CBSA to begin an investigation into the group’s allegations. The CBSA considered a period of activity lasting from Jan. 1, 2011 through Dec. 31, 2012.

The investigation stretched into May, and was extended past its initial deadline by the CBSA because of the “complexity and novelty” of the issues involved. According to the 60-page Statement of Reasons issued by the CBSA in July, those issues were:

  • the large number of related party transactions between importers and exporters
  • unitized wall modules are not sold separately but as part of a building facade project
  • each unitized wall module is unique and can only be used for the project for which it is designed
  • the time lag between sale and importation
  • many unitized modules were imported during the period of investigation for unfinished projects for which payment was not yet received
  • the potential for upstream subsidies
  • the size and complex nature of the organizational structure of the exporters

It is also clear from the statement that the Chinese government and the exporters named were usually less than cooperative with the investigation. The only response from the Chinese government to the CBSA’s several requests for information was a letter sent March 4, the day the investigation was due to begin, protesting the investigation, claiming the time between the first and second complaints was too short and challenging the CBSA’s standing in the matter. Since this submission was received well past the deadline for such responses, the CBSA said it did not have to consider it. Of the Canadian importers of the curtain wall in question, only two bothered to reply to the CBSA’s inquiries: Jangho Curtain Wall Canada and Yuanda Canada Enterprises. Of the 64 possible exporters, only Guangzhou Jangho, Shenyang Yuanda and Shanghai Henry Yijian responded. In many instances, the statement reports that the information provided by these companies is incomplete, and request for further information were ignored. Both Jangho and Yuanda declined to comment on the case.

The reference to “size and complex nature of the organizational structure of the exporters” is borne out with a quick look at the companies’ websites. Yuanda, for instance, claims to be the largest curtain wall manufacturer in the world, employing 12,700 people and operating 1.3 million square meters of fabrication plant. It has grown to this size in just 20 years, and has built projects in 35 countries.

The CBSA investigation had to determine two things: whether the exporters in question were dumping goods into the Canadian market, and whether they were receiving subsidies from the Chinese government. Dumping is defined as selling goods at a price lower than what the profitable price would be in the exporter’s home market. So in order to find the Chinese exporters guilty of dumping, the CBSA needed to find evidence that not only were they not making any money at the price they sold their goods for in Canada, but that they also would be taking a loss selling for that price in China. This is an important point, because it belies the notion that exporters with cheap inputs in their home country are not allowed to leverage those advantages in our market. They can use those advantages. It is only when they are selling so low that they would be unprofitable even in their home market that a charge of dumping is possible.

Before the CBSA could decided if the Chinese importers were dumping or not, it had to determine what price the exporters actually received for the products sold in Canada. This proved difficult, as the importing companies are owned by the exporter. In these cases, the CBSA applies a “reliability test” to determine if the price the exporter reports makes sense in light of the final sale price, less the importer’s costs. For both Jangho and Yuanda, the exporters’ reported prices were found to be “unreliable” – in other words, the price the importer was reporting on its books did not appear to be a realistic reflection of what the product actually cost. Under these circumstances, the CBSA was free to calculate a its own estimate of the real export price using the known price of inputs, sales of similar products in the Chinese market and other methods. Using these numbers, the CBSA was able to determine that the Chinese exporters were selling their products to their Canadian importers at prices far below what they would sell those same products for at home. In Canada, those price points would enable the importers to easily underbid any competing offer from a domestic manufacturer.

The CBSA then delved into a truly intimidating list of government programs funneling money to Chinese curtain wall fabricators through a variety of thinly disguised subsidy programs. The resulting duties from this part of the investigation were relatively small, but still significant in the case of the Chinese importers who did not respond to the CBSA’s requests for information. In fact, if there is a lesson for Chinese curtain wall importers in all this, it is that cooperating with the CBSA is ultimately very beneficial. Jangho and Yuanda will see their imports taxed as much as 25 per cent less than imports from other Chinese companies.

The Chinese importers still have an opportunity to prevent these duties becoming permanent. They have until the date of the final determination, slated for Nov. 12, to submit a written undertaking to revise their prices to remove the reported levels of dumping and subsidizing. Arnold illustrates the seriousness of the situation facing our industry: “We were losing significant projects to inferior Chinese wall modules at ridiculously low prices. We had lost jobs and those jobs are being delivered now, so in fact we are out of that revenue even as we speak. So we lost some work, but probably the biggest, more damaging part is that once they got a few jobs, we just got beat down. Our unit selling rates just got pummeled into the dirt. That is where the real issue has come. The market has been decimated to the point where, if this carries on, there won’t be a domestic market.”

Arnold adds that no one is happy taking this route, and that Canadian fabricators are keenly aware of the pain this may cause their customers. It is to be hoped that Canadian builders will see the larger picture and support the existence of a domestic source of unitized curtain wall for years to come. •

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