Financial Services Association, Feb. 27 (Reporter Zhao Zixiang) After several months of anti-dumping duty investigations, Dream Lily (603313.SH)'s mattress bases and related products produced in Spain and Thailand have ushered in preliminary ruling results.

According to Dream Lily's announcement tonight, the anti-dumping duty investigation included some thick padding products produced by the company's Spanish production site and exported to the US. Meanwhile, during the period between this initial ruling and subsequent final ruling, anti-dumping duties on US customers imported thick pads from Spanish production sites were temporarily enforced at 10.74%, and Ligao Thailand imposed a tax rate of 344.70% on exports from Kosovo to the US. A Financial Association reporter noticed that Ligao Thailand is an overseas production base with good overall performance in 2023.

According to information, in August 2023, in response to applications submitted by several mattress companies in the US, the US Department of Commerce announced an anti-dumping investigation against mattresses in 12 countries or regions including Spain.

The Financial Services Association reporter learned that the “petitioners” of the anti-dumping of these mattresses at the time claimed that “mattresses imported from these countries were harming the US domestic industry because these mattresses were sold at lower than normal values in the US, and mattresses imported from Indonesia were unfairly subsidized.”

According to relevant US Department of Commerce (DOC) regulations, anti-dumping/countervailing duties will be levied if it is determined that such alleged dumping is occurring, and if the US International Trade Commission (ITC) determines that the dumping or subsidizing of imports has caused “material damage” (or threat of material damage), an anti-dumping/countervailing duty will be levied.

A CIFA reporter learned from the industry that this is also the third trade case involving imported mattresses. The first was an anti-dumping investigation against Chinese mattresses launched in 2018. The second was an anti-dumping investigation initiated in 2020, involving anti-dumping investigations against 7 other countries and countervailing investigations against China. However, in every previous case, the US Department of Commerce determined that there was dumping and subsidies.

Now, after nearly 7 months of investigation, on February 26, 2024, local time in the US, the US Department of Commerce announced preliminary affirmative rulings on mattress anti-dumping duty investigations in 12 countries or regions, including Spain and Kosovo.

As far as Dream Lily is concerned, the preliminary ruling in this anti-dumping investigation involved the company's Spanish production sites “Hengkang Spain”, “COMOTEX”, and the Thai production base “Ligao Thailand”.

According to the announcement, Hengkang Spain and COMOTEX actively participated in the compulsory lawsuit. According to the preliminary ruling results announced by the US Department of Commerce, Hengkang Spain and COMOTEX were subject to a 10.74% tax rate.

Among them, although Ligao Thailand is a mandatory respondent company, it no longer exports anti-dumping products to the US, so it is not participating in the lawsuit. However, according to the preliminary ruling results announced by the US Department of Commerce, Ligao Thailand imposed a tax rate of 344.70% on exports from the Kosovo region to the US.

According to Dream Lily's 2023 semi-annual report, Ligao Thailand achieved operating income of 341 million yuan and net profit of 71.4475 million yuan in the first half of the year. It was the company's overseas subsidiary with the best net profit performance during the reporting period. During the same period, Dream Lily achieved operating income of 3,601 billion yuan in the first half of last year and achieved net profit of 97.616,300 yuan to mother.

Furthermore, according to the Dream Lily announcement, the anti-dumping duty investigation products covered some thick cushion products produced at the Spanish production site and exported to the US. Thin cushion products and other household products produced by the Spanish production base and exported to the US were not included. During the period from the initial anti-dumping ruling to the final ruling, the anti-dumping duty on US customers imported thick cushions from Spanish production sites was temporarily enforced at 10.74%.

The company said that the US Department of Commerce issued the preliminary ruling on the anti-dumping tax investigation. Currently, the anti-dumping investigation has not yet been completed, and the final ruling will be made after further investigation by the US Department of Commerce. The company also claims that it has set up production capacity in the US, and that this anti-dumping has not had a significant adverse impact on the company's production and operation.

An industry insider told the Financial Federation reporter that although there is still some time until the final ruling of this anti-dumping tax investigation, round after round of targeted investigations may face a more difficult situation and fewer choices in the future for Chinese mattress companies that have achieved sales through re-export. Practitioners urgently need to reconsider their future US market strategies.