ASSESSING THE POTENTIAL BUSINESS SUCCESS OF EXPORTING RUBBER PRODUCTS TO CHINA
By: D P M Subasinghe
The manufacture of rubber based products such as industrial tyres, tubes, auto parts and components has been a part of Sri Lanka’s economy since the early 1930’s. As one of the largest rubber producing countries, Sri Lanka produces different types, forms and grades of rubber as well as rubber based products for export markets. China accounted 0.45% of total exports from Sri Lanka to the world, but on the current trend it’s optimistic that China will increase the potential items of exports from Sri Lanka such as rubber products, tea, spices and confectioneries and seafood. China’s demand for rubber was expected to rise 8.5 % tonnes in 2010 to reflect strong growth in the country’s auto sector. The development of the auto industry is the main driver for the development of market for rubber products in China. The development of highway construction and transportation industry will drive the demand for tyres, engineering rubber products and other rubber products. China consumes 16% of the world’s natural rubber. China has already become the world’s largest rubber consumption than any other country, estimated statistics illustrate China’s top rubber consumer’s position will not be shaken in the period ahead. In recent years, the world’s major rubber companies such as Goodyear, Bridgestone, Michelin and other tire companies have entered China, mass production of export products. As the emerging economic super power, China led solid foundation for the exporters of rubber products by creating potential market opportunities due to its sustained high growth in exports of rubber. Many opportunities are available on improving trade with China considering the strength of the cordial relationship maintained between the two countries by continuous dialogue and trade agreements on mutual understanding. It is reasonably appropriate to commend the trade relationship between the two countries considering the fact its historical relationship and the monumental development in China who will indisputably become the giant in trade & industry during this century. China’s membership of Asia Pacific Trade Agreement (APTA) would provide Sri Lanka access to one of the largest markets in the world. It was becoming more important as it gave Sri Lankan exporters access to the emerging giant economies in the world such as China, India and South Korea. Rates of utilization of key trade deals such as the Asia Pacific Trade Agreement (APTA) and South Asia Free Trade Agreement (SAFTA) were low by Sri Lankan rubber exporters. It might be due to exporters are not obtaining certificates of origin from the department of commerce, exporters are not aware of the Free Trade Agreements (FTA) or the importer is not presenting it and getting duty concessions. It’s important to improve exports to China because the potential market for the rubber based products is enormous. Sri Lankan exporters should make aware of the preferential trade terms between China and Sri Lanka and utilize them in the best possible way to develop the export of rubber products. Recently, Sri Lankan Government has used trade policies which would further their foreign policy objectives such as building strong relations with China. Despite Sri Lanka rubber industry being adversely affected by this world crisis, Sri Lanka was able to recover the lost market share and offer its natural rubber at a highly competitive rate under these trade agreements. China commenced import of rubber from Sri Lanka in 1951 even before agreements became effective. China extended a remarkable sense of generosity to the people of Sri Lanka in becoming the principal importer of rubber from Sri Lanka. Although exports under APTA have grown, it was still only about 50 million dollars worth of goods to China, Korea, India and Bangladesh with about 1,800 certificates of origin issued by the commerce...
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