BEIJING -- China's Ministry of Commerce began questioning six Japanese and Taiwanese machine tool makers on Friday as part of an investigation into allegations of dumping, a probe that stands to benefit mainland competitors bruised by the U.S. trade war.
The ministry selected the top three companies by export volume from both Japan and Taiwan for sampling. Fanuc, Brother Industries and Makino Milling Machine from Japan as well as Yeong Chin Machinery Industries, She Hong Industrial and Hurco Manufacturing from Taiwan were named in an official release Tuesday.
Strengthening domestic precision tool makers is vital for President Xi Jinping's "Made in China 2025" strategy to modernize the country's industry. The probe is likely an effort to push back Japanese and Taiwanese rivals as Beijing lends a helping hand to Chinese machine tool makers, now facing a slump in U.S. exports due to President Donald Trump's tariffs.
The inquiry began following a request from Beijing Jingdiao Group and two other mainland machine tool makers who accuse Japanese and Taiwanese players of selling vertical machining centers at unreasonably low prices in China. Japanese vertical machining centers are used widely by Chinese electronics manufacturing services to produce items like smartphone cases.
The dumping probe targets five Japanese makers -- Fanuc, Brother Industries, Okuma, Yamazaki Mazak and Jtekt -- as well as five Taiwanese ones, but the authorities are also asking a wider group of manufacturers from those regions to cooperate with the investigation, which is scheduled to end by October 2019. Sanctions such as tariffs will be imposed should the ministry conclude that these companies engaged in dumping.
More than 80% of China's vertical machine center imports in 2017 came from Japan while less than 10% were from Taiwan, the Japan External Trade Organization says. Chinese makers currently cannot offer the same precision as Japanese companies for manufacturing products that require advanced machining.
Chinese production of machine tools for metal processing fell 10% on the year in October, the National Bureau of Statistics said. The U.S. represents the largest destination for China's machine tool exports, accounting for over 10% of their value in 2017, local media report.
Japanese machine tools are essential for the automotive and electronics industries. Should this equipment become more difficult to obtain, the impact could spread to other industries.