The US hit China with anti-dumping duties of up to 99% on steel pipe imports worth $2.6 billion. The duties were a victory for US steel companies that had petitioned for protection, claiming nearly half of domestic industry workers had been laid off. However, China accused the US of "rampant protectionism" and said it would investigate unfair subsidies to US carmakers. The duties ranged from 36.53% to 99.14% depending on the Chinese manufacturer and were aimed at offsetting Chinese government subsidies and surging imports of the pipes.

1. Unit 3-style Exam Paper, Section A
US slaps duties on Beijing steel pipe imports
By Sarah O’Connor in Washington - Financial Times, November 6 2009
The US hit China with another big trade action on Thursday as it slapped preliminary anti-
dumping duties on $2.6bn worth of Chinese pipe imports. The commerce department’s
decision to impose duties of up to 99 per cent on imports of some steel pipes is the latest
in a string of trade spats between over tyres, cars and chickens. It comes less than a
fortnight before President Barack Obama’s first visit to China. The ruling will affect more
imports by value than Mr Obama’s recent move to impose duties on Chinese tyres, which
sparked an international row in which Beijing accused the US of “rampant protectionism”.
The decision was a victory for steel companies, including US Steel Corporation, that
petitioned for the duties in April. The United Steelworkers union said the decision was “an
overdue message for thousands of American laid-off workers that trade laws are being
enforced”. It says nearly half the domestic industry’s workers have been laid off. “China’s
government and exporters are being told we are fed up with their cheating on our fair-
trade laws, and penalties for these transgressions are long overdue,” said Leo Gerard, USW
union president.
Anti-dumping duties are used when companies sell their products unfairly cheaply into
foreign markets. Imports of the Chinese pipes, which are used in oil-drilling, surged 203
per cent between 2006 and 2008, according to the commerce department. The duties
range from 36.53 per cent for a select group of Chinese companies to 99.14 per cent for
the rest. One manufacturer, Jiangsu Changbao Steel Tube Co, was exempted from the
ruling.
It follows commerce department’s decision in September to impose so-called
“countervailing duties” on the pipes, which are aimed at offsetting government subsidies.
China recently struck back at the US, announcing it would investigate whether Washington
was unfairly subsidising its car-makers.
Section A. Answer All Questions (35 marks)
1. Some Americans may think they would be better off without trading with China. Explain
why specialisation and trade may benefit the populations of both countries. (6 marks)
2. Before this US government ruling, an increasing number of U.S. construction companies
were buying steel pipes from supply sources in China. Examine why they may have chosen
to do that. (8 marks)
3. American workers and their trade unions may be concerned that imports from China are
produced in unfair, ‘sweated’ labour conditions. Examine whether a ban on such imports
will help or hinder the interests of such workers. (9 marks)
4. Discuss the impact on US Steel Corporation’s stakeholders of its ‘victory’ in persuading
the US government to place tariffs of up to 99% on steel pipe imports from China.
(12 marks)

2. Unit 3-style Exam Paper, Section B
Evidence A.
JCB goes Multinational
JCB’s yellow vehicles and black logo are visible on construction sites throughout the world.
From its 1945 start-up in Derbyshire, it has become a world famous brand. It is one of
Britain’s biggest manufacturing employers and one of its biggest manufacturing success
stories.
In 1979, after some years of rising export sales, JCB decided to open its first overseas
factory in India. This was unusual, as most western firms were looking at Singapore or
South Korea as their manufacturing bases. From that strategic decision, JCB’s future was
to have two characteristics: a focus on India in preference to China; and a focus on the
developing world rather than the developed one. In 2001, JCB opened a factory in Brazil,
leading to sales success in South America.
JCB first dipped a toe into the Indian market in 1979, but it was only in 2003 that JCB
bought out its Indian partners to commit 100% to this growth market. It has three factories
in India and also exports parts from the company’s Midlands HQ. India is already JCB’s
biggest market. In the future it will become the main driving force behind the business.
Everywhere in the world, JCB faces two major competitors: Komatsu (Japan) and
Caterpillar (USA). In India it is clear that JCB has won this battle. Local firms offer
comparable equipment at cheaper prices; but JCB is India’s Number 1 supplier of
construction site equipment with a 50% market share.
Today, JCB has 18 factories around the world, including a small one in China. Its British
factories remain the hub, though, providing parts to assembly factories elsewhere, and
being the focal point for new product development.
Source: Business Review April 2009 (with additions)
Evidence B. JCB sees no recovery signs outside China
JCB faces a struggle to avoid its first annual loss this year, its chief executive warned,
as he cautioned that he saw no recovery in demand for construction equipment outside of
China next year. Matthew Taylor, chief executive of the UK’s largest maker of earth-
moving machines, said that JCB’s revenues could drop between 35 to 40 per cent this year,
which would make it one of the biggest year-on-year falls in the company’s 64-year
history. He declined to give an outlook on JCB’s profits for 2009 but indicated that it faced
a tough struggle to avoid losing money.
He forecast that unit sales could drop to 35,000, compared with 56,000 in 2008. Mr Taylor
said he thought demand for construction machines outside China this year would fall by
about 50 per cent, making 2008 one of the sector’s most difficult years since the second
world war. “In 2010 we are planning for demand [outside China] to be flat,” Mr Taylor
said.
“Looking around the world, with the exception of a few countries that include India, I can
see few positive signs in relation to underlying demand,” he added. Since the beginning of

3. 2007, JCB has cut its global workforce from 9,500 to about 7,000. It employs 4,500 in the
UK where it has its main factories.
The company is one of the world’s top eight makers of construction equipment by value.
Its focus on smaller, less costly machines, however, pushes it up to third in terms of unit
sales – though still some distance behind Caterpillar of the US and Japan’s Komatsu, the
industry leaders.
Last week, Caterpillar cheered investors when it said it expected economic conditions to
improve quickly, and indicated its revenues next year could rise by 10 to 25 per cent.
However, its relative confidence is linked to the company being helped by fairly high
demand for large diggers and other such machines used in mining – an area to which JCB
has much less exposure.
In China – where JCB has opened a factory but has a small presence – demand for machines
this year will probably increase 10 to 15 per cent, Mr Taylor said, and a similar rate of
growth was likely next year. China accounts for between a quarter and a third of world
demand for construction equipment, which in 2008 totalled about £100bn.
A bright spot for JCB is India, where the company is the largest company in construction
machines by units, accounting last year for just more than half the total 30,000 machines
sold. India and the UK are JCB’s two biggest markets, accounting for 20 to 25 per cent of
its sales each year. This year India is likely to become the company’s biggest destination
Source: Adapted from: Peter Marsh, Financial Times October 27th 2009
Evidence C. JCB progress worldwide, 2001-2008, Source: JCB
Rev (£bns) JCB World Sales and Profits 2001-2008
Prof (£m s)
2.5 200
180
2 160
140
1.5 120
100
1 80
60
0.5 40
20
0 0
2001 2002 2003 2004 2005 2006 2007 2008
Revenue (£bns) Profit (£m s)
JCB Worldwide Sales, Profits and Market Share, Source: JCB
Unit sales Revenue Profit Market share
2004 37,000 £1,150m £55m 8.6%
2005 45,000 £1,420m £110m 9.6%
2006 55,000 £1,750m £149m 10.4%
2007 72,000 £2,250m £189m 12.0%
2008 57,000 £2,000m £39m 10.8%

4. Section B. Answer All Questions (45 marks)
1. Examine why JCB might have chosen India for its first overseas factory in 1979.
(6 marks)
2. Examine one possible benefit and one potentially negative impact of multinational JCB
establishing itself in India. (10 marks)
3. JCB offers the same product range, with the same design and logo worldwide. Discuss
the benefits and drawbacks to JCB of this approach to global marketing. (13 marks)
4. Using the data in Evidence A, B and C, discuss whether JCB may have made a strategic
mistake in focusing on India rather than China. (16 marks)

5. Mark Scheme
Unit 3-style Exam Paper, Section A
US slaps duties on Beijing steel pipe imports
Section A. Answer All Questions (35 marks)
Q No. Question and Mark scheme Marks
1. Some Americans may think they would be better off without 6
trading with China. Explain why specialisation and trade may
benefit the populations of both countries.
Knowledge: up to 2 marks for explaining specialisation or 2
attempting an explanation of comparative advantage or
identifying two benefits to the populations of China and the USA
Application: up to 2 marks for placing their answer in the 2
context of this case, or of another case they are aware of
Analysis: up to 2 marks for developing from specialisation to 2
comparative advantage, perhaps using opportunity cost within
the argument
Q No. Question and Mark scheme Marks
2. Before this US government ruling, an increasing number of U.S. 8
construction companies were buying steel pipes from supply
sources in China. Examine why they may have chosen to do
that..
Knowledge: up to 2 marks for explaining why businesses might 2
choose a supply source from overseas
Application: up to 2 marks for placing their answer in the 2
context of this case, or of another case they are aware of
Analysis: up to 4 marks for developing their argument, perhaps 4
covering the external pressures the firms may have faced that
may have forced them to look for the cheapest source of supply.
It could also be suggested that the US firms were being ruthless
in pursuing minimal costs in the attempt to maximise their own
profits.

6. Q No. Question and Mark scheme Marks
3. American workers and their trade unions may be concerned that 9
imports from China are produced in unfair, ‘sweated’ labour
conditions. Examine whether a ban on such imports will help or
hinder the interests of such workers.
Knowledge: up to 2 marks for explaining why businesses or their 2
customers might be concerned about ‘sweated labour’; or
identifying 2 points for or against a ban on such imports
Application: up to 3 marks for placing their answer in the 3
context of this case, or of another case they are aware of; here,
the key is to show some understanding of the context of working
in China versus working in America or Europe.
Analysis: up to 4 marks for developing their argument, perhaps 4
covering the debate about whether some work (however low
paid) is better than none, i.e. whether providing this work is
exploitative or helpful.
Q No. Question and Mark scheme Marks
4. Discuss the impact on US Steel Corporation’s stakeholders of its 12
‘victory’ in persuading the US government to place tariffs of up
to 99% on steel pipe imports from China.
Knowledge: up to 2 marks for explaining the meaning and/or 2
purpose of tariffs and/or stakeholders; or identifying 2 relevant
stakeholders in this case
Application: up to 2 marks for placing their answer in the 2
context of this case, or of another case they are aware of; here,
the key is to show some understanding of the relationship
between US Steel, the US government and the companies based
in China.
3
Analysis: up to 3 marks for developing their argument, perhaps
covering the issue that some stakeholders will benefit while
others suffer.
5
Evaluation: up to 5 marks for judgements showing insight into
the issues. Above all, perhaps, should be a discussion of ‘victory
for whom’, in which the conficting interests of some
stakeholders can come to the fore.

7. Unit 3-style Exam Paper, Section B
Q No. Question and Mark scheme Marks
B1. Examine why JCB might have chosen India for its first overseas 6
factory in 1979.
Knowledge: up to 2 marks for reasons why a business might 2
choose one country over another as a home to a subsidiary, e.g.
internal security; ability to repatriate capital; attractiveness of
local market; skills of local workforce
Application: up to 2 marks for placing their answer in the 2
context of this case, i.e. why India (answers can come from case
or wider knowledge)
Analysis: up to 2 marks for developing their argument, using 2
economic/business terms where appropriate, e.g. the
importance of the decision being based on a long-term, strategic
view
Q No. Question and Mark scheme Marks
B2. Examine one possible benefit and one potentially negative 10
impact of multinational JCB establishing itself in India.
Knowledge: up to 2 marks for showing understanding of 2
multinational or for identifying two relevant points
Application: up to 3 marks for placing their answer in the 3
context of this case, or of another case they are aware of
Analysis: up to 5 marks for developing their argument, probably 5
including the understanding that ‘benefit’ and ‘negative impact’
might depend on perspective, e.g. the Indian government might
enjoy some tax revenue but local people might resent working
for a foreign owner – especially if JCB ships middle and senior
managers in from the UK, implying that locals are of lesser
worth
(NB there is no suggestion that this is their practice)

8. Q No. Question and Mark scheme Marks
B3. JCB offers the same product range, with the same design and 13
logo worldwide. Discuss the benefits and drawbacks to JCB of
this approach to global marketing.
Knowledge: up to 2 marks for showing understanding of the 2
debate between ‘glocalisation’ and pan-global (mass) marketing
Application: up to 2 marks for placing their answer in the 2
context of this case. Better students would mull over the
implications of this nbeing an industrial (B2B) product instead of
the usual consumer products
Analysis: up to 4 marks for developing their argument, perhaps 4
developing further the B2B v B2C issue, or weighing up whether,
even if the logo, design and branding should be worldwide,
there may still be scope for producing a range of low-cost
machines for developing countries
Evaluation: up to 5 marks for judgements showing insight into 5
the issues. It is likely that these will be highly applied, i.e. to
this specific B2B context – and perhaps incorporating the
competitive struggle against Caterpillar and Komatsu
Q No. Question and Mark scheme Marks
B4. Using the data in Evidence A, B and C, discuss whether JCB may 15
have made a strategic mistake in focusing on India rather than
China
Knowledge: up to 2 marks for explaining the attractiveness of 2
China v India; or explaining the meaning of key terms such as
‘strategic’
Application: up to 2 marks for placing their answer in the 2
context of this case
Analysis: up to 3 marks for developing their argument, probably 3
based in part on an analysis of the numerical material in
Evidence C, plus the written evidence in B
Evaluation: up to 8 marks for judgements showing an ability to 8
weigh one side of an argument against another and then to
explain why one side is preferred to the other. The justification
of the conclusion is essential to score a mark in the range 5-8
marks.