China reduced import duties on some consumer goods ranging from shoes to cosmetics. According to the Ministry of Finance the duties will be:
- cut by half on average on imports suits, fur garments and shoes
- reduced on cosmetics to 2% from 5% and on diapers to 2% from 7.5%
China’s government targets to encourage consumer’s domestically spending. Currently:
- Chinese tourists travel abroad to buy goods in order to avoid import and consumer taxes. Chinese duties can make some luxury goods about 20% more expensive than they are overseas.
- Additionally the strong yuan contributes to the spending overseas.
“This would be good news for international players in China, as the lower tariff would entitle the imported products to apply relatively more competitive prices in China than before,” said Linda Li, a senior research analyst at market-research firm Mintel Group Ltd.
According to Erwan Rambourg, head of consumer and retail research at HSBC the new policies should boost Chinese stores that have lost customers to French and South Korean cosmetics counters.
“It is understandable that instead of losing business to Galeries Lafayette in Paris, Harrods in London, or shopping malls in Hong Kong, China’s administration may want to tap into the power of domestic consumption,” Mr. Rambourg said. For Hong Kong’s retail market the duties cut might be negative as the city has traditionally been a tax-free shopping destination for mainland Chinese consumers.