Import taxes on some consumer goods are to be cut by an average of more than 50 percent in an effort to encourage more people to spend at home rather than abroad.
The Ministry of Finance said on May 25 that it will lower import taxes on products such as Western-style suits and fur garments, boots, disposable diapers and skin care products starting on June 1. The measure is intended to boost imports, promote domestic consumption and satisfy strong consumer demand for certain imported products.
The decision comes after the State Council said in April that it was considering reducing import tariffs on some consumer goods to stoke domestic spending.
Record numbers of middle-class Chinese are spending heavily overseas or buying cheaper consumer products from foreign websites through overseas shopping agents known as daigou.
According to market consultancy Bain & Co, Chinese consumers spent 380 billion yuan ($61.3 billion) on luxury products last year. About 55 percent of the purchases were made in overseas markets, and another 15 percent were completed by daigou. Less than a third of the luxury purchases were made through Chinese mainland brick-and-mortar shops or online platforms.
“This is obviously good news for international companies who are already selling imported products in China, as it means higher profit margins,” said Laurel Gu, a senior lifestyle analyst at Mintel China, a market research agency.
“It can be encouraging for overseas brands who are looking to enter the Chinese market. Mintel’s consumer research shows that, in categories such as baby food, personal care, household appliances and digital products, Chinese consumers show a clear preference toward international brands over domestic brands.”
According to PWC China Trade and Customs, the average tariff across all products in China is currently 9.8 percent. The average duty rate on the items included in the cuts is much higher than that figure, and considerably higher than the average in many other Asian countries.
A nationwide tax refund policy that allows overseas visitors to claim refunds on purchases made across the country was introduced in January. The growth of retail sales in April fell to 10 percent year-on-year, the lowest gain since February 2006.
