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China’s tariff cuts reduce commodity prices, boosts sales volume

(People's Daily Online)    15:52, August 03, 2018

The prices of imported consumer goods and automobiles have been gradually dropping since China cut import tariffs on July 1, which in turn has seen a boost in sales volume, reported on Aug. 2.

On July 1, China actively reduced tariffs for daily consumer goods and automobiles involving 1,449 taxable items, with an average decrease of 55.9 percent.

The price of over 70 items in a Walmart supermarket in Shenzhen have been reduced by 10 to 15 percent, including those from South Asian and European countries, Ye Shuyun, vice general manager of the supermarket disclosed.

Some customers found that the price of certain products remain unchanged. One reason for this phenomenon is that some goods were imported before the tax reduction took effect, and the prices for those items imported after the move will be lowered according to the tariff adjustment, said Zeng Jun, a manager at Sfbest, an online shopping platform owned by one of China’s largest couriers SF Express.

The tax reduction covers all kinds of daily necessities. Among them, the average tax rate on household appliances has enjoyed the sharpest fall, from 20.5 to 8 percent.

Apart from daily necessities, luxury brands are another profiteer of this tax reduction move.

“On the day that the new policy was announced, we have saved more than 700,000 yuan (about $101,872) in customs duties, which will help to reduce the final selling price,” said Zhao Shoukun, chief operating officer of COSCIA (HK) LIMITED.

Zhao added that their business performance is expected to achieve a year-on-year growth of about 20 percent in the second half of this year.

The tariff reduction will have a slight impact on the retail price of domestic luxury goods due to the relatively large price difference between domestic and foreign items. The domestic luxury goods market will therefore improve consumers’ shopping experience and after-sales service, which will reduce outflow of luxury consumption.

In addition, after the move to reduce tariffs, imported high-end car brands have announced a price reduction of their cars in China as an effort to expand their market in the country.

The price for a Panamera Turbo S E-Hybrid in China has dropped by 190,000 yuan, said Zhang Peng, manager of a Porsche store in Shenzhen, adding that they obtained nearly 700 orders for the vehicle in July.

Moreover, as products imported through e-commerce platforms are excluded from the tax reduction policy, some e-commerce operators are also actively making changes, for example, altering the methods of importing their products, to ensure profits.

The lower tariff rate will also make it easier for more overseas goods that have not previously entered China to enter the country in a formal and general way, which will enrich the selection of commodities for consumers.  

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Bianji, Hongyu)

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