The New Pattern Of Luxury Retailing &Nbsp; Tariff Reduction Brings The Price Down Space.

For luxury stores and shopping malls, lower taxes mean lower costs.

Ministry of Commerce confirmed

Tax reduction and price reduction must be synchronized.

"Tax reduction policy is a double-edged sword, because some luxury brands will not lower their prices because of lower import tariffs, instead, they will" eat this part of their profits ".

Yan Jun, director of the luxury management project at Peking University, said: "it is suggested that the government should introduce corresponding supporting measures to reduce the tariff and implement corresponding mandatory price reduction measures for luxury brands, so as to ensure the effectiveness of the policy.

At the same time, lower tariffs may lead to some luxury brand prices lower than domestic brands, bringing new competition shocks.

"A sharp fall in tariffs will reduce the consumption threshold of luxury goods, increase new consumer groups and expand market size."

Liu Gang, President of Haidian venture capital and private equity investment Association, said, "however, the luxury market will not change completely because of tax changes, because luxury goods are driven by quality rather than price."

Dynamics affect channel pattern

The import tariff rate of luxury goods in China is generally between 15%-25%, while some up to 50% (such as cosmetics and liquor). In order to avoid tariff, Chinese people spend 200 billion yuan each year to buy luxury goods.

According to China's e-commerce market data monitoring report, in 2010, the market scale of overseas purchasing amounted to 12 billion yuan, of which cosmetics and luxury goods were the majority. Even though the tax rate was calculated at 40%, the annual revenue loss was as high as several billion yuan.

How to let the huge luxury consumption stay in China? The scope of tax reduction is the key, and the magnitude of it has a crucial impact on the sales channels of luxury goods.

For luxury stores and shopping malls, lower taxes mean lower costs.

For luxury purchasing channels, life and death are at a crossroads.

If tariff reduction leads to lower retail price of goods than the cost of purchasing, the purchasing industry will lose its core competitiveness.

For the newly rising luxury online shopping, the direct impact of tax reduction is that luxury websites compress their profit margins and sacrifice part of their profits to maintain a lower customer base than direct stores.

It takes time for consumption to return.

Although tariff reduction is to promote domestic consumption, some overseas consumption is converted into domestic purchase.

But the decline of 15% obviously does not solve the phenomenon of luxury goods and other consumption movements.

Domestic luxury prices are higher than overseas, tariffs are only a factor.

Take imported cosmetics, in addition to paying 6.5%-18% import duties, but also to pay 17% of value-added tax, 30% of consumption tax, the cumulative need to pay the highest tax of more than 60%.

In addition to these taxes and fees, there are also high toll, entry fees, logistics fees and turnover tax and income tax on domestic value-added links. These factors lead to "cheap and expensive".

However, the tax reduction policy may affect the Hainan Island Islands tax rebate policy implemented in May 1st.

According to the insiders, if the import tariff of international luxury goods is reduced, it will affect Hainan's Islands tax rebate products to a certain extent.

"But the impact is limited and will not cause a devastating blow.

There is little possibility of a reduction in tariffs, and there is a big difference between reducing tariffs and Islands's tax rebate. "

The source said.