Insiders Explain The Mystery Of Luxury Price Differentials.

Recently, Yao Jian, spokesman of the Ministry of Commerce, said China would further reduce imports.

The first batch of tax reduction policies may start with perfume, cosmetics and other commodities.

The relevant departments are carefully studying and demonstrating the details of tax reduction.

Recently, Yao Jian, spokesman of the Ministry of Commerce, said that China would further lower import tariffs, including some of the tariffs on medium and high grade commodities.

As China's current import tax on luxury goods is between 25%-30%, some of them are more than 50%. High tariffs lead to a much higher price of imported luxury goods than overseas markets.

High tariffs have made China lose huge amounts of luxury goods to overseas markets. Although the Ministry of finance has denied it, the Ministry of Commerce has made such a clear official statement about tax reduction. It is tempting to suspect that a number of relevant departments may have reached a tacit understanding. Luxury tax reduction is imperative.

at home and abroad

According to a set of statistics released by the Ministry of Commerce, 20 brands of high-end consumer goods, such as watches, bags, clothing, wine and electronic products, are clearly priced at home and abroad: the domestic market is about 45% higher than that of Hongkong, 51% higher than that of the United States, and 72% higher than France's five products.

Why is the price difference so big at home and abroad?

Ouyang Kun, the chief representative of the World Luxury Association's China Representative Office, judged that the statistics from the Ministry of commerce were quite credible.

The price discrepancy in different countries and regions is mainly determined by factors such as freight, customs duties, customs quarantine and related expenses.

Take a luxury brand in France, for example, because it is sold in small shops or outlets in France, which eliminates the cost of agents, and does not have overseas pportation, import tariffs and other related expenses. Therefore, France is the cheapest in origin, and the North American market is slightly more expensive, and Hongkong is once again.

And if this commodity is imported to China, because luxury goods have to pay an average import tax of about 30%-40%, such as tariffs, value added tax and consumption tax, then the price of the Hongkong market will be higher than that of the non tax free market.

Ouyang Kun said that different types of luxury goods involve different taxes, and some skin care products do not have to pay a 30% consumption tax.

So for cosmetics, the mainland has an average 25%-30% import tax more than Hongkong, plus freight, customs inspection and retailers' entrance fees. The average price difference between Hongkong and the mainland is about 30%-40%.

Domestic luxury consumption outflows

Such a big price gap makes most consumers choose to go abroad to scour goods.

China has lost huge consumer goods market.

The strong purchasing power of Chinese tourists overseas has greatly enriched the European luxury market, including France.

The Swiss based tax rebate company has released a report that in 2010, the total amount of duty-free goods purchased by Chinese tourists in France amounted to 650 million euros, or about 6 billion 130 million yuan, which was the title of "shopping king" in France.

High tariffs restrict domestic luxury goods delivery

"Among the world's leading luxury consumption countries, the average import tax rate of luxury goods in China is the highest on average," 30%-40% said.

Ouyang Kun said that in other countries, the overall tariff on luxury goods will not be higher than 10%. "Like Italy, there is no tariff at all, so luxury goods in Italy are cheaper than in France."

Excessive tariffs not only allow consumers to drain, but also restrict the number and variety of high-end luxury goods to China.

"Foreigners do business and do not spend too much money at once, so the more expensive luxury they are, the less they will put in the Chinese market.

Big agents in China report sales to headquarters every three months, and the headquarters will deliver the goods in the first quarter according to the report. "

He said that consumers often feel that in China's big flagship stores, the quantity and style of the goods they choose are very few, and they are not stock.

In Europe, styles and quantities are picked and warehouses.

This is why many consumers like to go shopping in Europe.

Insiders suggested that tax reduction actions should be launched soon.

Ouyang Kun thinks another important significance of tax reduction is that there are reasons to limit and curb the rise in prices of big brands day after day.

"Now these big brands are adjusting their prices almost every day, and as long as the euro depreciates, they will raise the price of their imports."

Ouyang Kun said that luxury goods are generally priced in euros. Although the renminbi is strong, big brands will not increase the purchasing power of the renminbi on their commodities, and will rise in price on the basis of high tariffs.

Although the call for tax cuts is constant and there are many official voices, the specific promotion of reducing the comprehensive tax rate of luxury goods is still very cautious.

According to people familiar with the matter, relevant departments are still studying and demonstrating the details of tax reduction and assessing the role of tax cuts in price reduction.

He speculated that tax reduction measures will not be implemented in one step, but will be progressively promoted.

The first batch of tax reduction policy is likely to start from cosmetics, perfume and other similar commodities.

Secondly, it may be luggage and luxury goods, in short, it is a consumer oriented product dominated by women.

The tax cut may be between 10%-30%.

"After the cosmetics are lowered, the price may not be much different from that in Hongkong."

However, Ouyang Kun reminded consumers that the reduction of tariffs does not mean that the price of commodities will drop immediately. There must be an digestion period.

Since the policy has been published, the commodities on the market have been paid taxes, and the price will remain unchanged.

When the inventory of the dealer is finished, the price of the new imported goods will come down.

He estimated that the digestive period of cosmetics is about 3 months to half a year.

Luxury goods such as high-end bags, clocks and so on can be more than one year.