China duty cuts details released

China’s mainland government will halve duties on imported clothing, accessories, skincare products and nappies from Monday June 1.

The China duty cuts were first flagged early this month as Beijing’s lawmakers sought a way to revive flagging retail sales growth and encourage locals to spend more at home rather abroad.

The cuts are aimed at incentivising travellers to purchase luxury goods from local retailers rather than abroad, and discourage cross-border trading, especially through Hong Kong.

The duty cuts average 50 per cent and will go a long way towards addressing an imbalance where mainlanders can pay as much as 40 per cent premium on foreign made goods due to import duties and other taxes.

While the biggest impact of the duty cuts will be on luxury goods, Hong Kong’s border traders and cosmetics and personal care chains will take a significant hit. The mainland government has already clamped down on cross-border runs, limiting mainlanders to one trip a week to Hong Kong. That has reduced sales of nappies, cosmetics and infant milk formula in Hong Kong, for resale in Shenzhen and beyond.

Hong Kong General Chamber of Pharmacy committee member Cheung Tak-wing told the South China Morning Post that local pharmacies had seen sales drop by one-fifth in April year-on-year. Drugstores in the northern district were hardest hit by the loss of bulk buyers from across the border.