Tax changes lower Mainland cosmetics prices
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China’s new import tax regime has enabled cosmetics giants AmorePacific and Estee Lauder to lower their prices in China by up to 30 per cent.
AmorePacific’s China division says it will reduce Mainland cosmetics prices for 327 lines under the brands of Etude House, Innisfree, Laneige and Sulwhasoo by 3 to 30 per cent from January 15.
US rival Estee Lauder has confirmed immediate price cuts for more than 300 lines in China, including its namesake label, Bobby Brown, Clinique, Jo Malone, and Mac by as much as 18 per cent.
This follows Beijing’s move last year to slash its hefty duties on imported cosmetics in an effort to boost domestic consumption, according to AmorePacific, which has its headquarters in Seoul.
“These global cosmetics names are now narrowing the price gap between China and overseas, and we believe more are probably about to follow suit,” says China Market Research Group director Ben Cavender, noting that with western brands becoming cheaper in the mainland, people may be discouraged from travelling to Hong Kong to make purchases.
Imported cosmetics previously faced tariffs of 84 per cent, reflecting both import and point-of-sales taxes. The tariffs have now gone down to 29 per cent for most beauty products.
Before the tariff reduction, many mainland consumers shopped via cross-border online marketplaces or while travelling abroad.
Questions & Answers
Q.What was the purpose of Beijing’s decision to reduce import duties on cosmetics?
What was the purpose of Beijing’s decision to reduce import duties on cosmetics?
Beijing reduced its duties on imported cosmetics last year. This move was made in an effort to boost domestic consumption within China, according to AmorePacific. The aim was to encourage more purchasing activity inside the country.
Q.Which specific brands under AmorePacific are having their prices lowered in China?
Which specific brands under AmorePacific are having their prices lowered in China?
AmorePacific’s China division is reducing prices for lines under several of its brands. These include Etude House, Innisfree, Laneige, and Sulwhasoo. The cuts affect 327 lines in total.
Q.What impact might these price reductions have on consumers travelling to Hong Kong for purchases?
What impact might these price reductions have on consumers travelling to Hong Kong for purchases?
Ben Cavender, director of the China Market Research Group, suggests that if Western brands become cheaper in the mainland, consumers may be discouraged from travelling to Hong Kong to make their purchases. This narrows the price gap.
Q.What were the previous tariffs on imported cosmetics before the recent reduction?
What were the previous tariffs on imported cosmetics before the recent reduction?
Before the recent tariff reduction, imported cosmetics faced duties of 84 per cent. This figure encompassed both import and point-of-sales taxes. These tariffs have now been significantly lowered to 29 per cent for most beauty products.
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