July 1, 2018 will see the reduction of import duties of 1,449 products by an average 55.9%.
China’s reduction of import duties on daily consumer goods will affect 1,449 taxable products; over 70% of all daily consumer goods in China. Over the past four years, China has reduced import duties on consumer products five times.
The average rate of this reduction is from 15.7% to 6.9%. That’s seven times the total number of tax reductions of the previous four rounds of reduction.
China has seen a steady rise in both disposable income and foreign travel, meaning that Chinese tourists significantly contribute to overseas consumption. Now, China wants to attract and improve its domestic consumption. And it’ll do so by creating a more competitive and quality-driven market.
Mr Zhu Guangyao, China’s Deputy Minister of Finance, promoted the benefits and explained the impact of July’s tax reductions at a recent press conference.
The reductions, he says, “will better reflect the people-centred development concept, help create a fair market environment, and deepen the structural reforms on the supply side of consumer goods. Helping to further expand openness is a major initiative and practical action for us to actively open up the market.”
Competition will grow
China is officially open for business. And it’s seeking high quality foreign products. This upcoming tax reduction is among a series of initiatives simplifying export to China. ACOLINK have already examined the ways these policy reforms facilitate foreign interest in China’s domestic market, including the merge of the CIQ and GACC. So in light of July’s tax reduction, we’ve now made it possible for companies to easily check the rate of reduction on specific products on our website.
Because while exporting to China is becoming easier, we can see that the market is simultaneously becoming more selective and competitive. As China encourages foreign imports, Chinese consumers refine their demand for quality and value in foreign and domestic goods.
Mr Zhu explained that welcoming foreign goods will also act as “a forceful mechanism that motivates [Chinese] entrepreneurs and urges them to have greater motivation to innovate and reform, improve the competitiveness of their products, serve Chinese consumers, and contribute to the world.”
Foreign businesses who want to explore and develop in the Chinese market need to do so now. As we identify it, it’s the ideal time for high-quality foreign products to establish a presence in the market. Especially as China’s consumption upgrade is spreading from localised sectors, like baby&mum, to daily consumption products.
As more time goes on, competition will grow. Not only from foreign competitors but also from domestic Chinese ones too. So taking this time to cultivate brand recognition is vital for companies with long-term goals of flourishing in China’s market.