SHANGHAI — China’s Ministry of Finance’s decision to slash import tariffs on some “daily use” consumer items won’t be a huge boost to consumption on the Mainland, according to experts.

It will be a blow to Hong Kong, however, which will be another in a series of setbacks to the special administrative region’s relationship with its long-term beau — big spending Chinese consumers.

“They have been talking about potentially lowering tariffs for a few years,” said James Button, consumer and retail director at SmithStreet Solutions. “It’s a reaction to what the market is doing, so I think it’s a positive step by the government to react to what consumers are actually doing.”

The measures include cuts to tariffs on imported apparel, with suits and overcoats coming down to seven to 10 percent, from 14 to 23 percent; shoes and boots will see tariffs effectively halved from 22 to 24 percent to 12 percent, and skin-care products will see their import tariffs lowered from five percent to two percent.

“In Hong Kong the impact will be huge. Forty percent of Hong Kong’s retail market comes from Mainland tourism coming to shop in Hong Kong,” said Mariana Kou, senior investment analyst at CLSA.

“In terms of beneficiaries, global brands such as L’Oréal, cosmetics brands — specifically skin-care brands because this change is for skin care — those guys will benefit the most because this will lower the price gap between the foreign brands and the local brands, which might tip more Chinese consumers into buying foreign brands.”

L’Oréal on Tuesday cautiously welcomed the cuts, saying the beauty giant would take the opportunity to show its commitment to Chinese consumers by lowering ticket prices on the firm’s imported products.

“As a beauty industry leader, and despite the fact that the decreasing custom duties have very limited impact on retail price, we have decided to actively respond to this decision by lowering the prices of most of our imported products, as we believe it will encourage domestic consumption,” the company said.

Other brands, including South Korean cosmetics giant AmorePacific, and Adidas, told WWD on Tuesday that they were taking a wait-and-see approach to the introduction of tariff cuts.

Unlike Hong Kong, it’s unlikely lowering tariffs will impact spending by Mainland Chinese tourists in markets such as South Korea and Japan, where consumers are traveling to experience different cultures as much as they are to shop, or Europe, where significant price discrepancies still exist, particularly for luxury items, which are subject to steep value-added taxes when purchased in China.

“Korea and Japan won’t see that huge of an impact, the Mainland consumers going to these markets aren’t just shopping, they are looking for food, sightseeing, the whole different cultural experience, so I think the sharp growth we have seen [of Mainland consumption] in these two markets in recent quarters will continue,” Kou said.

According to China Market Research Group’s Benjamin Cavender, there may be some winners in the apparel sector, but they are most likely to be those priced at the mass end of the market.

“Fast-fashion brands that consumers are more likely to impulse purchase will probably benefit, so brands like Zara or H&M should see this as a positive,” he said. “Luxury brands may benefit somewhat, but we are still likely to see most of those purchases stay overseas because they will be less conspicuous and because consumers are shaping more of their spending around experiences and are buying items around experiential trips they are taking rather than traveling simply to shop.”

Another potential beneficiary, according to Button, may well be China’s already rapidly growing e-commerce platforms, with their direct distribution channels making it easier for them to pass tariff savings onto their customers.

“The other winner could very well be e-commerce, so the local e-commerce platforms Yihaodian, or Jingdong, which can basically deliver the goods more directly to consumers and can go around the more complex distribution you have for each product. They can pass on a much larger share of that saving to consumers and they can do it more quickly,” he said.

U.S. trade associations also believe some of its members will see a benefit. “In principle, we support tariff reduction and tariff elimination. The action by China is something we applaud,” said Julia Hughes, president of the U.S. Fashion Industry Association. “The impact on our member companies who are selling to the Chinese consumer is a longer term question. But when tariffs are removed, that tends to put downward pressure on prices and I would expect that will allow companies to lower the cost on goods selling in China, which should be a good thing for consumers and for sales.

“I think at the designer level [for example, Italian handbags] there will be an impact for sure,” she said.

Hughes added that countries like India or Turkey or any others that “specialize in certain products” that are sold in the high-end market in China, will benefit.

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