Costume Cosmetics Tax Promotion Promoting Consumption

Can garments and cosmetics reduce tariffs and consumption taxes and consumers can enjoy lower domestic prices? Is the international big name really going to follow up the price reduction in a wide range? How long can such a good thing be achieved? Will domestic companies face more intense international brand competition? Will this messy industry really disappear? On April 28, the executive meeting of the State Council released the "promotion of consumption" signal. Who will benefit from it?

The tariff on imported clothing in China is not high, at 10%, but if it hits a consumption tax of 30%, the stubbornly high prices of imported goods may be shaken. The consumption tax is precisely what was mentioned by this new policy.

Previously, China experienced several rounds of tariff reductions. At present, the tariff on imported cosmetics is 50%, and the perfume is 10%. The effect of lowering the tariff of perfume on the final price of the product will not be too great. In addition, 17% of value-added tax and 30% of consumption tax are also large in the tax composition of imported cosmetics.

In this new import and export policy, it is mentioned that “Combined with the tax reform, we will improve the consumption tax policy for popular consumer goods such as clothing and cosmetics”. If the New Deal hits a consumption tax of up to 30%, it is really possible to break the high price fortress of imported goods.

At present, China's import commodity tax rate is generally around 45%, and some of them have the problem of overlapping taxation. Once the implementation of the tax reform solves this problem, the price of imported goods may actually be shaken. This will be of great benefit to enterprises. .

The adjustment of the import tariff rate will lead to cheaper commodity prices. If the policy is directed at expanding domestic demand and mitigating consumer outflows, will domestic companies face more fierce competition?

The New Deal is also very good for domestic fashion apparel, cosmetics and other industries. The adjustment of the consumption tax on clothing and cosmetics is not only related to imported goods, but the domestic manufacturing industry also reduces the tax burden.

Although domestic domestic fashion industry enterprises have higher gross profit, they actually have very low net profits. The link from the factory to the end of sales, and the cooperation from taxes and fees to retailers all have to pay a lot of costs. This has led to a 2-3 times higher factory price increase rate for products from domestic companies than the European and American brands. Take the Italian luxury brand Ferragamo as an example. From the ex-factory price to the terminal retail price, the total mark-up rate is about 6 times the ex-factory price, while the domestic brand's mark-up rate is as much as 12 times the ex-factory price. From the financial reports of listed companies in the apparel industry in China, it can be seen that the general profit rate is difficult to increase by 10%.

According to the State Council’s pro-consumption policy, in order to facilitate consumers to purchase foreign products in China, China will increase the number of import-export duty-free shops at the port and rationally expand tax-free varieties. For overseas tourists, it will promote its shopping customs clearance and tax refund facilitation to promote Consumption upgrades.

Adding duty-free shops and expanding duty-free varieties will ease consumer outflows, but the global trend of luxury goods will gradually withdraw the tax-free industry from the market.

For the tax-exempt industries in which China is growing rapidly, the global same price will make it no longer have room for survival, and it will accelerate its development into a sunset industry. The “China Tax Exemption Report” released by the Wealth Quality Institute at the end of last year showed that although tax-free shopping continued to grow, the growth rate began to slow down under the pressure from factory stores and high-end department stores. In 2013, the global sales tax-free industry increased by 8%, which was a year-on-year drop.

The huge spread between domestic and foreign commodities is an important reason for the Chinese people's outflow of consumption, and is also the business opportunity of the purchasing industry. Increasing duty-free shopping channels, lowering consumption taxes, and stimulating price cuts by international brands in China will squeeze the living space of the purchasing industry.

In particular, luxury goods e-commerce companies that mainly deal in new products, tariffs and excise tax adjustments are very favorable. For example, many products of the Fifth Avenue luxury goods network are brand-licensed products, and most of them are new products that are in sync with Europe. Once the brand has reduced the price of goods in China, the goods on the e-commerce platform will follow the price cut, and the unit price will still be lower than the domestic market. These are the advantages that can't be compared with the genuine and fake products.