China's tariff cuts for imported goods will have little effect: experts

Lower import tariffs that came into effect yesterday for foreign-made skincare products, shoes, garments and diapers will be ineffective in boosting local spending, industry experts say.

To boost domestic consumption, the finance ministry has cut import duties on skincare products from 5 per cent to 2 per cent; on diapers from 7.5 per cent to 2 per cent; and on shoes and garments from a range of 14-24 per cent to 7-12 per cent.

Domestic retailers and experts said the lower rates would lead to lower prices for some products, but the differences would be limited.

In the past week, major foreign skincare and cosmetics groups including L'Oréal of France, Estée Lauder of the United States, Shiseido of Japan and Amorepacific of South Korea, have all said they plan to cut prices on the mainland.

"We are very supportive of the Chinese government's measures to lower import duties. We have decided to adjust our retail prices [on the mainland] in response to the government's measures," said Estée Lauder.

But some industry experts doubted the new policy would do much to spur local spending.

Import duty accounted for only a small percentage of retail prices of imported goods on the mainland, said Ge Wenyao, chairman of the Shanghai International Fashion Federation. Value-added tax (VAT) and consumption taxes accounted for a much greater share of retail prices, he said.