Move Comes At Time When Government Looking To Boost Domestic Spending
China’s high luxury import tax, which has over the years sent many potential luxury goods buyers across the border to nearby Hong Kong, or to foreign countries, may soon be lowered, in a move aimed at boosting domestic consumption. According to this China Daily brief, Jiang Zengwei, vice Minister of Commerce, said in an article published in People’s Daily that the move is also aimed at increasing overall sales revenue of luxury goods in the Chinese market.
Bloomberg’s Wing-Gar Cheng notes that Jiang’s plan extends to commodity goods as well, as “China’s government also wants to encourage spending on big- ticket items including vehicles and home appliances, and will be expanding trade-in subsidies to encourage consumers to replace old products with new ones.” Cheng goes on to quote Jiang’s thoughts on the potential broader payoff of a reduction in import tariffs:
“Such wealthy consumers exist and instead of them spending their money overseas, why not keep them in the country,” Jiang said in a commentary published in the People’s Daily today. “Lowering the duties will boost the imports of luxury products and that will spur domestic retail sales.”
Demand for luxury goods in China, the world’s most populous nation, remains unabated amid the global economic crisis, according to a survey published last month by communications consultants Ruder Finn Asia. Louis Vuitton and Cartier are the top choices of Chinese consumers for purchases, and residents in smaller cities will be the key to sustaining growth in demand, the survey said.