Imported beauty products, such as eye creams and moisturizing gels from L’Oreal SA’s Lancome and South Korea’s Amorepacific Corp that are sold online, could become cheaper for Chinese consumers as the government continues to tweak its e-commerce tax policy.
A year after introducing special treatment for a port district in the eastern city of Hangzhou, where goods are traded at lower tax rates to promote “cross border e-commerce,” the Chinese State Council broadened the trial to 12 more cities, as it pushes to expand its online retail industry.
The Chinese government is expected to adjust the taxes again next month, the Economic Information Daily reported this month.
While details of the changes have not been released, the effect is likely to be mixed, with lower-end products, such as foods, seeing an increase in prices, while higher-end items, such as cosmetics and electronics, could become cheaper, the report said.
Discounted value-added and consumption taxes are expected to be expanded nationwide and replace a special tax for bonded imports, the report said.
“Cosmetics will be the biggest beneficiary after the tax adjustment,” said Catherine Tsang (曾惠賢), a Hong Kong-based tax partner at PricewaterhouseCoopers LLP.
As beauty and personal care is one of the most popular categories among imports bought by China’s Internet shoppers, any price cuts would further boost the market, Tsang said in an interview.
Riding on a wave of popularity from South Korea’s TV dramas and music, Amorepacific’s Etude House and other brands from the nation are in demand among Chinese customers.
For South Korean products, cross border e-commerce has become a more direct and cheaper way to expand in China compared with setting up store networks, Tsang said.
Online sales of imported goods have grown at a compounded rate of 63 percent in the five years to last year, reaching 638 billion yuan (US$98 billion) and accounting for 17 percent of China’s total online retail sales, data from Mintel Group Ltd showed.
The most popular categories of products being purchased online in China are consumer electronics, clothing and shoes, appliances, food and beverages, and beauty products, research firm Euromonitor International said.
While food and baby items, such as diapers, might cost more after next month’s adjustments because of their current lower tax rates, those imports might remain attractive as China’s growing middle-class are becoming more concerned about health and are willing to pay more for quality, daily necessities, Tsang said.
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