Luxury tariffs stir debate about pricing

Cutting tariffs on luxury goods would do little to help lower the prices of the goods, because brands set the pricing too high for the mainland market, Jiefang Daily reported over the weekend, citing Sun Yibiao, deputy director of the General Administration of Customs.

Tariffs only account for 3-4 percent of the sales prices of luxury items sold in the country, and "even if the tariffs (on luxuries) were cut to zero, luxury prices would remain at quite a high level," said Sun.

China's average tariff rate has fallen to 9.8 percent currently from more than 15 percent before its entry to the World Trade Organization in 2001, according to the Customs.

Sun made the remarks amid rising complaints that many Chinese luxury shoppers prefer buying goods overseas to buying them in the mainland, as prices in the mainland are much higher than they are abroad. Chinese shoppers spent a total of $7.2 billion overseas on luxury goods during the week-long Spring Festival holidays, an increase of 28.6 percent from the same period of last year, making Chinese people the world's biggest spenders on luxury goods, the World Luxury Association said in a report in February.

Sun rebuffed the belief that the nation's tariffs are the main factor behind Chinese going abroad to buy luxury goods, and attributed it to the brands' pricing in the mainland market, which he said is the highest worldwide.

Finance Minister Xie Xuren also said Wednesday during the ongoing conference of the national legislative and consultative bodies that tariffs have little to do with the high prices of luxury goods sold in the mainland. However, many are still not convinced.

A cut in tariffs would lower prices of luxury goods, Wang Jianlin, chairman of real estate developers Dalian Wanda Group and also an NPC deputy, said during the two sessions Wednesday. If luxury tariffs only represent a small percentage of the total pricing as claimed by officials, why are Chinese consumers required to pay an extra 20 percent in duty on goods brought from overseas, Wang inquired.

Market watchers expect tariffs on luxuries to be lowered, saying that this will help spur more Chinese people to buy luxury goods inside the country.

The percentage of Chinese people buying luxury goods in the mainland market rather than overseas is expected to rise to more than 50 percent by 2014, US-based consulting firm Frost & Sullivan said in a survey released last month.