Further decrease in China Import Tariffs
According to Statista, the value of imports to China has considerably increased over the last 10 years. In May 2017, it reached USD 150 billion confirming China as the third world’s biggest importer. Considering data, maybe the time to steadily export to China has finally come.
CHINA CUTS IMPORT TARIFFS: DOORS ARE OPEN TO DIFFERENT INDUSTRIES
Check the label of anything you’re holding right now, what does it say? In the majority of cases, the label reports the Made in China caption. In the past decade, we have been used to import a huge variety of goods from China and rarely to export our production to China, as import tariffs were too high. But things started shifting a while ago, when the P.R.C. rethought its strategy on the basis of the country’s new level of economic and social development. In other words, Beijing is cutting import duties: it now focuses on boosting internal consumption and increasing products’ quality levels.
Perhaps the enormous Chinese consumer market is becoming more and more accessible to SMEs.
WHAT’S CHINA STRATEGY ON IMPORT TARIFFS?
Beijing recently cut import tariff on 200 products attempting to increase internal purchases. From December 1st, 2017, companies can take advantage of the new import tariff, which on average has been cut by 7.5%. The first drop in import tariffs took place in 2015 for four rounds, when 187 product categories were benefited.
Now, supported goods ranges from cosmetics to baby care products and household tools. The table below shows the new import tariff in the main categories, for more details we suggest to have a look at the import duty calculator and to contact a tax expert.
HOW MUCH IS THE NEW IMPORT TARIFF FOR YOUR PRODUCT?
Import duties vary according to each product HTS code, and so does the import tariff cut. Therefore, to have a clear idea of how much you will pay to export your product to China, the best idea would be to refer to the import duty calculator.
The import duty calculator is an easy tool that provides you with a comprehensive idea of the Chinese import duties amount. It can be of great help when starting considering export to China, as it solve doubts for free computing shipping costs and duties. Obviously, to get the full picture of taxation levied on your specific product category, the support of a tax expert becomes fundamental.
3 MAIN BENEFITS OF THE IMPORT TARIFF CUT
1. SMEs can Explore the Chinese market
SMEs operating in the above mentioned sectors, and not only, could explore the Chinese market through easier exports, without the need of establishing a direct presence right away. For example, by exploiting e-commerce channels, a brand can test its consumer profile and create its catchment area. Even if it is advisable to penetrate the market with a direct local branch to enhance control and extend the distribution network, the export phase with favorable import tariffs can represent an appropriate test strategy.
2. Illegal Practices are Discouraged
The Chinese government purpose behind this decision is also to discourage Chinese tourist to purchase abroad. Indeed, many Chinese people, during their time abroad or when on holiday, buy products to resell them in China and profit. This well established illegal practice, called代购 (dai gou), ruins the market competition as re-sellers don’t pay any tax. Fostering imports at low tax rates allows decreasing final prices and hopefully discouraging illegal practices.
3. Final Prices will Drop
A positive consequence of lowering import tariffs is a decrease in final prices. And this is definitely the main P.R.C. objective for the next years: internal consumption should then boom. Nevertheless, this trend also shows a general skepticism towards some specific products’ categories that, if Made in China, are not perceived as safe.
In order to understand China’s complex taxation system, especially when deciding to export, the opinion and support of experienced tax advisors is vital. Our advisory could not only let you save money, but also open new unexplored opportunities.