As China’s jewelry import tax drops by an average of 20.7 percent, opportunity knocks for foreign luxury brands looking to boost mainland China sales. According to a recent announcement by the Ministry of Finance of the People’s Republic of China, the Chinese government is set to reduce import tax on 18 categories of jewelry, effective from July 1 this year.
The announcement comes after jewelry products were re-categorized by the government, now listed under “general consumer goods” instead of “luxury”. According to Liang Weizhang, Head of Guangdong Diamond Trading Center, this change could signal that the government is attempting to boost purchasing power and increase Chinese demand.
This would be likely to have huge implications for foreign jewelry brands. Lower import tariffs could mean the cost of foreign jewelry brands in China drops significantly, forcing domestic brands to adjust their prices accordingly. According to Shi Jongyue, Secretary-General of the Gem & Jewelry Trade Associate of China, the lowering of import tax would promote structural innovation, and motivate high-end local brands to compete on the same level as global companies.
Mid-to-high end brands occupy a major share of the global jewelry market in China. According to the Global and China Jewelry Industry Report 2014-2018 by ReportLinker, the domestic high-end market is dominated by internationally renowned jewelry brands like Tiffany & Co, Cartier, Bvlgari, Van Cleef & Arpels. Domestic competitors include Hong Kong-owned brands Chow Tai Fook and Chow Sang Sang, as well as mainland brands Lao Fengxiang, Chow Tai Seng, CHJ and Ming Jewelry.
See below for the full list of import tax cuts: