HONG KONG retailers are bracing for a more than 50 percent reduction in import taxes in the mainland, which are set to hit their bottom line.
From 1 June, import tariffs on a slew of consumer goods, including sports shoes, face cream and nappies, are going to be slashed in an attempt to stimulate domestic consumption, the Ministry of Finance (財政部) said.
Import tariffs for Western-style clothing will be cut by between 7 and 10 percent, from 14 to 23 percent.
On ankle-high boots and sports shoes, tariffs will be cut by 0.5 to 12 percent, while those on nappies and skin-care products will fall to 2 percent from 7.5 percent and 5 percent respectively, the ministry said.
That means, after retail prices are adjusted, Western-style clothing will be 6-10 percent cheaper than now. Ankle-high boots and sports shoes will be 10 percent cheaper, while skin-care items will be 3 percent cheaper and nappies 5 percent less.
Caroline Mak Sui-king (麥瑞.), chairwoman of the Hong Kong Retail Management Association (零售管理協會), said mainland prices will now be closer to those in Hong Kong. This may lead to fewer tourists coming here to buy daily goods, Mak said.
But she believes the SAR will still remain attractive to mainlanders as it offers a wider variety of products.
“Those who have always come to Hong Kong for these goods will continue to do so. After all, they have more confidence in the product quality here,” economist Andy Kwan Cheuk-chiu (關焯照) said.
“The impact [of lower tariffs] won’t be very large as the tax cut as a whole is not deep. But local shoe retailers might feel some pressure as the price gap will further narrow by 10 percent,” Kwan said.
(The Standard, Ling Wang, 26 May 2015)