China import tax cuts no remedy for retail slowdown

China's economic policymakers clearly didn't consult mother-of-one Chen Xuejun when they decided to try stimulating consumer demand by slashing import tariffs on sneakers to skincare.

The 28-year-old speaks for many Chinese shoppers when she says the move last week won't make her shift her purchases back home from overseas, suggesting the economic upside may be less than Beijing has bargained for.

"Even with the tax cuts and discounts, it's still not as good value as buying abroad," said Chen, a worker at a state-owned enterprise in Shanghai. And anyway, she said, quality and design were just as important as price.

The tariff cuts, effective from June 1, are the latest in a string of measures to stimulate domestic consumption and bolster economic growth, which hit a 24-year low last year. Private consumption now accounts for over half of China's GDP growth, but lags far behind levels in markets like the United States.

A Reuters analysis suggests shoppers may be right to be sceptical. High Street prices of imported goods can be about 40 percent higher in China than overseas, and data shows the tariff cuts are unlikely to make much difference.

Indeed, even after an average 50 percent cut in import duty, retail prices for skincare products will actually fall by less than 2 percent and diapers just over 3 percent - pocket change for China's almost 1.4 billion consumers.

Such price falls will barely scratch the mark-up Chinese shoppers pay on certain products. A 30 ml bottle of L'Oreal SA skincare product Lancome Advanced Genefique costs 780 yuan ($125.79) in China, between 40 percent and 60 percent more expensive than in Hong Kong, France and the United States.

China's economic policymakers clearly didn't consult mother-of-one Chen Xuejun when they decided to try stimulating consumer demand by slashing import tariffs on sneakers to skincare.

The 28-year-old speaks for many Chinese shoppers when she says the move last week won't make her shift her purchases back home from overseas, suggesting the economic upside may be less than Beijing has bargained for.

"Even with the tax cuts and discounts, it's still not as good value as buying abroad," said Chen, a worker at a state-owned enterprise in Shanghai. And anyway, she said, quality and design were just as important as price.

The tariff cuts, effective from June 1, are the latest in a string of measures to stimulate domestic consumption and bolster economic growth, which hit a 24-year low last year. Private consumption now accounts for over half of China's GDP growth, but lags far behind levels in markets like the United States.

A Reuters analysis suggests shoppers may be right to be sceptical. High Street prices of imported goods can be about 40 percent higher in China than overseas, and data shows the tariff cuts are unlikely to make much difference.

Indeed, even after an average 50 percent cut in import duty, retail prices for skincare products will actually fall by less than 2 percent and diapers just over 3 percent - pocket change for China's almost 1.4 billion consumers.

Such price falls will barely scratch the mark-up Chinese shoppers pay on certain products. A 30 ml bottle of L'Oreal SA skincare product Lancome Advanced Genefique costs 780 yuan ($125.79) in China, between 40 percent and 60 percent more expensive than in Hong Kong, France and the United States.