China slashes duties on watches
China is taking steps to cut import taxes on consumer and luxury goods.
Swiss watchmakers are awaiting a two-stage reduction of import duties on watches with considerable anticipation.
China – absorbing sales of 19.3 billion Swiss francs (US$21.1 billion) in 2011 – is now the third largest international market for Swiss watchmakers.
Francois Thiebaud, CEO of Swatch Group’s Tissot brand, unsurprisingly described the duty cut as “good news.” Thiebaud says brands such as Swatch Group’s Omega will be helped by a reduction of import taxes in the range of 10 to 25 per cent. Thiebaud is also president of the Swiss exhibitors at this year’s Baselworld watch and jewellery show.
China Daily quoted, Wei Jianguo, a member of the National Committee of the Chinese People’s Political Consultative Conference, and former deputy commerce minister saying import taxes on luxury and consumer goods will settle at a lower rate as a result of at least two rounds of reduction.
Chinese authorities want more money on luxury merchandise to be spent in the domestic market rather than abroad during travels.
The World Luxury Association’s Beijing office confirms the trend toward spending money on luxury items abroad: During the Chinese New Year holiday this year Chinese tourists spent 29 per cent more than last year luxury items purchased abroad – some US$7.2 billion overall.
CEO of privately-held watchmaker Raymond Weil said the tax cut was in the mutual interest of both luxury merchandise exporters and Chinese authorities as it will stimulate more spending on the domestic market.
Swiss watchmakers have benefited from similar steps taken in South America where Colombia, Argentina and Chile are cutting import taxes. The zero-tax policy in Colombia has boosted imports of Swiss watches by 30 per cent on an annual basis (2011 vs 2010).