China import tax cut could boost luxury watches sales

Omega boutique, Shanghai, China

Moves by China to potentially reduce import taxes on consumer and luxury goods have been welcomed by members of the Swiss watch making industry, who say it could further boost sales in what is their third biggest market.

China has been the main driver behind the increase in Swiss watch exports, which reached a record 19.3 billion Swiss francs in 2011. Chinese English-language newspaper China Daily has cited Wei Jianguo, a former deputy commerce minister and member of the National Committee of the Chinese People’s Political Consultative Conference, as saying that there will be at least two rounds of reductions on import taxes on consumer and luxury goods.

“This is good news,” Francois Thiebaud, chief executive of Swatch Group’s Tissot brand and president of the Swiss exhibitors at this year’s Baselworld watch and jewellery show. He said a reduction in import duties, which range from 10% to 25%, would particularly help prestige brands like Swatch Group AG’s   Omega.

According to the Beijing-based World Luxury Association, Chinese tourists spent $7.2 billion on luxury merchandise outside the country during the 2012 Chinese New Year holiday, up 29% from a year ago.

Olivier Bernheim, chief executive of privately-held watchmaker Raymond Weil, said the Chinese government had realized that if they lift some of the customs barriers, more of this money would be spent in China.

South American countries such as Argentina and Chile could follow neighbouring Colombia in striking a free trade deal with Switzerland, cutting import tax on Swiss watches. In Colombia, the zero tax is applied to import of Swiss watches has translated into a 30% increase in official imports from Switerland in 2011 compared to 2010.

from Dow Jones and CPP