Paul French

China’s government is trying to change its economy from export and investment oriented into a consumer nirvana. Unfortunately, writes retail analyst Paul French in Channel4, corruption and inflation hinder that policy greatly. What will the upcoming CCP-congress bring?

Paul French:

Two possible policy changes could emerge from this congress that will be crucial to consumption. Firstly, there’s the likelihood of a serious, all-encompassing anti-corruption law similar to America’s foreign corrupt practises act.

A key thing will be whether vouchers are included — vouchers for a certain sum of money but with a deadline to spend them — are now the most popular form of “gift” in business and politics. Some Beijing department stores claim (off the record) that over 50 per cent of their high-end sales are through vouchers. No wonder the luxury brands are moaning — no more vouchers, then perhaps (to be honest dirty money, like water, always seems to find a way to spread itself) fewer sales of Rolexes, Mont Blanc pens and luxury handbags.

Secondly, we may see the long-awaited repeal of China’s onerous luxury taxes (that vary, but can double the price of a luxury product in the PRC compared to duty-free Hong Kong or tax-rebate EU). A large amount of money is now flowing out the country due to Chinese tourists “arbitraging” their purchasing and spending abroad.

Word has it that the Ministry of Commerce would love to repeal the taxes and boost high-end spending back home, while Ministry of Finance is naturally loathe to lose any tax revenue and wants them kept in place.

In the old days, when the infamous nouveau riche 1 per cent were the luxury market’s customers, the tax arguably made sense. But now LV, Gucci and Prada are the items craved by ordinary urbanites, and they’re spending overseas to get comparative bargains.

More in Channel4.

Paul French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

On Thursday November 8 the China Weekly Hangout (10pm Beijing Time, 3pm CET, 10am EST) will focus on the future of nuclear power in China, what are the risks after Fukushima, and might a succesful NIMBY protest be possible? Here you can register at our events page. Or see the announcement here.

On November 1 the China Weekly Hangout also discussed what to expect from the upcoming meeting of the Communist Partij in Beijing:

Enhanced by Zemanta
Please follow and like us: