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China moves against Daigou with extensive tariff cuts

China unveiled a surprise round of tariff cuts for food, clothing, cosmetics and consumer goods on Friday, in a move to achieve a wider range of locally available products.

The average import tariff for the affected items would be more than The tariff reduction is the second reform made by Beijing since its leadership conclave of two decades per decade and follows the criticism of US President Donald Trump for allegedly unfair. business practices

The measure could also interrupt imports of the gray channel, from so-called "daigou" or personal buyers who live abroad in countries like Australia.

"It's not a friendly move for the daigou in Australia," said Yu Simin of Chinese e-commerce consultancy CECRC.

"The lower tariffs mean that Chinese consumers can buy Australian products at a lower price and more comfortably at home, which means that the daigou will lose its price advantage." [19] 659002] While this is considered positive for Australian exports in the long term, it could cause some disruption in the short term if the daigou moves away from some products before they become available in China.

The measure could also decrease the advantage enjoyed by Australian exporters under the Free Trade Agreement that came into force in December 2015.

Tariffs on fresh abalone will be reduced by half to 7% all the countries. Under the FTA with Australia, they will be eliminated by 2019.

The macadamia rate will be reduced by half to 12%, compared to a full abolition by 2019 under the Australia FTA.

The tariff applied to a specific type of infant formula will be reduced from 20 percent to zero, although this is not expected to provide any benefit to the Australian companies Bellamy & # 39; s Organic or A2 Milk Company.

Packaged baby foods will reduce tariffs from 15 percent to 2 percent.

The Australian manufacturer of vitamins Blackmores welcomed the announcement and said it would further open the Chinese market.

"We understand that the tariff reductions are in addition to the continued benefits of the China-Australia Free Trade Agreement and will support Blackmores' ability to meet the demand of our growing number of consumers in China."

The measure is also designed to help Beijing raise more taxes, as more products are sold in traditional stores instead of coming via daigou or the cross-border e-commerce channel.

This later channel is favored by many Australian exporters since the registration requirements are lower than to sell products online or in traditional stores in China.

"It means that there will now be a smaller gap in how much the Chinese government collects in tax dollars from cross-border e-commerce trade and traditional channels," said Ben McHarg, CEO of Evolution Health, one of the world's largest companies. Australia's rapid growth that sells health supplements to China.

McHarg said that lower tariffs were unlikely to affect cross-border e-commerce trade, especially for companies like yours.

"It is not tariffs that have stopped anyone using the most traditional channels, it is the regulatory framework," he said.

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