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Cosmetic giants lower prices

By Sun Yuanqing | chinadaily.com.cn | Updated: 2015-06-29 09:50

Cosmetic giants lower prices

Clinique's three step facial comestics. Photo provided to chinadaily.com.cn

US cosmetic giant Estee Lauder Companies will reduce the price of some of its most popular products in China from July 1, after the Chinese government lowered import tariffs to stimulate domestic consumption.

"By reducing prices, we hope that more consumers in China will now experience the quality and efficacy of our most iconic products together with our expert advice and high level of personal service," the company says in a statement.

The price reduction will cover all skincare and make-up brands owned by the company, including Estee Lauder, Clinique, La Mer, Origins, MAC, Bobbi Brown and Lab Series. The reduction in price ranges from 11 percent on a best-selling La Mer facial cream to 23 percent on an Origins essence.

China’s Ministry of Finance announced that it will reduce import tariff by an average of 50 percent, on products such as apparel, shoes, cosmetics and diapers, effective June 1. The tariff on cosmetics will fall from 5 percent to 2 percent.

In May, French cosmetic company the L’Oreal Group announced that it will reduce the price of most of its imported products.

"Although the impact of tariff reduction on the retail price is very limited, we think the government's move is positive to the market. And our decision will further encourage consumption in China," the company said in a statement.

The move is considered to be a countermeasure to the slowdown in the Chinese market, analysts say.

China's luxury market declined slightly for the first time last year, as a result of economic slowdown, the government's crackdown on gifting and increasing overseas purchase.

At the same time, the wide price gap of imported goods in China and Europe and the United States are driving a grey market of scalpers.

"The price reduction will strengthen the connection between the brands and the customers. It will help the brand to maintain their long-term value and might trigger more brands to follow suit," He Mu, founder and chairman of Shanghai-based consulting firm Wisdom Aid, tells China Daily.

The move echoes Chanel's decision in March to cut the prices of three signature handbags in China while raising them in Europe. It has since been joined by other luxury brands including Dior, Prada, Cartier, Patek Philippe and Gucci, with price reduction up from 5 percent.

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