China

Chinese Government Reportedly to Reduce Taxes for Domestic Cosmetics Makers

This article was originally published on July 2, 2014 at 10:52 pm EST

Summary:

  • The Department of Treasury reportedly plans to reduce taxes for domestic cosmetics makers, as reported by Securities Times.
  • The policy is expected to be implemented in the second half of this year.

Why It Matters:

  • The Chinese government’s move is in order to support domestic cosmetics makers compete with foreign players. According to a local article, China is the third largest consumer of cosmetics after the US and Japan and expects to become the largest consumer by 2020. However, in China domestic companies have only a 30% market share and most of them compete with each other at the lower end of the market. On the other hand, foreign companies have a 70% market share and dominate the entire high-end market.
  • Famous domestic cosmetics makers which expect to benefit from the policy include Lonkey Industrial Co. (CH: 000523), Liuzhou Liangmianzhen Co. (CH: 600249) and Shanghai Jahwa United (CH: 600315).