Foreign cosmetics and milk powder tariff cut prices

From January 1, a new round of tariff reductions was implemented for more than 730 items, including infant milk powder and skin care products. However, the reporter’s investigation found that foreign milk powder and skin care products did not “make profits to the people” because of tariff cuts. Instead, they staged price increases in turns at the end of the year and turned tariffs into their new profit growth points.

What does the foundation of the foreign brand “Want to go up and go up” come from? Experts point out that this is due to their mastery of market discourse power and pricing power. In order to end the situation of “hard prices” for foreign brands, domestic products need to be strengthened.

High-end skin care products against the market price increases

The Ministry of Finance had previously announced that it will make partial adjustments to China's import and export tariffs from January 1, 2012 onwards, and impose a lower temporary import tax rate on more than 730 commodities, including infant milk powder, skin care products, etc., with an average tax rate. This is 4.4%, which is 50% lower than the MFN tax rate.

However, the reporter visited the field and discovered that the price of imported milk powder that had just been raised “in advance” in December last year has not changed since the tariff was lowered. The high-end skin care brands that will increase their prices almost every year will not be subject to tariffs in order to maintain their "body size." They have successively raised prices, and several well-known skin care brands including SK-II have successively increased their prices, and the price increases have exceeded the maximum. 10%.

The reporter learned from the SK-II counter on the Huaihai Road in Shanghai that after the New Year's Day in 2012, the price of almost all skin care products of the brand had a different range of price increase. For example, the skin cleansing oil 250ml rose from 420 yuan to 460 yuan. The brand's star product skin care essence 330ml loaded bottle price is increased from 1550 yuan to 1710 yuan, the price increase rate of more than 10%.

Compared with skin-care products that have gone up against the market, foreign milk powder appears to be calm. Reporters found that the market price of milk powder in supermarkets in Shanghai was not changed due to the reduction of tariffs. This was actually due to the fact that in December last year, “foreign milk powder” had already made a round of price adjustment in advance.

In December of last year, Wyeth announced that the high-end product "Qifu" series had adjusted its protein and other nutrient contents due to formula optimization and in order to meet the requirements of the new national standard. It has gradually increased the price by about 10% throughout the country and led the foreign milk powder. "Collective price increases" are about 10%. Among them, 900g of Synbiotics Gold Infant Formula milk powder rose from 277 yuan to 290 yuan, 800g of milk powder 800g increased from 298 yuan to 328 yuan, and Nestlé Super Energizing (formula) milk powder 900g rose from 286 yuan to 298 yuan. yuan.

Turning Tariffs into profit growth points

Tariffs have been lowered, but prices have risen instead of rising. Originally it was to benefit the people, and it turned out to be “benefiting business”. The expert analysis pointed out that in the foreign milk powder and high-end skin care products market, the brand “wants to go up and get up” because of its grasp of market discourse and pricing power, and Chinese consumers “only buy expensive, not buy right”. Mentality. Under such a market environment, merchants will not lower prices due to favorable tariffs, etc. Instead, they will adopt a “one-year-and-a-day increase” marketing strategy to ensure the “body size” of the brand and use the reduced tariff as their “profit growth point”. .

Wang Weiqing, head of the Taxation Teaching and Research Group of the School of Overseas Education at Shanghai Jiaotong University, said that imported goods, especially luxury goods, have their own marketing strategies and pricing systems for their multinational groups, in North America, Europe, Asia, Japan and China. , which models to sell, how to price, have their own comprehensive strategy system. Foreign milk powder, cosmetics, etc. all have their own market positioning and marketing strategies in China and will continue to maintain their image of high-end market positioning.

“Since the foreign milk powder and skincare products have high market consumption, what else is there for manufacturers to transfer this part of their 'goodwill' to consumers? At present, it seems that this tariff cut will eventually become another of the manufacturers and their distributors. Profit growth points." Wang Weiqing said.

Experts also believe that the rising prices of well-known foreign brand products reflect not only the cost of circulation but also the value of goods, including actual value and psychological value. “Brands dare to take the lead in the price increase, to a large extent because many consumers have a kind of consumer attitude that foreign capital can only rely on foreign moon circles,” said Gu Jun, a professor at Shanghai University.

“Since the foreign milk powder and skincare products have high market consumption, what else is there for manufacturers to transfer this part of their 'goodwill' to consumers? At present, it seems that this tariff cut will eventually become another of the manufacturers and their distributors. Profit growth."