State control and reduced tariffs dent China business

Print Article E-Mail Article

The Shanghai Institute of Current Economic Research has reported that the country's duty-free shops are suffering after the country's accession to the World Trade Organisation

Duty-free shops in China are struggling to maintain their competitive pricing after tariff reductions following the country's entry to the World Trade Organisation. The Shanghai Institute of Current Economic Research has predicted that tariffs will fall even lower, and argued that tight government control of duty-free retailing was also hampering sales.

"China's duty-free shops are short of product varieties and brands because the business is under strict state control," director Wang Liang told China View, "and their price advantages are lessening as import tariffs keep declining after China's entry to the World Trade Organization."

Stores in the region were heavily affected by the outbreak of SARS last year. Sales at the country's largest store in Shanghai fell by over half to around $3m in 2003 and are still slow, operator China Duty Free Group told the national news website.

"About 95 percent of our customers are Japanese and SARS and bird flu apparently curbed their presence," said a store official. "Sales for the first quarter of this year are still slow. We will use various promotions and try to contact more tourist groups in Japan and South Korea to attract more visitors."