The Wall Street Journal reported on Tuesday that French cosmetics giant L'Oreal plans to cut prices of products exported to China in order to increase sales.

The company made the announcement shortly after China stated its plan to reduce import tariffs on certain products early next month. L'Oreal also hopes to combat the strong gray market for its products in China.

The Ministry of Finance announced on Monday that China will reduce import taxes on clothing, fur, shoes and other products by an average of 50%. Taxes on imported cosmetics will be reduced from 5% to 2%, and taxes on disposable diapers will be reduced from 7.5% to 2%.

The Yuan has recently significantly appreciated against the Euro and other foreign currencies, which makes shopping abroad more attractive for Chinese. The number of Chinese tourists traveling abroad to shop increased by 28% in 2014. Last year, Chinese tourists spent $165 billion shopping internationally.

Not all shopping abroad is for personal consumption. Many Chinese tourists purchase designer handbags, cosmetics and other luxury items abroad at discounted prices and sell them through the lucrative Chinese gray market back home.

Bain & Company reported that 115 billion Yuan (about 18.5 billion U.S. Dollars) worth of goods were purchased abroad by Chinese tourists and resold back in China last year.

Source: inews.qq.com

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Keywords: China gray market China import taxes L'Oreal China