BEIJING (Reuters) - Apple and luxury labels such as Gucci have lowered their prices in China after a cut in its value-added tax (VAT) rate came into effect from April 1.
Beijing said last month that it would cut taxes and fees for all companies by nearly 2 trillion yuan in 2019, with the manufacturing, transportation and construction sectors set to benefit as it looks to stimulate a slowing economy.
Price tags for products listed on Apple’s China website were lowered on Monday, including a discount of up to 500 yuan ($74.44) for some of its latest iPhone models.
Apple declined to comment on its prices.
But French luxury goods group Kering said on Tuesday that its Italian Gucci brand had cut prices by 3 percent, while a spokeswoman for LVMH’s Louis Vuitton confirmed its China business had adjusted prices on Friday.
Louis Vuitton was “fully supportive of the Chinese government’s ongoing efforts to narrow the price gap between China and overseas,” she said.
Birkin-bag maker Hermes also said it had passed on the VAT cuts to customers in China, with price drops of 3 percent from the beginning of April.
Luxury brands have in recent years gradually narrowed the price gap between Europe and China - where their wares could often be 50 percent more expensive - including following a cut in import taxes brought in by the Chinese government last year.
The latest price moves follow carmakers BMW and Daimler’s Mercedes-Benz which both said last month that prices for several car models would drop following the Chinese tax changes.
Several Chinese electronics retailers lowered prices for iPhones in January, discounting latest models by up to $118, after weaker-than-expected sales at end-2018.
The world’s second-largest economy is growing at its weakest pace in almost three decades amid lower domestic demand and a trade war with the United States.
High-end fashion and handbag brands are increasingly looking to woo Chinese clients on their home turf, even though most of the spending by these consumers still takes place in the shopping capitals like Paris, Milan or Hong Kong.
“Long term, luxury consumption will happen incrementally at home,” analysts at HSBC said in a note on Tuesday. “A few years ago, 75 percent of Chinese luxury sales happened outside of China. We see that moving to 50-50 either this year or next.”
Reporting by Cate Cadell; Additional reporting by Sarah White in Paris, Editing by Himani Sarkar and Muralikumar Anantharaman
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