Apple, luxury brands drop prices in China on VAT cut

BEIJING: 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 (US$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 per cent, 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 per cent 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 per cent 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. — Reuters