P&G and Nestlé stand to gain from China’s lower import taxes

On Dec. 1, tariffs will drop from an average of 17.3 percent to 7.7 percent

China’s new plan to slash import taxes on a wide range of consumer goods promises to boost the prospects of multinationals in the Chinese market, with everything from Procter & Gamble.’s diapers to Diageo’s whiskey becoming more affordable to local consumers.

Tariffs for 187 product categories will drop from an average 17.3 percent to 7.7 percent after the cut takes effect on Dec. 1, the Ministry of Finance said in a statement Friday, citing the need to help consumers access quality and specialty products that aren’t widely produced locally.

The new policy follows President Xi Jinping’s call at the October Communist Party conclave to meet citizens’ demands for improved living standards and better quality products in the world’s largest consumer market. Foreign multinationals stand to benefit as middle-class shoppers seek out goods stamped with foreign brands, while the cuts also encourage consumers to spend at home rather than on

spend at home rather than on trips overseas.

“It’s aimed at three things: helping boost consumption in China, reforming the Chinese economy by continuing to open it up, and sending a signal to the world and particularly to the U.S. that it is committed to advancing global trade,” said Shane

Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney.

Tariffs for some types of baby formula were cut to zero, triggering losses in Chinese dairy stocks. Shares climbed, meanwhile, for European food and beverage companies.

The moves will help companies like Danone and Nestlé that compete with local brands in the large market for infant formula. Chinese parents worried about a series of foodsafety

scandals often favor foreign brands.

Among other foreign companies poised to benefit is Procter & Gamble, which gets 8 percent of its sales from Greater China. P&G, the owner of brands such as Crest, Gillette and Tide, may get a lift from cuts to items including diapers and personal-care products. For instance, the tariff on electric toothbrushes will fall from 30 percent to 10 percent.

“While P&G products are largely designed for

Chinese consumers and manufactured in China, this will allow Chinese consumers even more access to our latest global innovations where there is a strong local consumer demand and need,” P&G’s Rene Co said in an email.