Eighteen months ago, China reformed its export tax rebate system, which is introduced in 1985 and have made Chinese products more competitive on the international market since then. Now it seems the time has come for another adjustment.
China will again reduce tax rebates on exports of high energy-consuming, resource-intensive and environmentally-harmful products. New policy is scheduled to take effect around September or October, but under the pressure of international trade surplus and the hot discussion of undervalued RMB (Chinese Currency) in the first half year in 2007, it might be effective on July 1 as earliest without any grace period.Most products in the piping and heating business will be affected by the new tax rebate system. The plastic or metal pipe, relevant fittings and radiators are fall into the categories of the chemical and metal products, both are considered as resource intensive products.
The tax rebate will be decreased from 11%-13% to 5%, some products’ rebate might be cancelled and will add extra export tax, such as steel and iron. The detailed information is not yet released by the government.
Further cutting the export rebate in China will definitely narrow the price gap between Made-in-China products and others. But in the piping and heating business, 6%-8% price increase will still far beyond the European products price level. The Chinese manufactories already understand the signal that the government encourages the export based on brand, quality, and service. The tax rebate reform is only beginning. For the long-term success in the international market, they will have to shift the core competitiveness from offering low price to supplying well-designed quality products.
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