China will see tariff on watches imported from Switzerland drop 60 percent accumulatively over the coming decade.
Chinese premier Li Keqiang paid a visit to Switzerland during May 23 and May 25 and on May 24, China signed a MoU on ending a free trade agreement (FTA) negotiation with the nation. The MoU is significant as it marks that a FTA will be sealed by both sides later. Undoubtedly, Switzerland will export more products to China driven by slashed import duties rooted from implementation of the FTA and it thus has become a focal point whether the price of watches imported from the European nation in the Chinese mainland will drop largely.
Yu Jianhua, assistant to minister of the Ministry of Commerce (MoC), said publicly on May 27 that China would see tariff on watches imported from Switzerland drop a total of 60 percent over the coming decade. In detail, the fall would hit 18 percent in the year the FTA was put into force and that for the following nine years would be five percent, each.
However, in line with people in the circle, the agreement would not cover some high-end watches. Notably, it would involve a 10-year interim. Thus, the price of watches imported from Switzerland in the Chinese market would not drop sharply within a short period of time.
An industry observer pointed out that the agreement would boost the cooperation between low value-added manufacturing of China and high value-added manufacturing of Switzerland in the short run. And in the long run, it would boost FTA Negotiations between China and other European nations. However, it would play quite a small role in the pricing of watches imported from Switzerland, especially the high-end ones.
The Chinese mainland has become the third-biggest export destination of watches of Switzerland, following Hong Kong and the US only. Available data shows that the European nation exported CHF 21.4 billion watches and timepieces in 2012 and of the total, CHF 1.65 billion, or about CNY 10.7 billion, was achieved from exports to the Chinese mainland. After a fast growth for several consecutive years, it began slowing down such exports to the Chinese mainland and Hong Kong from the second half of last year and the export to the latter each dropped 15 percent and 32.3 percent last December. It saw export to 14 major markets around the globe rise in the year and among the 14 markets, the Chinese mainland was the smallest one in terms of growth.
