Asian markets up since consumption tax cut

The results follow China’s decision to remove the consumption tax on non-luxury cosmetics and reduce the consumption tax rate on high-end cosmetics and beauty products from 30% to 15%.

The change, which came into effect on the 1st October, sparks positive news for cosmetics companies throughout the Asia-Pacific (APAC) region.

Strong initial results​

Following the tax update, cosmetics manufacturing giant Amorepacific, which owns natural cosmetics brand, Innisfree, had increased by 1.41% on Tuesday 4th October 2016. The leading South Korean consumer goods company, LG Household & Health Care, was also up 1.88%

Asian equities were up, and the Australian Securities Exchange (ASX) had recovered from earlier losses to enter into positive figures.

Cosmetics manufacturer Cosmax also showed positive developments following the tax update, with shares up 6.93% and plans to open a new factory in China.

Samsung Group's biopharmaceutical manufacturing unit BioLogics in South Korea was also reported as saying that it anticipated its planned initial public offering to increase to 2.25 trillion won ($2.04 billion).

As India is under its new Governor Urjit Patel,  the country’s new governor presided over his first policy review and announced a cautious approach by keeping rates constant. Last Tuesday, he said the country would have a 25-basis-point cut in the repo rate to 6.25%.

Positive forecast?​

As mainland Chinese markets have been closed for the Golden Week public holidays, the short-term results from China’s decision to cut consumption tax are positive and appear effective in helping Chinese brands extend their product offerings to the wider APAC region.

In the mid-to-long term, accessibility to the Chinese market and wider APAC countries will be reflected in increased sales. As multinational brands look to enter the Chinese marketplace, the exact effect that consumption tax changes will have on growth remains to be seen.