Shares in luxury beauty firms fall as China cracks down on imports

Shares in luxury beauty firms fall as China cracks down on imports

China’s border guards have managed to wipe significant value from multinational behemoths Kering, LVMH and Shiseido after videos of luxury goods being seized at the border and a tax receipt levying CNY 17,100 in import duties on make-up  went viral, according to a report published by Bloomberg.

A crack down on the duty-free allowance for Chinese travellers could have significant impact on sales of luxury cosmetics and accessories, with many tourists indulging in high-end spending sprees on their visits abroad, particularly to Tokyo and Paris in order to take advantage of lower prices.

Shares in Shiseido dropped 3.6 percent on Friday while AmorePacific plummeted 16 percent at the week’s close, Kering was down 5.4 percent, LVMH lost 4.9 percent and L’Oréal dipped 3.6 percent.

Speculation is rife as to the motivation behind the crackdown with some suggesting it is part and parcel of the US-China trade dispute and others suggesting the country is working to end the practice of ‘daigou’ (selling luxury goods acquired abroad at a profit). Either way, it could spell disaster for the prestige beauty camp.

“Beauty is the No.1 purchased category by outbound Chinese travellers worldwide, as more than 50 percent make beauty purchases while outside of China,” wrote Jeffries Analyst, Stephanie Wissink, in a note, per Bloomberg.

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