The first batch of tariff-free Hong Kong-made goods arrived in Beijing on February 25.

The goods are all garments, with a combined value of US$200,000, and are being imported tariff-free thanks to the Closer Economic Partnership Arrangement (CEPA) which came into force on January 1.

Customs official said that, before the CEPA between the Hong Kong Special Administrative Region (SAR) and the central government, the customs tariff rate of the garments was between 14 and 16 percent.

Beijing Commerce Bureau spokesman Yan Ligang said the importer of the garments is China New Era Holding (Group) Co Ltd.

And 56 suits were already on sale on February 27 at the TSE store in Beijing's Oriental Plaza.

"Since TSE opened its exclusive store in the Oriental Plaza, their goods can be sent there directly after getting a customs declaration," said Yan.

And the store can also set its own prices, instead of after negotiations with agents or wholesalers.

"But other retailers are not expected to receive their goods until the beginning of April, as the imported goods should be distributed from the agent to wholesalers and then on to the retailers," said Yan.

According to the Beijing Commerce Bureau, the first batch of the tariff-free Hong Kong-made commodities is small, the large proportion of products will reach Beijing in mid-May.

The district government of Chaoyang, the largest one in the capital, which encompasses the Central Business District and the embassy area, selected four large shopping centers, including the SCITECH Plaza, Blue Island Plaza, Full Link Plaza Shopping Arcade and Zhongfu to set up exclusive sales counters to showcase and sell Hong Kong-made products.

Chaoyang is the first district in Beijing to arrange the marketing of products under the CEPA.

"We know that the first batch of tariff-free Hong Kong-made goods has been transported to Beijing, but the four stores have not yet been notified by the providers of the commodities," said Li Xiaoqun, a Chaoyang District government official in charge of the promotion of CEPA products.

A manager with the marketing department of the SCITECH Plaza said that they certainly hoped the tariff-free Hong Kong-made products can be put on sale as early as possible.

"The tariff-free Hong Kong-made commodities have attracted people's great interest, which may lure more consumers to our store," said the manager.

Some consumers say that the CEPA goods are free of tariff, which implies the prices will be relative cheap.

However, Yan said that the tariff-free treatment just offers more room for manoeuvre to the manufacturers.

"If the manufactures want to compete for the market share at an early stage, they may decrease the price to attract consumers, otherwise, they may choose to maintain the original price," said Yan.

In accordance with the analysis of Yan's bureau, the majority of the CEPA products are luxury or high-grade commodities, such as watches, clocks, jewellery, cosmetics and garments.

"The prices of such high-grade consumer products will be relatively high," said Yan.

(China Daily February 28, 2004)