«Opening of markets is vitally important»
A break in leathergoods

A Chinese Hong Kong? Nothing changes
Riccardo Landi is the new promotion manage in the engineering sector for footwear and leathergoods of the Itc Meccanica Strumentale Plurisettoriale office.
He arrives from an important experience in Peking where he was vice director for four years, up to February 1997. We asked Riccardo Landi for an interview on what will happen after 1 July 1997 in Hong Kong
In the giant Tian An Men Square of Peking a luminous sign illustrates the count-down to 1 July 1997, the day on which Hong Kong will be handed over to the People’s Republic of China. What will happen in the fatal "zero hour" of midnight on the 30th of next June. Leaving aside the grand celebrations scheduled, raising of the flag and its political implications (not up to us here) and concentrate on the possible repercussions of this historic event on conditions of export and industrial collaboration with China and Hong Kong in the sectors that involve us, then we can reply: nothing. In fact, the Chinese market has for some time been in a phase of rapid development, as everyone knows, influenced by a series of endogenous and exogenous factors which do not include the event we are talking about. The constitutional law of the Special Administrative Region (Sar) of Hong Kong within the People’s Republic of China, in fact, establishes that conditions of trade and finance be maintained for 50 years in the status quo of 1 July 1997, following the concept of "One country, two systems" pronounced by Deng Xiao Ping, great author of the reunification. Therefore, very briefly, as regards us:

- Merchandise entering Hong Kong will remain exempt from customs duties;

- At the same time, customs duties between Hong Kong and the rest of China, which continues to consider Hong Kong as a foreign country, will remain in force.

- Economic subjects of Hong Kong will continue to be considered as foreigners in Chinese territory regarding the setting up of joint-ventures or opening of representative agencies. I would like to take this opportunity to clarify the current Chinese tax situation, aware that there is a certain confusion among Italian dealers (in all the engineering sectors), due to conflicting information often from agents or intermediaries in Hong Kong. On 1 April 1996 China reduced taxes on all products and these have been given different quotas. But, at the same time, the Chinese authorities have eliminated some facilities concerning joint-ventures which allowed importers various not too clear means of avoiding legal duties. Now, although in the present period of transition is is still possible, in some cases, to pas the "wide net" of Chinese customs, it is the firm intention of central authorities to follow laws to the letter (demonstrated by the strong increase in the number of customs officials being condemned and executed). Therefore, in practice, on average machines and plants (and also hides) entering China will be subject to higher taxes than in the past, even if quotas have been reduced. All the aforesaid depends on the formal efforts made by China to lower taxes in order to finally be admitted to the Wto, and substantial commitment to making customs efficient in procuring revenue for the state. Although the handover of Hong Kong to China places it in this picture, it should not be directly influenced as an exclusively political event. To conclude, I would like to repeat that affirmed by colleague Maurizio Forte in the pages of your magazine for January. My working experience in China has convinced me of the necessity for Italian firms to make every effort to establish direct contact with Chinese customers, above all in the engineering field. It is becoming fundamental, through the evolution of the market and buyers capacity to take decisions, to understand and satisfy the real needs of end-users, to train relative technicians and, above all, offer adequate post sales service. I realize how difficult this is for small and medium firms in the sector but these are now decisive factors of successful marketing, than even in China can make all the difference between developing and maintaining or losing their market quotas.



The new customs duties in China

Machines for tanning, footwear and leather goods 16%

Parts and components for machines 12%

Tanned hides (cattle and horses) 35%

Tanned hides (sheep and goats) 50%

Leather footwear 60%

Footwear accessories 40%

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