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China Tax Change Will Hardly Affect Prices

Published December 5, 2008

CHANGHUA, Taiwan (BRAIN)—China’s decision to give some tax relief to exporters will have little to no effect on bicycle prices, according to Bob Margevicius, Specialized’s vice president and a sourcing expert.

“When you parse it down to what the net effect is, it’s tiny,” Margevicius said Friday.

Bicycle Retailer reported Thursday that the Chinese government is increasing the export tax rebate on Chinese-made bicycles from 9 to between 11 and 14 percent.

But Margevicius pointed out that the increase amounts to only 2 percentage points, to 11 percent from 9 percent, for whole bicycles and almost all parts and accessories. The exception is tires and inner tubes.

The story noted that the rebate applies only to locally made components, not to the value of the entire bicycle. For example, a China-made bicycle that consists of 30 percent local content, the rebate would amount to only 0.6 percent of the total value.

The change, effective Dec. 1, is part of a sweeping effort by the Chinese government to bolster its slowing export industries. The government awarded tax relief to some 3,700 products, accounting for more than one fourth of its exports.

—Doug McClellan

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