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Chinese Camera Market Braves Zero Tariffs

It has been a month since China removed all tariffs on imported digital cameras (DCs) and DC parts, but the nation's DC market, dominated by low- and medium-end products made domestically, has felt little impact.

"The zero tariff rate, on the whole, has not affected our pricing," said a distributor who declined to be named at the Zhongguancun Hailong Building, well-known for selling digital products in Beijing.

Honouring its commitment to the World Trade Organization (WTO), China has further cut tariffs on thousands of categories of imported products to an average 10.1 percent since January 1, 2005, most notably making imported DC and DC parts tariff free.

Yet prices of DCs below the 5,000 yuan (US$602.4) threshold, which account for 80 percent of the market, have been almost untouched by the tariff cut, said the distributor.

Foreign DC brands favoured by domestic consumers, such as Sony, Canon and Olympus, now have direct access to the marketplace with the building of manufacturing bases in China.

Therefore, the tariff rate has had little or nothing to do with their low- and medium-end products as they are made on the mainland, analysts said.

Sony's DCs sold in China are all produced in the company's Shanghai and Wuxi plants. And Fuji's DC factory in Suzhou, East China's Jiangsu Province, has become one of the firm's three main global manufacturing bases.

Olympus and Canon have followed the trend with the building of their own plants in China.

"Some consumers are waiting for further price cuts as our prices have dropped recently," said the distributor. "But that is a misunderstanding."

He explained that many DC makers are offering lower prices for promotions over the week-long Spring Festival which begins on February 9.

And Japanese DC makers usually introduce new products and reorganize prices in the first few months of the year, with the final pricing structure not made clear until March, he added.

Yet prices of imported digital SLR (single lens reflex) cameras, high-end products targeting professionals, have declined 10 percent to 20 percent, according to distributors.

In particular, imported cameras priced at more than 10,000 yuan (US$1,204) are believed to be those most affected by the zero tariff, as buyers can save thousands of yuan, he said.

Prices of DC parts and accessories, such as memory cards and batteries, have decreased 10 percent on average since the tariffs were removed.

And cheaper parts have not only benefited consumers, but also DC makers.

Insiders said some distributors preferred smuggled or fake DC parts, which were cheaper before the zero tariff came into effect. But with the new system in place, imported products are of equal price with the fakes, therefore broadening legitimate distribution channels.