China hikes import tariffs for LCD panels


The China government has officially announced that it will raise the tariff rate levied on imports of LCD panels in sizes over 32-inch from the current 3% to 5%, effective on April 1 - a move which aims to protect China's fledging panel industry, while pushing up the costs for Taiwan- and Korea-based makers exporting panels to the country.

The measure is a compromise between China-based panel makers who demand the government raise import tariffs so as to safeguard the development of the nation's flat panel industry, and local branded LCD TV vendors who believe a tariff hike will increase production costs given that panel supply by local makers is still insufficient.

A two percentage-point increase in tariffs coupled with the strong local currency against the US dollar, the cost of a 32-inch TV panel will edge up by CNY16.3 (US$2.53) per unit as calculated on prevailing price of US$127 for 32-inch panels, according to branded TV vendors in China, who added that the cost for a 42-inch TV panel will increase CNY26.9.

Taiwan panel makers including AU Optronics (AUO) and Chimei Innolux (CMI) have already mapped out countermeasures for the increased tariffs, since the China government had long planned to hike the import duties for flat panels, indicated sources at Taiwan flat panel industry.

As China-based panel makers are currently focusing on the production of standardized 32- or 46-inch models, Taiwan makers are able to offer multiple products and specifications and will also be able to minimize the impact through differentiation, the sources commented.

While the impact of the hiked tariffs on Taiwan penal makers will not be significant in 2012, the market share of Taiwan makers held in China will be gradually eroded as China's panel industry is set to continue growing under the government's protection policy, said the sources.

An early inclusion of flat panels on to the preferential tariff list under the Economic Cooperation Frame Agreement (ECFA) signed between Taiwan and China will also help ease the impact on Taiwan panel makers, added the sources.


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