Too many taxes, fewer condoms are sold in China

Too many taxes and so on China the sales of Durex condoms they go down. Beijing has in fact abolished a tax exemption that had been in force for some time on these products while simultaneously tightening restrictions on their marketing.

Il Government in this way wants to relaunch a vast campaign to encourage birth rate. In detail, according to estimates developed by Jefferies based on the company’s financial data and reported by Financial Times sales of China’s leading condom brand, owned by the consumer goods group Reckittdecreased by 5% in the country during the first quarter. This marked a drastic slowdown compared to last year’s sales growth, which in China had even exceeded 40%.

According to analysts, the trend reversal is largely due to the new regulations which have forced the dominant social commerce platform in China, Douyinowned by ByteDance (the parent company of TikTok), to ban the marketing of condoms through live streaming.

Tax effects and price increases

Furthermore, at the beginning of the year the exemption fromIVA on condoms which had been in place since 1993. And so contraceptives are now subject to a VAT rate of 13%. Durex could come under further pressure due to the economic repercussions of the closure of the Strait of Hormuz. Tension in the Gulf has already prompted the Malaysian Carexwhich produces about a fifth of the world’s condoms, to increase the prices up to 30% due to soaring production costs. And for Durex too it will be inevitable to raise prices, thus further discouraging consumption.

Demographic crisis in China

It is true that the Land of the Dragon is experiencing an unprecedented demographic crisis, since the birth rate last year fell to historic lows: 7.92 million births, less than half compared to 2015.

Government policies

For several years now the Government abandoned the one-child policy and instead invited couples to have three children. For example, last year state subsidies were introduced for parents of young children, thanks to which families receive the equivalent of $531 a year for each child under the age of three. And now the Government has ‘targeted’ contraceptives.