Volume 42, Issue 9 - September 2007

Global Update  

China Lowers Value-Added-Tax Rebate 
Rates for Glass Exports

In a sweeping move, China has cut the value added tax (VAT) rebate rates on 2,831 classifications of products, including glass. This represents 37 percent of the total number of classifications in China’s customs tariff, point out officials at the consulting firm Ernst & Young, and is the third such change in refund rates since 2005. The company says it is another attempt to address overheating export growth and manage the ballooning trade surplus. 

The VAT rebate rate for glass was lowered from 11 percent to 5 percent, a 6-percent drop. This rate reduction results in additional export costs that must either be absorbed by the exporter or passed on to overseas customers.

Sources in China told USGlass that, for some glass producers, the VAT rebate is the majority of their profit. Speculation is that glass export prices will increase. 

Officials with Ernst & Young explain that the VAT refunds have played an important role in keeping export prices low. By changing the VAT refund rates, the government can, to a certain extent, encourage or discourage exportation of the affected products.

The new rebate rate went into effect July 1. Most of the products included in the change fall into the category of high-polluting, high-energy consumption or export of China’s natural resources. The production of glass fits most comfortably into the energy consumption slot. 

Xinyi to Sell Curtainwall Business
Hong Kong-based Xinyi Glass has announced that it is selling one of its subsidiaries, Xinyi Curtainwall Engineering (Shenzhen) Co. Ltd. The company says by divesting itself of this business it will be able to concentrate on its core businesses, manufacturing float glass and producing architectural and auto glass products. In addition, the company says some of its current customers are involved in curtainwall design, and it wants to ensure it is not competing with its customers. www.xinyiglass.ca

Fee-Based Services Help European Distributors Grow 
Executives of wholesale distributorships outside of North America have found that they are able to charge customers for new services rather than giving away value-added services for free, according to a new report.

Lawson Software in St. Paul, Minn., sponsored the research of the global survey paper, Growth Strategies in Wholesale Distribution, by Adam J. Fein, Ph.D., of Pembroke Consulting Inc. The company surveyed wholesale distributors in several industries in North America, Europe, Australia and New Zealand.

According to the survey, North American wholesaler distributors have found less success than their European counterparts when trying to charge for activities that used to be given away for free. Instead, the report found, “North American wholesale distributors have been most successful with services that take on critical tasks in a customer’s business.”According to the report, “Growing with fee-based services requires wholesale distributors to develop services that directly improve a customer’s operations and provide measurable gains in the customer’s business.” Success is measured by customer productivity gains, labor savings, ergonomic improvements or an improved time-to-market. www.lawson.com 

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