Shanghai, China, March 27, 2006--Cui Yifan was extremely busy last week running to different decoration markets, trying to buy wood floor panels before Saturday, according to Shanghai Daily.
Having purchased an uncompleted apartment which will not be handed over to him until September, Cui seemed a little hasty to buy floor panels. But he was not alone.
Wood-flooring retailers saw dozens of consumers every day last week, who were determined to make their purchases before Saturday, the start of April.
This rush to buy was due to a new sales tax on wooden floor panels from Saturday as China boosts efforts to help preserve forest resources.
The Ministry of Finance said last Tuesday that China will impose a five percent tax on wooden floor panels and wooden chopsticks. A tax of up to 20 percent will also be imposed on luxury consumer goods including luxury watches, pleasure boats, golf balls and golf clubs.
The new policy is designed to regulate energy consumption, help protect the environment by reducing the consumption of timber resources and narrow the gap between the rich and poor by collecting taxes on luxury goods.
"I made the decision to order the floor panels as soon as possible because prices can rise again on April 1," said Cui.
Daily sales at local wooden floor panel dealers surged over the weekend as consumers hurried to order panels, believing prices will increase when the new policy takes effect. Over the weekend, major wooden dealers generated twice normal sales.
"We sold over 400,000 yuan (US$49,751) worth of floor panels on Saturday, doubling the sales of the days before the tax plan was announced," said a saleswoman surnamed Pang at Lifine Flooring, a Shanghai-based wooden floor producer which has a store in Shiningmen Shopping Mall of Flooring and Timber on Yishan Road.
"Prices are bound to rise following the new policy and consumers want to buy floor panels before that happens," she added.
Prices of wooden floor panels now range from 200 yuan to 500 yuan per square meter. A majority of consumers are buying wooden floor panels at around 250 yuan per square meter.
Zhang Qi, an analyst at Haitong Securities Co., predicted a decline in sales with the possible price rise, and composite floor panels, on the other hand, will become more popular.
