Estee Lauder to cut prices of products in July

Estee Lauder's significant price cuts are a sign that the company sees a need to expand its user groups by making prices more competitive, Gu added.

The tax reduction gives such brands a perfect opportunity to adjust their pricing strategies in China with the minimum impact on brand equity or product quality perception.

Mintel's research shows that China remains the largest facial skin care market globally, accounting for $12.79 billion in 2014, followed by Japan at $8.6 billion, South Korea at $7.06 billion, the United States at $4.65 billion and France at $4.02 billion.

Wang Jing, who buys all her skin care and cosmetics products at the duty-free shops at Beijing Capital International Airport's Terminal 3, welcomed the price changes announced by Estee Lauder.

"If the price gap between duty-free shops and domestic retailers narrowed, no one would want to take the trouble of shopping at the airport or during overseas trips," she said.