23rd February, 2015
The Truth Behind Chinese Tourists’ Raiding Shopping Style
By Kay Lam
As the number of Chinese tourists in Hong Kong continues to raise, most people and commentaries focus on the consumption power of Chinese tourists but rarely touch on the truth behind the influx of Chinese tourists in Hong Kong: the unreasonable high prices in China. Due to its large population, China does not affect the global supply of goods but also the retail market across the world – the strong purchasing power pushes prices to sky high. Isn’t it odd that the people who live in the “World Factory” rush overseas to buy products that were produced in their own country at high prices?
Not all “Made in China” products are the same: those exported overseas are highest quality products, and those for domestic consumption are of lowest quality. Hence, if Chinese want to purchase high quality Made in China products, they have to go overseas. If Chinese want to purchase products that were made outside of China and not being ripped off, they still have to go overseas.
In end of January, a shop opened in Guangzhou claiming to be “the first to offer cross border direct purchase”. The baby diapers and formula powder available at this shop are sold at prices similar to those in Hong Kong, which is around 50-60% of the market price in China. The shop’s formula powder was sold out in the first two hours after the shop first opened. Many in China questioned why Guangzhou’s Customs Department authorised a shop that is “duty free” to operate. China’s Customs Department later on clarified that this shop had paid all relevant duties on all the products sold (which is impossible given the low prices). This is clear evidence that the problem (of large number of Chinese “shoppers” buying products in bulk overseas) is not merely due to product safety and logistics costs, but the system of which China’s government is corrupted and imposes heavy tax on all products.
For example, some German-made formula powder is sold at HK$100 per tin in Germany, when the tins are transported to Hong Kong, the retail price stands at 2-3 times of that in Germany. When they are transported to China, depending on the supply, each tin can cost between HK$300 and HK$400. The price difference shows that daily necessities in China can cost 3-4 times the price in Europe. This is the major reason why Chinese tourists would raid shops whenever they go overseas: prices in China are ridiculously high!
According to HKSAR Government statistics, in 2012, the monetary amount of imported formula powder in Hong Kong grew by over 30 times compared to that in 2008. In terms of quantity, Hong Kong imported 11 times more formula powder in 2012 than in 2008. Due to the frequent shortage of supply, many retailers in Hong Kong can, and do, constantly increase their retail prices. In a matter of few years, formula powder price in Hong Kong has gone up by over 50%. These retailers and importers have therefore made very handsome profit in trading formula powder, but the consequences of Chinese tourists raiding formula powder in Hong Kong are borne by the mothers in Hong Kong. This is not an isolated phenomenon, besides formula powder and baby diapers, prices across all daily necessities have seen substantial increases in Hong Kong. Chinese live in a world of super high prices, and their response (going overseas to shop in bulk) causes people in neighbouring areas to suffer as well. Even countries that produce formula powder have imposed restrictions on the amount of formula powder one consumer can buy. This outrageous situation highlights the difficult situation Chinese live in. However, the majority of Chinese, the immediate victims of the policies set by China’s Government, do not blame the government for creating the environment in which these unreasonably high prices arise. Instead, they see themselves as the saviours of other countries (boosting their economies) as their purchasing power grows with China’s growing economy. This is likely to be a result of China’s systemic brainwashing propaganda. Such large scale brainwashing propaganda is efficient, and most Chinese do not blame the government in China but enjoy their super purchasing power that brings negative impact to other countries. Such a twisted mindset is simply pathetic.