Mainland Chinese Shop In Hong Kong for Price, Product Safety and Quality

Further detail behind the trend of mainland Chinese to shop in Hong Kong. In the instance cited below, the focus is on shoppers from Shenzhen who were originally driven by the melamine-poisoned milk scandal to seek safer products. Now, a broader variety of products is stimulating such behavior, along with the rising value of the RMB.

It may come as something of a surprise to western - particularly US readers - to learn of the RMB's appreciation, given the continued emphasis by the US government and US media on the need for it.

Rachel Xu of hkdc.com's Shenzhen office has the story. Thanks to Yang Zhang for pointing it out:

"The appreciation of the Rmb is the main reason why consumers in Shenzhen have taken to doing their shopping in Hong Kong. It's cheaper compared to spending Rmb, while Mainland product prices have skyrocketed with rising inflation.

Shenzhen citizens can also make use of multiple-entry visas to Hong Kong, making it far more convenient for them to shop in the SAR.

Frequent exposure to safety problems in food, milk and other products is also prompting Shenzhen residents to go to Hong Kong for their daily necessities.

Latest figures published by the Shenzhen Statistics Bureau show that the Special Economic Zone's consumer price index (CPI) grew 4.6% year-on-year in October, higher than the national average of 4.4%. The prices of food and daily necessities registered the biggest jump among consumer goods.

"About 20,000 Hong Kong residents are going to Shenzhen for groceries daily on average," said Xinhua in a news release in January 1986.

Today, with the appreciation of the Rmb, fewer Hong Kong people are going to Shenzhen for farm and sideline products as they had done for decades. On the contrary, spiralling inflation has prompted many more Shenzhen people to visit Hong Kong for shopping.

Shenzhen citizens started making the short journey to Hong Kong to buy baby formulas after Mainland-produced milk products were found to be tainted with melamine. There's better quality assurance buying in Hong Kong, while prices are cheaper.

Shenzhen shoppers now buy such daily Hong Kong necessities as detergents, shower gels, shampoos, soy sauce, condiments, monosodium glutamate and facial tissues.

A survey of 22 products sold in Shenzhen and Hong Kong supermarkets found that the prices of nine products are cheaper in Hong Kong than in Shenzhen. The price differences in descending order are apples, edible salt, soy sauce, Thai rice, toilet rolls, baby formulas, shampoo, oyster sauce and eggs.

Prices of rice, flour, sugar, meat, eggs, milk products and edible oil have risen substantially on the Mainland since October. Although Hong Kong mainly relies on imports for food and daily necessities, having many different import channels means it does not have to rely solely on Mainland supplies, carrying higher wholesale prices.

Hong Kong receives sizeable imports of such products from Malaysia, Vietnam and Thailand, while rice mainly arrives from Thailand.

The Mainland also levies import duties and value-added tax on imports which Hong Kong does not.

With the appreciation of the Rmb, the greenback-pegged Hong Kong dollar has depreciated by comparison. Hence Mainlanders have considerably more purchasing power, equivalent to a 15% discount when shopping in Hong Kong.

Zhongying Street, also known as "Sino-British Street", on the Shenzhen-Hong Kong boundary is also packed with Shenzhen shoppers. Here, Shenzhen residents can buy Hong Kong products at Hong Kong prices after paying Rmb10 in visa fees and Rmb10 in transit fees.

That's certainly cheaper than spending more than Rmb60 on transport alone to Hong Kong, not to mention the time wasted queuing up at customs checkpoints.

As far as shopping destinations go, so-called "Sino-British Street" is a first choice for shrewd Shenzhen consumers looking for the best deals