What are China's Shenzhen shoppers buying in Hong Kong?
China has moved to restrict visas for mainland visitors to Hong Kong in a bid to temper the craze for shopping which has angered locals faced with empty shelves and long queues. We look at who the shoppers are, what is on their list and why.
Who are the shoppers?
The visa change targets residents of the southern Chinese area of Shenzhen who currently enter the mainland on multi-entry visas. These residents will now be limited to just one visit a week.
Frank Li, a former Hong Kong legislator and spokesman for consumer affairs, says that many are individuals who are stocking up on products for their home, or to give or sell at a small profit to friends and neighbours.
But some work in a more organised way for shadowy networks that organise the resale of the goods back in mainland China on a bigger scale - a practice known as parallel trading.
What they like to buy
Everyday items are the main focus, analysts say. A report by investment bank Goldman Sachs on the effect of the curb on multi-entry visits says that day-trippers - who accounted for 90% of the 15 million multi-entry visitors in 2014 - are mainly interested in buying cosmetics and food, alcohol and tobacco.
Nappies, baby formula, and medicines have long been popular and the government has a long-standing two tin limit on baby formula leaving Hong Kong, following an outcry over mainland shoppers buying up stocks of baby formula perceived to be safer than Chinese brands.
Case study: Bottle of shampoo
Large quantities of items as ordinary as bottles of shampoo are picked up and sold by traders. Even though a product or brand may be identical, it has greater cache and is more trusted simply because it was purchased in Hong Kong. A 750ml bottle of Vidal Sassoon moisturising anti-dandruff shampoo costs:
- $HK 74.53 (US$ 9.62, £6.59) in a mainland supermarket
- $HK 69.90 (US$ 9.01, £6.18) in a Hong Kong supermarket
Smartphones are also popular, though these are mainly targeted by the professional traders, says Mr Li. Smartphones are sought because they can be snapped up in the early days of the latest version's release, when demand outstrips supply, and therefore can be sold at a premium on the mainland.
Luxury items such as jewellery and leather goods are more likely to be snapped up by those staying in Hong Kong for longer periods of time, according to the Goldman Sachs report.
Hong Kong goods are more trusted and cheaper
The difference in exchange rate and the lack of tax makes the goods cheaper in Hong Kong than in Shenzhen, Mr Li says. But the other major incentive is that the goods are perceived as better quality.
He cites the example of traditional moon cakes made by the well known Hong Kong bakery Maxim's Cakes which are widely available on the mainland but which are still bought up over the border because Chinese shoppers trust Hong Kong products more.
This fear of fake or substandard goods in China - fuelled by a series of scandals in which baby milk powder was found to be contaminated or lacking nutrition - explains the popularity of personal care, medicinal and food products.
This has long angered HK residents
Whilst undoubtedly good for Hong Kong retailers, this practice annoys Hong Kong shoppers who are faced with long queues and disruption as the Shenzhen visitors pack up their items in the middle of the street and then wait on station platforms with multiple boxes and parcels. Critics say the shoppers also push up prices and sometimes behave badly in their rush to snap up certain products.
But will it hurt HK's economy?
While the restriction is estimated by Goldman Sachs to cut visits to Hong Kong by 4.6 million a year (10% of the 47m visits to China in 2014), the impact on Hong Kong retail sales is expected to be only 2%.