Brands, borders and lots of baggage

PUBLISHED : Monday, 03 April, 2006, 12:00am
UPDATED : Monday, 03 April, 2006, 12:00am

He Tianji, a 21-year-old student at Guangzhou University, isn't a habitual early riser. But every Tuesday, and sometimes on Wednesdays, he is out of bed at 5am to catch the first bus to Hong Kong so he can arrive before the shops open at 11am.


All day, he prowls the department stores and cosmetics chains until he has filled his suitcase and backpack with personal-care products. Mr He is a personal shopper, not the kind who guides shopping trips and offers wardrobe suggestions, but the type characterised by an underdeveloped market economy.


Mr He shops for countrymen and women who covet duty-free luxury goods across the border but can't travel. Although no figures are available for the number of such shoppers on the mainland, an online search reveals the popularity of the service.


Log on to Taobao.com or Ebay's mainland branch, Eachnet.com, type the words 'personal shopping' in the search engine and you will find more than 1,000 entries.


Personal shopping services are offered in the United States, Japan and even between mainland cities, with items ranging from high-end consumer goods including cosmetics, digital products and diamonds to less common English-language books.


Thanks to the booming economy, mainlanders have rising incomes and a growing taste for finer things of life, but duties and value-added taxes make imported luxury goods much more expensive than overseas. Fashion and personal care products can cost up to 30 per cent more than in Hong Kong, and some brands are not available. Lured by abundant supply and reasonable prices, increasing numbers of mainlanders are making the most of relaxed travel rules to shop in Hong Kong.


According to a report by Goldman Sachs, mainlanders accounted for 12 per cent of global luxury goods sales in 2004, but only 2 per cent of that was purchased in the mainland. The remainder was sold to Chinese travellers abroad, including in Hong Kong.


For those who long for cheaper and better products but can't travel, personal shoppers are a viable alternative. With the help of the internet, a buyer can reach a shopper anywhere on the planet. All they have to do is email a shopping list and pay a deposit, usually about 20 per cent of the cost of the required items.


It wasn't always like this. When the service first came into being during the heyday of the planned economy, the shoppers were often relatives or friends travelling overseas. The shopping catalogues were largely confined to consumer goods that were scarce at the time but now the business has emerged from the underground and thrives in cyberspace.


Mr He has only recently recognised the potential of personal shopping. His university classmate and girlfriend, Vivi Lu Huadan, is a frequent visitor to online beauty forums, where she first heard about personal shoppers.


'I was looking for a good deal and then was told to get a personal shopper. When I realised what it was about, my first reaction was that it was a great service. You can buy genuine products at a much lower price. Then I thought to myself 'why not do it myself? I can do that',' she said.


After studying the operations of other shoppers, in August last year she launched a shop called Trouble Studio on Taobao.com to offer personal shopping for cosmetics and specialty foodstuffs.


Her parents helped her raise 10,000 yuan and she now devotes her spare time to taking orders and dropping off deliveries. Mr He, a Guangzhou resident who holds a Hong Kong passport, does the purchasing.


In peak seasons, when there are few sales on at department stores, their orders can add up to 10,000 yuan a week.


Mr He's shopping list is so long that he has to skip lunches to buy all the items in a day.


Before leaving for Hong Kong, Mr He sorts the orders by brands, shop names and special demands, and maps out an itinerary. His favourite shopping area is Tsim Sha Tsui, which offers non-stop shopping opportunities from luxury department store Lane Crawford to mass market Sa Sa Cosmetics.


Normally he will shop for branded goods at department stores first and non-branded goods at specialty cosmetic stores like Sa Sa. 'Branded products are fewer and more expensive. You have to buy small and expensive things first and then go to shops like Sa Sa to buy heavier and cheaper things,' he said.


When ordered products change in price or variety, he takes pictures and calls Ms Lu to contact the customers and see what they want.


By setting a fixed exchange rate of one $1 to 1.06 yuan and charging seven per cent of the cost of each item, Mr He says their net profit margin is about 10 per cent, with a turnover of about 3,000 yuan a month.


But other personal shoppers speculate that the earnings of their competitors in Guangdong can be much higher because of their proximity to Hong Kong.


Liu Jiang, a 38-year-old personal shopper in Beijing said: 'They can finish a round trip in a day. There is no accommodation cost and the travel cost is also low. Some have accumulated enough credit to enjoy a discount of up to 20 per cent. But the customers don't know this.'


A few Hong Kong retailers, such as Sa Sa, have offered delivery services to its mainland customers through its websites and some Hong Kong residents have opened similar ventures on Taobao.com and Eachnet.com, but they don't have much of an edge over the mainland personal shoppers.


One hurdle is the comparatively higher delivery cost in Hong Kong. Ms Lu charges as little as 13 yuan to send a package to a customer anywhere on the mainland; a Hong Kong seller would have to charge at least double that sum.


The other hurdle is credit cards. The mainland is still a cash society so most mainland sites link up with banks to have their own online payment system. Some even offer cash-on-delivery services.


In contrast, Hong Kong retailers deter mainland customers by requiring credit card payments for goods. Despite the brisk business of cross-border personal shoppers, their legal status remains a grey area. Travellers carrying articles worth more than 5,000 yuan must declare them to Customs when entering the mainland and anybody who fails to do so will be fined. But, it's physically impossible to check every passenger, so many shoppers try their luck.


Mr He has been fined twice, once paying 2,000 yuan and the other 700 yuan.


Mr He and Ms Lu graduate from university in July and, even though they don't know how long their business will last, they have no plans to find other jobs.


'With China's entry into the WTO, the price difference between home and abroad will be narrowed sooner or later. When everyone can find cheap products at shops here, there will be no place for us,' Ms Lu said.