Prologue Journal

Driving a hard bargain: Inside the cut-throat world of Hong Kong’s cross-border ‘shopping agents’ 

• prologu5
• 08/11/202408/11/2024

Hong Kong Free Press

By Joey Yang and Eva Qiu

After driving slowly into a warehouse under a freeway in Tuen Mun, Chan unloads goods from his car. Two of his colleagues manoeuvre their vehicles to the side, before loading the items into their own cars according to their delivery destination.

In the process, a box of pastries falls to the ground. Chan – whose name has been changed to protect his identity – throws it in the trash, returns to the car seat and calls another colleague, asking them to tell the customer the baked goods are gone for the day.

In the mad rush to buy and deliver clients’ orders, there is no time to fuss over a box of pastries.

Before the Covid-19 pandemic closed the city’s borders in early 2020, mainland Chinese shoppers flocked to Hong Kong to buy products such as milk powder, cosmetics, medicated oil, and luxury items.

However, because not everyone had the time or the visa to cross the border southbound, shopping agents came into being. They bought goods in Hong Kong and sold them in mainland China, charging a fee on top of the retail price of the goods. 

Since Covid-related curbs were lifted, cross-border shopping habits have reversed. Prices tend to be cheaper in mainland China and an increasing number of mainland Chinese have moved to Hong Kong, many of whom crave products from back home.

To satisfy rising demand, people like Chan have sought to make a living transferring products from megastores and chain stores in mainland China to Hong Kong.

But being a shopping agent is a highly competitive, if not cut-throat, business. Chan readily admits that “there are too many shopping agents from Hong Kong” and that he often earns only enough to cover his petrol costs when ferrying goods across the border from Shenzhen.

To drive across the city’s border, private car owners must obtain licences and permits from the authorities in both Hong Kong and Guangdong province, including consent to pass through the relevant checkpoint – a process that can take months. It also comes at a cost: private car owners from Hong Kong can only obtain a mainland licence plate under an investment quota if they pay over HK$150,000 in taxes in China each year.

Then there is the question of legality. While Hong Kong is a free port and does not levy tariffs on most imports, under the Import and Export Ordinance, “any import of controlled items must be accompanied by a valid licence or permit issued by the relevant authorities,” the Customs and Excise Department told HKFP by email last month.

Chan gets around this by saying the goods he is transporting are for personal consumption.

“Controlled” items include game, meat, poultry, plants, eggs, powdered formula, and telecommunications equipment. Anyone found guilty of bringing them into Hong Kong without the required paperwork is liable to a maximum fine of HK$2 million and seven years’ imprisonment.

From instant noodles to vacuum cleaners

Among the reasons for the increase in popularity of cross-border shopping agents is that although goods in Shenzhen are cheaper than in Hong Kong, it is neither cost- nor time-efficient for individuals to frequently cross the border to shop. It takes around an hour to reach a boundary control point from central Hong Kong, and then more time to pass through two sets of customs.

But with people like Chan to do it for them, customers can receive items ordered in the morning that same evening.

Hong Kong residents buy everything from frozen dumplings and instant noodles to appliances like kettles and vacuum cleaners from stores in Shenzhen, with wholesalers Sam’s Club and Costco two of the most popular.

According to Hong Kong’s Centre for Food Safety (CFS), the labelling of packaged food sold in the city must either be in English, Chinese – Traditional or Simplified – or both. “Food for sale in Hong Kong, whether it is imported or locally produced, must be fit for human consumption and comply with relevant food safety standards,” a CFS spokesperson told HKFP by email in July.

“The Centre for Food Safety… has been reminding members of the public to patronise licensed food premises and online shops with appropriate permits when purchasing restricted food, and pay attention to the potential food safety risks when purchasing food online,” they continued.

Dozens of public groups pop up when searching for “Sam’s Club/Costco shopping agent” on Facebook. The most popular one has 74,000 members, and across them hundreds of posts are published daily seeking or offering shopping agent services.

“Super sweet mangoes with lots of flesh and a thin core. Same-day delivery for orders placed before 10 a.m.,” a shopping agent on one of the Facebook groups promised.

This is how Chan promotes his services, too, funnelling customers into a WhatsApp group with 740 members and new customers joining every day. People share their experiences of different products and discuss which are worth buying.

Sharley Wong has been using the shopping agent services for several months, once a week on average. She shares and discusses products she has bought from Chan in his WhatsApp group. 

“I think the food they bring back from the mainland is of better quality. Like soy milk, it has a stronger flavour than the version sold in Hong Kong,” she said after buying a box of soy milk from Chan that night. 

However, both Sam’s Club and Costco are restricted to members who pay an annual fee. An employee of Sam’s Club China said by phone that it did not allow agents to shop at its stores and had a system to detect them. A recent report in the South China Morning Post suggested Sam’s Club was looking to launch free delivery to Hong Kong for orders over RMB599 (HK$643). 

“This kind of purchasing agency is currently not supported, but there is still no clear way to prevent [shopping agents] from doing this,” the public relations department of Costco Shenzhen said. The store was also exploring offering a Hong Kong delivery service, it said, without providing further details.

Chan, however, was undeterred. 

“Most of our current orders are only around HK$300. Sam’s Club is still not sure whether it could deliver goods to the doorstep, but we can. I believe there will still be some space for us in the future,” Chan said.

A day in Chan’s shoes

In March, Chan’s store had been online for less than a month. To meet his customers’ orders, he sets off from Tuen Mun for Shenzhen at noon every weekday, returning eight hours later having driven over 100 kilometres and visited two Sam’s Clubs and a Costco.

After arriving with the day’s purchases at the warehouse in Tuen Mun, Chan still has work to do: sorting the orders, responding to customers’ inquiries, and delivering the goods to their doorstep.

When his day finally ends, he may not have sat down to eat for almost 10 hours. 

And after a busy day buying cakes, bread, instant noodles, and different snacks to complete five orders around Hong Kong, he and his three colleagues make only around HK$200 profit each – largely because they face such stiff competition. Since the prices of goods in Shenzhen are transparent, if an agent increases their price even slightly, customers will seek out cheaper alternatives. 

For example, a box of six packs of frozen burgers on the Sam’s Club website is priced at RMB89.9 (about HK$97). Chan needs to charge HK$134 to make a profit, but other agents list it for HK$119 or less. Consequently, agents seek to attract orders through superior service and after-sales support, or explore other methods to expand their business.

As a controlled item under the Import and Export Ordinance, any import of meat “is required to apply for an import licence from the Food and Environmental Hygiene Department (FEHD),” the CFS spokesperson said. Meat brought into Hong Kong is also supposed to have a health certificate issued by its place of origin or permission from the FEHD.

After two months without being able to cover the cost of hiring people to help him, Chan’s business came to a temporary halt in April. “It makes no money at all,” said one of his colleagues, who also quit. 

Making money as a loss leader

Couple Korsf Lee and Phoebe Lam entered the shopping agent industry early, and have been helping people buy Sam’s Club products since last July.

Lee, who used to run an interior design company, began selling items purchased from the Shenzhen store out of Lam’s frozen meat shop on the second floor of a boutique mall in Tuen Mun.

“When we first started working as shopping agents, the business was very good. There was not even enough room for me to stand in the frozen meat store since all the shelves were filled – even the floor was almost covered,” Lam said.

Lee soon decided to rent two more stores on the same floor specifically for the Sam’s Club shopping agent business. He no longer goes to Sam’s Club every day to buy goods like he used to, but instead tries to fill his car as much as possible each time he visits the store.

As competition in the shopping agency business became increasingly fierce, he decided to use his shopping agency as a “loss leader” – selling products cheaply to stimulate sales of more profitable items nearby. In this instance, the aim was to drive consumers to Lam’s frozen meat store.

The pair further expanded their business into locally made stew, a cross-border taxi service platform, phone cards for mainland China, and promotions for restaurants in Shenzhen. He describes the regular customers he has accumulated through his shopping agency business as “friends,” saying he never expected to have thousands who would support his business.

“It is always easier to ask thousands of people to give me a dollar each than to ask one person to give me thousands of dollars,” Lee said. 

Though they said they had not calculated specific profit data, both Lee and Lam said footfall had increased more than 50 per cent compared with before they opened the shopping agency business. In addition, they had more than 3,000 members in customer WhatsApp groups.

In those groups, Lee and Lam frequently update information about the products they have purchased from the mainland and the meat on sale at their frozen meat store. Some items, such as a hair removal device, spark particular interest for their cheapness compared to Hong Kong stores.

“It’s so cheap to buy from you,” one customer wrote on WhatsApp. “The old model I bought during the sale a few months ago was much more expensive than this one I bought from you.”

Exploring all potential sources

When Chan paused his business, many of his clients asked why he had stopped and when he would restart. It gave him the impetus to give it another go in mid-April. This time, though, he realised he could not depend on Sam’s Club and Costco alone; the competition was simply too fierce.

Chan sought to diversify, and, in May, expanded to offer clients cheesecakes and flowers. He also plans to add clothing. Now, he can complete around 20 orders at a time when he goes shopping in Shenzhen.

Chan said these added categories increased profit. Cheesecakes do not need too much time to purchase, and the store manager had begun setting cakes aside or notifying Chan when he should pick them up. Better still, while the cake cost RMB49 (HK$53) at the bakery in Shenzhen, Chan could sell it for HK$95.

On days when the order volume was high, Chan and his colleagues could make a profit of around HK$800 from the cheesecakes alone.

But the real money was in bringing packaged bouquets from Shenzhen to Hong Kong. Unlike other products he has purchased, the price of flowers varies greatly depending on the season, the location of the store, and the florists’ preferences. Chan tries to keep the cost as low as possible by cooperating with florists in mainland China.

Unlike with other products, he only posted photos of flowers in his WhatsApp groups. Ahead of Mother’s Day on May 12, he spent four days in Shenzhen buying flowers to meet more than 20 orders daily. Each bouquet of 10 to 20 flowers cost around HK$150 in Shenzhen. When Chan sold them in Hong Kong, he priced them at HK$300 to HK$500 each. He made around HK$15,000 in profits.

Chan’s success with flowers inspired him to venture into T-shirts. He planned to order a batch from a wholesale clothing market in mainland China at a cost of about RMB50 (HK$53) apiece. By adding some customised graphics and shipping them to Hong Kong for sale, he believed he could sell them for nearly HK$300 each.

He planned to visit the wholesale market soon to reach a deal with the shop owner, and was eager to get the business on a website he had made as quickly as possible. Though the T-shirts were not ready for sale, he added a blank product category specially for them online.

“I feel that I haven’t fully figured out the logic of the products on my website, so I don’t dare to expand my business further,” Chan said. “But I have been able to earn more money than before, so I believe I am on the right track – and I can do better.”

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