China / Cover Story

Shops do brisk trade in presents

By He Na (China Daily) Updated: 2012-01-17 09:08

'Who cares?'

About 1,000 meters north, a large liquor and cigarette store has a small gift recovery sign on the left side of the window. Two men are inside at the glass counter, one smoking and the other playing computer games.

The same conversation began, with the reporter again masquerading as a customer. After some talk of cigarettes, the reporter said, "I also have two bottles of Moutai. Do you want it? Someone gave it to my father."

Shops do brisk trade in presents 

Man: "Moutai? Strong one or light one? 560 for the best one."

Reporter: "Can I visit at night? You know it's not a good thing."

Man: "We're open 24 hours. And almost half of our customers come at night. Nowadays, it is an open secret that gifts are exchanged for cash. We only care that the goods are genuine. Who cares where you got them?"

As he spoke, a middle-aged woman wearing high heels and a black leather jacket came in with a black plastic bag under her right arm.

She said nothing but put the bag on the counter. The elder man smiled a hello and immediately stubbed out his cigarette in the ashtray.

Inside the bag were several cartons of Yellow Crane Tower cigarettes, which are produced in Central China's Hubei province. The brand comes in a dozen varieties in different packages. Prices range from 150 to 1,500 yuan a carton.

The man counted out a thick layer of 100-yuan bills, the woman put them in her pocket and left.

"You see, this is one of our old customers," the man told the reporter. "Yellow Crane Tower 1916, soft carton, is hard to find in the market. She sold 10 cartons at one time. Real rich people."

Promising to come back at night, the reporter prepared to leave. The man gave her a business card that noted they make house calls.

Earning power

That degree of service may not be necessary. Gift recovery is also being offered online. A search on Baidu led to store websites with photos of the gifts wanted, the prices offered, and contact names and phone numbers.

And some gifts have gotten easier to carry.

"I have three 1,000-yuan shopping cards for Ito Yokado shopping mall. How much cash I can get?" Qian Huizi, who works for a real estate company, said to a store owner.

"Fifteen percent off most of them," the merchant said. "Gift cards recovery isn't our main business. I just earn some pocket money. It's not much. But for you, after cashing the cards, you can spend the money anywhere."

There's much more than pocket money at stake with primary gift "recycling" operations. The owner of a large liquor store in Beijing has been running a gift recovery business for more than a decade.

"Though we claim to offer high prices, generally we only buy the goods at half their market price," he said - 40 to 50 percent off liquor on average, 20 to 30 percent off cigarettes.

In turn, he sells some of the goods at his own store and others to restaurants, bars, hotels and upper-level wholesale dealers.

"For a busy season like National Day and lunar new year, sometimes we can earn half a year's income." The hardship of being available to customers 24 hours "is well paid", he said.

Risks, responsibilities

In addition to the liquor and cigarette permits required for a legitimate retail business, a separate permit to sell goods wholesale also must go through legal channels. Gift recovery isn't within the scope of any of those permits, making the operators vulnerable to prosecution for running an illegal operation.

Xia Xueluan, a sociology professor at Peking University, counted three negative results when products change hands repeatedly outside the law before reaching the ultimate consumer:

A potential health hazard when inspection and possible quarantine are bypassed.

Evasion of taxes.

"An easy channel for lawbreakers to dispose of illegally obtained goods".

Wang Xiuquan, a senior lawyer at Beijing Chang'an Law Firm, added another. Invoices and receipts would not be provided with "recovered" gifts that are then sold. If consumers have complaints about the products, Wang said, there's no documentation to protect their rights.

The popularity of gift recovery makes it clear the service fills a need in the market. Some sociologists said it could become a good industry if the appropriate government departments supervised the business to magnify such attributes as waste reduction and job creation.

Not all felt that way. Luo Shuwei, a researcher at Tianjin Academy of Social Sciences, called for government to crack down. "Gift recovery stores got the goods at a much lower price than the normal marketing channel, which seriously undermines the market order," he said.

Xia said gift recovery is illegal, encourages corruption and has no reason to exist. The fact that it flourishes, he said, indicates a law enforcement problem when various government departments are involved and responsibilities are not clearly divided.

China Daily telephoned the Beijing Administration for Industry and Commerce over several days to ask how it is dealing with the widely available gift recovery stores. The answer, from a staff member who gave an incomplete name: It's not our business.

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