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Is Hong Kong A Country?

Why is shopping cheaper in Hong Kong compared to China despite Hong Kong being the richer country?

  • The goods in a richer country is usually more expensive than a poorer country. But this does not apply to Hong Kong and China. Hong Kong is swamped by China tourist dollars because shopping in Hong Kong is cheaper. Why is shopping cheaper in Hong Kong compared to China despite Hong Kong being the richer country?

  • Answer:

    Goods in Mainland China have a 20-40% VAT tax.  Goods in Hong Kong don't. Also in practically all goods, there is zero tariff on goods entering HK, and zero tariffs on goods moving between HK and the Mainland, whereas goods directly going to Mainland have 20-30% tariffs. HK can get away with zero taxes because the governments land policy is a defacto tax. One thing that's cool about looking at different prices in different places is that you can see the differences in cost structure.  Things that are labour and rent sensitive (restaurants and hotels for example) are a lot more expensive in HK than in the Mainland.  This also a good example of comparative advantage, since it turns out that both Mainland and HK people benefit to going to the other place.  For example, when I go to Shanghai, I go a little crazy staying in nice hotels and eating at fancy restaurants since the price of those things are less than HK. One thing that is weird is that it's cheaper to get Made in China computer parts in the US than in Hong Kong or in Mainland China itself.  The reason for this is that US/China shipping costs are nil, whereas the main cost is the retail markup, which is higher in HK because HK has a much less efficient distribution system than in the US.

Joseph Wang at Quora Visit the source

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China is a country in transition from Socialism, therefore there are many companies closely associated with governments at different levels. As a result these companies are used to fulfill many social and economic goals of government and the resulting inefficiency means they could not compete in a free market. So the relevant governments all have retail price control departments which rigorously ensure prices are high enough to allow inefficient companies to generate enough profits to continue in existence and sometimes even pay their workers and less regularly the local taxes. This constant need to protect can be seen in the Chinese central bank reversing its formerly relentless campaign to make Chinese companies 5% more efficient each year by regular appreciations of the currency. But the economy has become so moribund lately the currency was depreciated from 6.08 Rmb to the Usd to 6.25 Rmb. A popular move but one which only encourages mediocrity. Of course the drive to increase wages annually by 10% has meant a huge squeeze on manufacturing costs so manufacturers who can turn to robots, while those who can't either move deeper into Third World China which is plagued by poor governance, or to other low wage countries such as Bangladesh.

Alfred W Croucher

PRICE does not mean COST, and it has nothing much to do with economics development. Hong Kong enjoys a duty-free policy, which means government doesn't tax from overseas goods, so when you shop in Hong Kong, you don't pay for the extra "tax cost" the shop owners have already paid.

Monica Swan

Firstly, you must know HK is not a country. It's an area of China. The reason why shopping is cheaper in HK is because the TAX, exchange rate and the HK-benefited policies.

Lilyoung Wang

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