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Sunday, 17 August 2008

HK bargain hunters turn to bulk buying to beat inflation

HONG KONG : Hong Kong shoppers, ever on the hunt for a bargain, are tackling soaring food prices by getting together and buying in bulk, but experts warn the trend could make the inflation problem even worse.

Hong Kong households have been struggling with inflation that officially hit six percent in July, but which many fear is actually higher as pork and rice prices have soared by up to 64 percent since the start of the year.

Feeling the pinch of the rising cost of living, one community project now uses the Internet to allow low-income families to pool their resources to buy in bulk at impressive discounts compared to retail outlets.

The 'Grassroots Family Joint Council - Mutual Help Bulk Purchase Scheme' was launched in July and has since garnered support from non-government organisations and charities in the Chinese territory.

"They started this scheme on their own as they thought that they would have better bargaining power to get better prices from wholesalers," said Pauline Fung, a social worker with the Caritas Youth and Community Service.

More than 20 wholesalers are taking part, some offering their goods at cost, said Fung, whose charity has facilitated the scheme since its launch.

Shoppers typically get together to make large purchases of just one product -- for example, baby milk powder, which they can buy at 170 HK dollars for an 850-gram can, rather than 195 dollars.

Mandy Iu, a high school student, said she uses bulk-buying for cosmetics, cheap products and "things I want to try and cannot buy individually."

Co-op members might feel they are beating the price rises plaguing consumers worldwide, in part because of soaring energy, food and commodity prices -- but some experts say the hoarding of products may exacerbate the problem.

"Stocking more at home will only push prices up," said Andy Fong, lecturer of Communications and Social Sciences at Hong Kong's Polytechnic University Community College.

Bulk buying to beat inflation becomes a self-defeating exercise, he said, because, like panic-buying, it is perceived by the market as increasing demand, which in turn pushes prices up.

"It will end up in a vicious cycle," he said, adding that a recent government move to subsidise the poor to help them deal with inflation was also short-sighted as it would encourage more consumption.

One of the providers, Laurence Lee's company BB-Land.HK, established an online store and bulk-buying scheme that now has 4,000 members who, he says, save around 10 percent on their shopping bills.

He said many shoppers in Hong Kong, long considered a consumer paradise, had become lazy when it comes to comparing prices and were now finding they had to shop smarter to stay ahead of inflation.

"If you want to get cheap things, you need to develop a shopping plan," he said, adding that bulk buying schemes could help change spending habits. "Bulk buying is a way to educate consumers to plan their shopping."

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