The China Money Report: Repurchasing mooncake discount coupons

by on Oct.02, 2013, under Headlines

Stacy Summary: This is fascinating. I’ve got to get Max to comment on this. We need a weekly Google+ Hangout! There just isn’t enough time in the 13 minutes we have with each Keiser Report first half. Anyway, to me, this story really highlights the saying from Karl Menger (as told by Sandeep Jaitly) that ‘value cannot exist outside of human consciousness.’

Nine ways to make money ‘Chinese style;’ number two: Repurchasing mooncake discount coupons

Mooncakes are more widely presented as gifts than actually consumed during the traditional Mid-Autumn Festival each year and manufacturers have found a way to make extra profits without needing to go to the trouble of making any cakes. A baker can print a coupon for its mooncakes with a face value of 100 yuan (US$16.30) and sell it to a retailer for 65 yuan (US$10.60). The retailer then sells it to customer A for 80 yuan (US$13), who in turn presets it to customer B as a gift. Customer B then sells the coupon for 40 yuan (US$6.50) to a street peddler, who would in turn sells it back to the manufacturer for 50 yuan (US$8.65). The manufacturer thus makes 15 yuan (US$2.45) on the coupon and all parties are happy, having either made a small sum or given face without any actual product changing hands at any point.

Mooncakes are just one manifestation of this scheme — there is a market in China for discount coupons on most goods.

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