Yellow Cow, Cash Cow

In China, people find all sorts of ways to make money even in the most surprising of situations.  One of the most impressive little schemes we’ve come across occurs every day in Chinese malls but especially around the end of the year bonus season.  The schemers are nicknamed “Huang Niu” or “Yellow Cow”, and they make money in a shadowy legal but sketchy niche.

The nickname has some connection to the idea that these sellers, like the Yellow Cow, are seen to be of very limited use to society.

From our experience as customers, here’s how it works:

  1. MALL M sells a large number of gift cards to COMPANY C at a discount because of the volume.
  2. COMPANY C distributes these gift cards to its EMPLOYEES as bonuses, especially at the end of the year.
  3. EMPLOYEES who do not want to use the cards sell them at 95% of value to a HUANG NIU (YELLOW COW) and receive cash.Employees often sell the cards because they don’t live anywhere near the mall.  Plus they probably prefer the flexibility of cash and can make their money go further elsewhere.According to the Huang Niu we met, employees meet the Huang Niu at an unofficial but regular black market trading spot in a public place in the city.
  4. HUANG NIU goes to the mall and waits for a CUSTOMER who is going to purchase a product at a normal price from the mall.  As the customer walks to the cashier, the Huang Niu approaches.
  5. HUANG NIU offers the CUSTOMER the opportunity to buy the product using their gift cards (which they purchased at 95% of value) in exchange for 96% of the normal price in cash.
  6. The CUSTOMER takes the gift card, purchases the product with the card, and then returns it to the HUANG NIU who is waiting nearby.  Together they walk back to the vendor and retrieve the purchased item (unlike the US, you must pay first and then come back for the item).
  7. The CUSTOMER gives the HUANG NIU the cash for 96% of the value, and both part ways.

It may help to see an example:

  1. MALL M sells COMPANY C thousands of 1000Y gift cards at a 10% discount (900Y).
  2. COMPANY C gives each EMPLOYEE a 1000Y gift card.
  3. EMPLOYEES sell the 1000Y gift card to a HUANG NIU for 950Y (95% of value).
  4. HUANG NIU finds a CUSTOMER who is planning to purchase a normally priced 1000Y item from the MALL.
  5. HUANG NIU agrees to allow the CUSTOMER to purchase the 1000Y item using the 1000Y gift card in exchange for 960Y.
  6. CUSTOMER makes the purchase and picks up the product with the HUANG NIU.
  7. CUSTOMER pays HUANG NIU 960Y and they part ways.

In the end, the CUSTOMER saves 40Y (4%) and the HUANG NIU makes 10Y (1%).  The MALL sells that item at the 10% discount originally meant only for the company employees.  In essence, what is happening is that the employee is selling his or her bonus and discount to other people.

While this scheme is not illegal (and worse things probably are going on in the city all the time), it is definitely shady.  The malls technically shun the Huang Niu and will not sell the item if they see a Huang Niu with a customer at the cashier.  I would guess that the malls do not like that their discounted gift cards, which were meant to bring new shoppers into the stores, are actually just going to people already shopping there…people who would have paid full price.

The term “Huang Niu” also is applied to people that we would call “scalpers” in the west.  These scalpers are especially active at train stations during busy travel seasons and in front of big events.  However, while the goal of these scalpers is to get the customers to pay more than the original value of the ticket, the goal of the mall huang niu is actually to help the customers get a lower price. So in this way, the mall huang niu are appreciated by both the employees and the customers.

The mall Huang Niu we worked with told us that in a given month, she makes about 3000Y ($500) by working almost all day every day.  But she told us with a smile that it was a lot better than being a sales person, who make similar money, because she had flexible hours and didn’t have to report to anyone but herself (a huge plus, given the draconian rules for salespeople).  It may sound like a horrible job to people in the west, but actually it’s not bad on Chinese standards. You get to stay in a warm building and do not have to do much to make a basic living.  Compared to construction work or selling goods on the street, it’s not bad.

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2 comments

  1. Wow Jeff, thanks for the insider story on some of the ways of making a living in China today. In March in Suzhou a woman asked to accompany us to practice her English. She directed us to certain silk stores where, I am sure, she received some sort of rebate based on our purchases.

    1. You’re welcome! Glad you liked it.

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