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Consumer Council Names and Reprimands 4 Chinese Pharmacies Resurgence of Sales Malpractices with Repeated Offence and Reopening Under a New Name

  • 2023.09.07

The Consumer Council is highly concerned about the unscrupulous sales practices of some Chinese pharmacies which are detrimental to consumer rights and interests. After stringent study and consideration, the Council decided to publicly name 4 Chinese pharmacies (“Traders”) and strongly reprimand them for their undesirable sales practices. The 4 Traders are located in a prime shopping area frequented by tourists and the number of complaint cases involved have surged evidently since the borders reopened, not only greatly impacting the retail and tourism industries and affecting tourists’ experience, but also severely jeopardising the reputation of Hong Kong.

List of the 4 Chinese pharmacies and addresses:

1. City Medicine Limited
G/F, 522 Lockhart Road, Causeway Bay

2. Medicine Palace Living Plaza
       G/F, 521 Lockhart Road, Causeway Bay

3. Global Medicine Company
Shop 20, G/F & 1/F, the Annex Land Building, Excelsior Plaza, Causeway Bay

4. On Hong Medicine Company
Shop 20, G/F & 1/F, the Annex Land Building, Excelsior Plaza, Causeway Bay

Sales Malpractices Aggravated After Reopening of Borders

In the 32 months from 2021 to August 2023, the Council has received a total of 96 complaint cases related to the 4 aforementioned Chinese pharmacies which mainly sold Chinese herbal medicine (CHM) and dried seafood, among which 80 cases involved sales malpractices, accounting for 31% of the overall complaint cases (262 cases) of the same nature received during the period. Since cross-border travel with the Mainland resumed earlier this year, complaint cases against these 4 Traders saw a notable spike with 49 cases recorded in the first 8 months alone, surpassing the total number of 26 cases in 2022. The cases involved the sale of CHM ingredients and dried seafood with a total amount of $586,001 involved, averaging approximately $11,959 per case.

Intentionally Obscured or Avoided Mention of the Pricing Unit

Possibly Involved Misleading Omission

Most of the complaints involved trade malpractices using misleading pricing units, such as from catty (斤) to tael (両), and from tael to mace (錢), resulting in a final bill 10 times or even 16 times the price originally perceived by the customer. The signage of these CHM ingredients and dried seafood usually displayed the price prominently, but then labelled the unit of weight (e.g. per tael or per mace) in miniscule fonts or muted colours under the price in a way that was difficult to be discerned by consumers. Furthermore, the fact that “catty” is a commonly used unit of measurement in the Mainland makes it easier for Mainland tourists to fall into these sales traps. Upon customers’ enquiry, the shop assistant would only tell them the price displayed, but would omit the unit of measurement. Even when specifically asked about the price per unit, the shop assistant would attempt to deflect the question, or vaguely reply that “1 catty is equal to 16 taels in Hong Kong” while intentionally avoiding the pricing unit of measurement, leading some customers to misinterpret the labelled figure as the price per catty.

Once the customer expressed interest in purchasing, the shop assistants would swiftly grind or slice the CHM ingredients or dried seafood. The customer would only realise that the actual price far exceeded their expectation when settling the payment. If the customer refused to buy the goods, the trader would force them to complete the transaction on the pretext that the goods had already been ground or sliced.

The aforementioned diversion tactic is commonly practiced in the industry. Such sales malpractices might constitute the offence of misleading omissions and possibly be in violation of the Trade Descriptions Ordinance. The maximum penalty upon conviction is a fine of $500,000 and imprisonment for 5 years. In addition to the sales assistant who directly perpetrated the offence, other persons such as directors, managers and principal officers who consented to or connived in the offence may also be held liable.

Malpractice Persisted Despite Apparent Cooperation

Business As Usual After Changing the Shop Name

Before reaching the decision on this naming sanction, the Council had reached out to the persons in charge of the 4 Traders involved and requested to meet. A representative who claimed to be in charge of the accounting for City Medicine Limited and Medicine Palace Living Plaza denied any sales malpractices by their shop staff, but promised to relay the Council’s message to the management team.

The person in charge of Global Medicine Company refused to meet the Council’s representatives, but promised to improve their sales practices and properly handle the complaint cases received by the Council.

Although the Traders had agreed to give partial or full refunds to all complaint cases in the first 8 months of 2023 after the Council’s conciliation, the Council has continued to receive new complaints against these 4 Traders despite their pledge to improve their sales practices. This reflected that the 4 Traders had not honoured their promise to improve, but instead continued to adopt unfair practices in conducting their business.

Among those named, the shop location of City Medicine Limited was formerly occupied by a Chinese pharmacy named Chung Wang Tong Medicine Co. Ltd. (宗宏堂大藥坊有限公司), which was also publicly named and reprimanded by the Council in 2015 for its sales malpractice. Records from the Companies Registry revealed that one of the shareholders of City Medicine Limited is Chung Wang Tong Medicine Co. Ltd. Furthermore, another named Trader Global Medicine Company had closed down while the shop location was taken up by another Chinese pharmacy On Hong Medicine Company.

However, according to the contact card collected by a complainant while shopping at On Hong Medicine Company, the printed shop name was still Global Medicine Company. According to business registration records, both Global Medicine Company and On Hong Medicine Company were operated by the same owner, Zenith Capital Corporation Limited (新兆財有限公司). The above scenarios reflected that it is a common industry tactic to run the business under a new company name, so as to blindside consumers.

Strict Law Enforcement to Effect Punishment

Action from Industry Needed to Crack Down on Bad Apples

Despite the Council’s naming sanction against 7 Chinese pharmacies in 2015, similar sales malpractices are still happening today, a severe detriment to consumer rights. The Council anticipates that this naming sanction would serve as a firm warning to the bad apples in the industry that such sales malpractices will not be tolerated. Aside from harming consumer rights, such malpractices will also negatively impact the post-pandemic recovery of Hong Kong’s retail industry. The industry must take immediate action to curb this unhealthy phenomenon, while regulatory and enforcement authorities need to step up monitoring and to enforce the law resolutely by punishing dishonest traders. The Council will continue to collaborate closely with the relevant authorities to safeguard the legitimate rights of the general public and tourists.

The Council has in the past signed memoranda of understanding (MOU) for collaboration with the consumer bodies of many Mainland provinces and cities (including the Greater Bay Area), including the cross-border consumer disputes referral mechanism. If tourists have any unresolved disputes with traders in Hong Kong, they could file a complaint with their local consumer body upon returning to the Mainland. The case would then be referred to the Hong Kong Consumer Council for follow-up in accordance with the MOU. The complainant could also submit their complaint via electronic form on the Council’s website, then submit supplementary information and check the progress through the Council’s WeChat Official Account.

Consumers Reminded to Stay Vigilant

Stay Calm and Seek Help Immediately in Case of Unhappy Encounters

Apart from collaborating with law enforcement authorities to closely monitor the sales conduct within the industry, the Council will also disseminate information through various channels to strengthen consumer education, and to remind local consumers and tourists to pay heed to the following:

  • Never trust the cajolery of non-registered Chinese medicine practitioners and be coerced into purchasing possibly unsuitable CHM. Seek proper medical advice from a registered Chinese medicine practitioner regarding personal health issues and only consume prescribed medication;
  • When purchasing non-prescribed CHM, consumers should make detailed enquiries about the pricing with the shop staff, including the pricing unit of measurement, calculation method and total amount. Upon making the purchase, request to have such details clearly listed on the receipt;
  • Pay attention to the unit of measurement when buying CHM ingredients or dried seafood, e.g. catty, tael or mace;
  • Never let the shop staff grind or slice the CHM ingredients or dried seafood before payment, so as to forestall this being used as a pretext for forced transaction;
  • If the trader dodges pricing enquiries, consumer should heighten vigilance, stay calm, and avoid transacting under any unknown or unwilling circumstances;
  • If pressurised by shop staff to complete a transaction, do not give them your credit card, cash or QR codes for digital payment. Report to the police once it is safe to do so, take photos of the shopfront and write down the correct address for record;
  • In the event of confirmed or suspected scams, report it to the police or seek assistance from the Consumer Council;
  • Retain all receipts and goods as evidence for reporting to the authorities and seeking redress.