Huaqiangbei trades computer chips for lipsticks

Focus shift

The initial success of Huang and other pioneers spread quickly in Huaqiangbei, which led retailers who had bought electronic goods from them to follow them into the beauty products sector.

Lu Lin, a merchant in Huaqiangbei's Yuanwang Digital Mall who has worked in the area for 15 years, said the retailers see no difference between computer chips and lipsticks.

"They are all profitable goods. So although the merchants, mostly men, know little about cosmetics or beauty products, it's still a profitable business," he said.

So far, at least seven multistory malls in Huaqiangbei that used to sell electronics are now wholly or partly occupied by cosmetics retailers.

The first to make the change was Mingtong Mall, where merchants in the 1,300 stalls work from 10 am to 2 am catering to the huge demand for cosmetics to the exclusion of all other goods.

Cosmetics traders cram into Mingtong Mall, their stalls overflowing with famous imported products such as Chanel and Estee Lauder.

Sellers make phone calls, check WeChat records to confirm orders and pack the products for delivery. Some offer prices to customers without even looking up from their calculator as they tap out the numbers.

"Each stall receives about 3,000 orders a day. On the first floor, the fee to reserve a stall has risen to 1 million yuan," Huang said.

Mingtong vendors who sold foreign-made electronic products were crushed by much cheaper domestic brands, such as Huawei and Xiaomi.

"In 2014, we had to find a way out as the markets were 30 percent empty, which indicated that development in the cellphone industry was limited," said Lin Xu, manager of Mingtong Mall.

Before entering the cosmetics sector, many Mintong vendors tried selling smartwear and trading via WeChat mini programs, but to no avail.

"While doing research, we accidentally discovered that the people who gathered to buy beauty products in Japan and South Korea were mostly Chinese. We sensed the big market and adapted our strategy," Lin said.

The tide turned. The transformation of Mingtong started in 2017, closely followed by several other malls that had once focused on cellphones and components.