"The municipal government is determined to put a final lid on the circulation of coupons this time," said Zhu Chenggang, a spokesman for the Shanghai Commercial Commission.

"All the retailers were notified last week to end the practice before the July deadline," the spokesman said.

Gift coupons have become a favorite marketing tool for local retailers, which sell them in bulk to large companies to give away as gifts to clients or bonuses for employees.

Retailers benefit as the coupons, which often come in the form of electronic cards, can only be used at the store that issued them.

The government is worried about the practice, however.

"The government ban is aimed at cracking down on corruption involving public officials who take bribes in the form of coupons," Zhu said.

The government is also concerned about losing revenue when the coupons are given away as bonuses to employees, since such incentives are generally not taxed, Zhu said.

This isn't the first time the government has attempted to ban coupons to curb corruption. In 1998, the State Council banned the use of gift coupons nationwide, but the coupons returned in various forms after a period of time.

In Shanghai, many retailers abolished the title of cash coupons, replacing it with the terms VIP card, water coupons, rice coupons or milk coupons.

Although retailers declared that those coupons can only be used to buy bottled water or rice, they can be used the same as cash in the stores that issued the coupons.

The coupons have been banned several times, but they are still circulating among retailers, consumers and even scalpers who trade them.

"This time, the government is very determined to weed out the practice," Zhu said, shrugging off the suggestion that the coupons could return in a different form.

The ban does not include coupons given away directly to consumers through newspaper ads or flyers.

Retailers say they are not surprised by the news and their staff members have started informing customers of the ban.

"We will steadily reclaim the coupons, and consumers won't suffer any loss if they can not spend the coupons before the deadline," said Sun Ming, an official with Lianhua Supermarket.

Sun said Lianhua will probably allow users to turn the coupons into online cash to be used when ordering goods by telephone or over the Internet if they can't use them up before the deadline.

One industry insider said some retailers are taking a wait-and-see attitude to the ban.

Many stores in the city doubt the current ban will be any more effective than previous attempts to stop the use of coupons, the industry source said.

(eastday.com June 20, 2003)