The influx of parallel traders who buy their stock tax-free in Hong Kong to resell it in mainland China at a profit is causing growing unrest. Residents of Sheung Shui, a town close to China's border, say the increase in parallel importers has pushed up retail prices and causes a general nuisance. Importers argue that their trade benefits the Hong Kong economy.
Strong enforcement needed on parallel imports
Tensions surged over the weekend when hundreds of Hongkongers took to the street in North District and clashed with mainlanders snapping up household goods in bulk for trading across the mainland. The protesters complained that the neighbourhood had been severely disturbed by traders who abused the convenience given to mainland tourists. The incident not only underlines the need for stronger enforcement against parallel trading, it also speaks volumes about the deepening anti-mainland sentiments within society - a worrying trend that warrants serious attention.
The problem of parallel imports is not new to the city. For decades, locals have been trafficking goods across the border to make quick money. The difference now is that the mainlanders do it themselves, after the individual visit scheme opened the door for them to come.
The grievances of local residents are understandable. It is more than a nuisance when traders with cartloads of goods swarm train stations and push up prices in the neighbourhood. But it is dangerous if the sentiments are allowed to turn into ugly protests and verbal abuse.
The tension could have been avoided had law enforcement done a better job in cracking down on parallel trading. According to a government source, more than 3,000 traders are believed to be engaging in such activity every day, half of whom are Shenzhen residents who make trips back and forth several times a day. If the estimate is correct, that means an annual 2.2 million cross-border trips are related to unauthorised trade. However, enforcement remains woefully inadequate, with just 150 cases cracked in the first seven months of this year. Since parallel imports do not infringe our customs law, officials can only refer cases to the mainland authorities. It is good that both sides have stepped up co-operation recently. The Immigration Department and the police also have a role to play. Visitors can be arrested if they are found to have worked and breached their condition of stay. Stronger enforcement is needed.