• Thu
  • Dec 18, 2014
  • Updated: 9:11am

Parallel trading

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.

CommentInsight & Opinion

Time to fix the problems of a porous border

PUBLISHED : Tuesday, 15 January, 2013, 12:00am
UPDATED : Tuesday, 15 January, 2013, 3:52am

When travel convenience is abused by visitors for tax-free trading, when the country's import tax revenue is compromised, and when household goods prices and cross-border tensions surge as a result of such activities, something is clearly amiss. These problems appear to be what the mainland and Hong Kong are suffering after multi-trip permits have been issued for residents in Shenzhen.

According to mainland authorities, only five in 100 mainland visitors from Shenzhen are "genuine" tourists, with the rest coming to stock up on goods for resale across the border without paying customs duty. The long queues of travellers with cartloads of goods at Sheung Shui train station every day shows how serious the problem is. Although both sides have vowed to step up enforcement, the situation is still far from satisfactory. The problems appear to have spilled to other stations recently. More needs to be done to address the problem.

It is regrettable that tempers flared again early this month after some mainland traders clashed with local activists in a rowdy protest outside Sheung Shui station. The authorities should step up enforcement. It is encouraging to hear that the issue has been put on the cross-border agenda. In a sign of closer co-operation, officials from the Customs, Bureau of Exit and Entry Administration explored tighter measures during a meeting with their local counterparts in late October.

The mainland side is reportedly considering limiting the number of times Shenzhen residents can cross the border in a day as part of the efforts to crack down on parallel imports. Hong Kong immigration officials have also pledged to turn away suspicious mainlanders who make several crossings a day. These are welcome steps to tackle the problem.

With tens of thousands of passengers streaming through the border each day, enforcement alone is probably insufficient to curb the abuse. It makes sense, therefore, for the authorities to tackle the problem at its root. Restricting same-day multiple crossings appears to be worthy of consideration.

The Security Bureau has understandably raised concerns over the impact on Hong Kong's image and the entry and exit policy. But the proposed measures are unlikely to affect genuine tourists. The authorities should carefully examine the implications and strike the right balance.


Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive



This article is now closed to comments

its definitely mainland's tax policy of forcing ppl to consume crappy domestic products by putting up such a high import tariffs!!!
Stepping up inspections of parallel trading is just a band-aid, while the core problem remains. The HK gov needs to tell the mainland in very clear terms that their tax policy is broken, and this is what promotes parallel trade.
There's no good reason why the mainland can't sell milk powder or iPhones at or below the HK price, especially when average incomes are much lower. But due to high import tariffs and 17% VAT tax, many products in the mainland are more expensive than the same goods in HK.
The mainland needs to rethink its tax and trade policies to put consumers first. Otherwise the parallel trade will continue forever, regardless of how many roadblocks they put in place.
What the small guys are doing with red white and blue bags, the big boys are doing with container trucks. And drivers - don't forget to fill up with cheap back street diesel before you cross over into Hong Kong.
Why pick on only the poorer traders who have to physically handle the stuff across the boundary? If you are are going to label this form of parallel trading as "abuse" then please extend your criticism to the thousands of "tourists" who fly into Hong Kong each day to attend trade exhibitions or visit shopping malls in Tsim Sha Tsui and Central, buying up dozens of expensive fashion label bags or other apparel for resale when they fly home.


SCMP.com Account