• Tue
  • Dec 23, 2014
  • Updated: 3:27am

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

Officials must secure supplies of milk formula for local mothers

PUBLISHED : Friday, 01 February, 2013, 12:00am
UPDATED : Friday, 01 February, 2013, 3:02am

The government is expected to announce as early as today measures to combat shortages of imported infant milk formula caused by cross-border parallel trading, such as declaring it a reserved commodity subject to controls that ensure a stockpile for a stable local supply. The only other essential food still controlled in this way under a law dating back to the 1950s is rice.

That says something about public anger at the depletion of retail supplies by bulk purchases for resale on the grey market across the border, which has become a catalyst for growing resentment of mainland tourists and shoppers who buy a wide range of necessities and food.

Such a drastic step might not be necessary if mainland officials felt a sense of urgency about enforcing their own laws. Parallel trading, after all, is not illegal in Hong Kong. But on the mainland it amounts to smuggling, because the traders evade customs duty. Sadly, talks between Hong Kong and mainland officials have not resulted in enforcement that could have resulted in the pressure easing on local supplies.

Even if our officials do impose controls, they may need to be complementary to enforcement action across the border to be really effective against parallel trading. Hong Kong should call on the mainland authorities to exercise tighter oversight of the issue of multiple entry permits and enforce the law. These permits are being abused by traders who travel back and forth several times daily.

More than 3,000 people a day are believed to engage in parallel trading. Syndicates now employ hundreds who each carry their maximum load. This is stoking resentment in Hong Kong as well as violating mainland law, even though our security authorities say more than half of those involved are Hongkongers. Since it is illegal, there are ways to crack down on it. Restricting multiple same-day border crossings without a valid reason is an obvious step.

The mainland's food-quality issues are at the root of the problem. It will overcome them eventually as its rapidly developing economy matures. Then the attraction of Hong Kong supplies will fade. Meanwhile, antagonism directed at the mainland that fuels negative attitudes towards increasing integration is a sentiment the city can ill-afford for long. The government has no alternative but to secure supplies of infant milk formula for local mothers.

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