• Thu
  • Dec 18, 2014
  • Updated: 4:13am

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.

NewsHong Kong
PARALLEL TRADING

Traders try to beat rule on baby formula with sachets

Traders are attempting to beat the two-tin limit on exporting infant formula by selling small plastic bags filled with individual servings

PUBLISHED : Tuesday, 05 February, 2013, 12:00am
UPDATED : Tuesday, 05 February, 2013, 12:14pm
 

Parallel-goods traders are already finding ways to dodge the two-tin limit on baby formula – weeks before the government is set to approve the new rule.

On Monday, the South China Morning Post found traders outside Sheung Shui station – a large-scale distribution centre for the parallel-goods business – apparently loading bags with milk powder packed in small sachets of individual servings instead of the usual large tins.

The tactic raises doubts about whether understaffed customs officials at the border will be able to enforce the new restrictions, designed to maintain supplies in Hong Kong in the face of a continuing backlash from the 2008 tainted milk formula scandal on the mainland.

Bernard Lee Kwan-kit, vice-chairman of the Association of Customs and Excise Service Officers, insisted such tricks did not mean the rules would fail.

"Officers are fully capable of detecting milk powder even if it is disguised. But the main difficulty for us is the tight resources," he said. "The additional work is going to be quite a heavy burden to us. We will be needing extra manpower, space and facilities such as X-ray machines in order to carry out this new duty."

We will be needing extra manpower, space and facilities such as X-ray machines in order to carry out this new duty

Health secretary Dr Ko Wing-man said he was inclined to push for tougher restrictions by limiting anyone leaving Hong Kong to two tins – or 1.8kg – a day rather than each trip. This would prevent mainland parallel-goods traders from simply making more trips each day to move their stock.

He said they were considering whether the two-tin limit with a time restriction was legally and tactically possible.

Ko said that his bureau would hold talks with milk powder manufacturers on the amendment to the law and it was aiming to submit a proposal to the Executive Council .

Most parallel traders seen in Sheung Shui on Monday were carrying Enfamil infant formula in yellow packaging as opposed to the brand's normal blue packaging seen in Hong Kong stores.

A spokeswoman for Mead Johnson, which owns the brand, said the company had not imported the yellow version into Hong Kong. A Google search suggests this version is sold overseas and is available as individual servings packed in sachets.

A spokeswoman for Customs and Excise said the department would deploy additional manpower to help with checks on outgoing traffic. She added that under existing export regulations, the maximum penalty for a criminal offence is a fine of HK$500,000 and two years in jail.

Ko said figures showed that the parallel-goods trading was mainly affecting Mead Johnson and Frisco brands.

A government hotline set up last Friday has so far received more than 4,600 calls, of which around 2,500 were orders transferred to formula suppliers.

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This article is now closed to comments

whgmlam
Why is no one taking this to the baby formula manufacturers? They are the one's who are creating this situation with their greedy price policy in China? Stop targeting the poor customers, start to pressure the manufacturers.
jenniepc
Again, I am Taiwanese originally and I don’t know much about China or Hong Kong. I was born in a very poor family. Yes, I grew up in the countryside, well, the mountain and a lake behind our house. I have never heard baby milk formula until I was 21 years old and I still grow up healthy and strong with my mother breastfeeding. I am 5ft. 4" and 120 Lbs and The last time I went to see my doctor in January 2008.
Most Chinese people are hard workers. I understand that they want to get rich quick. They may lack in some social manners. They may not be aware of their own behavior, which may not be tolerated in other countries or peoples. I don’t know if it is due to uneven distribution of the level of an education or some character of Chinese people. Yes, people's level of education, the distribution is more uniform, usually better social etiquette. Hong Kong and Guangdong are the same ethnic group. The people of Hong Kong to deal with social way much better than Cantonese.
JenniePCChiang/江佩珍 02/04/13 美國
HK-Explorer
Get more infant formula. I am sure Mead Johnson can send and extra 10,000 tins to HK and set up a shop next to the boarder and let people buys as much as they want and take it home. I am sure they would love to do this. Not sure why they have not stood up and said "Hey we didn't cause it but we will fix it and this is how we will do it'. Great for PR.
ninacheung
Time to start training infant formula sniffing dogs!
bobbylad16
Keep up the pressure on them and they might start encouraging breast feeding on the mainland.
richardg23
Seal the border?

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