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Busy traders in Yuen Long yesterday.Photo: Jonathan Wong

Too little, too late: curbs on China visitors slammed as Hong Kong parallel trading booms

While visitors seem relaxed about new travel curbs, local residents fear it is too little, too late and shopkeepers worry about their livelihoods

Last week's decision to restrict Shenzhen residents to one trip to Hong Kong per week did little to dampen brisk sales in border towns yesterday.

Suitcases and shopping trolleys stuffed with baby milk formula and instant noodles, as well as medication, packed the pavements outside a cluster of pharmacies in Sau Fu Street, Yuen Long, for example.

Since Monday, Shenzhen's municipal government has not renewed expiring multiple-entry permits, which allow unlimited visits to Hong Kong. Instead, permanent residents can apply to visit no more than once a week.

The move - expected to slash the number of visitors from Shenzhen by 30 per cent, or 4.5 million a year - is designed to deflate tension over parallel traders, who snap up goods in Hong Kong to resell over the border.

But the full effect of the move is unlikely to be felt for six to nine months, and visitors in town yesterday seemed unperturbed - while locals were concerned the move could be too little, too late.

Shenzhen resident Shirley Tung had no problem with the decision as she was not a regular visitor. "In fact I am happy. Hong Kong used to be quite clean, it's dirtier now," she said. Fellow shopper Daisy Song saw no reason to apply for the new permit. "Since I am not a parallel trader, what's the purpose of visiting so often?" she asked.

But some Yuen Long residents - who claim parallel traders cause overcrowding and force out stalls catering to local tastes - said the move would not solve the problem.

"Limiting their trips to once a week will not work … If more people are attracted, then we are back to the original situation," said Y.K. Chan, who has lived in the town for a decade.

Pharmacists in the area said they had noticed little impact yet, but one worried fewer mainlanders would come in the long run.

"I am not disappointed but angry. Fewer people coming means less business, and less business means less money," said the employee of Yee Kin Medicine.

But an employee at Well Done Pharmacy said he was not too worried as Shenzhen residents might simply buy more goods.

Retails sales in the city have slumped in recent months as fewer mainland visitors have made the journey.

The Occupy protests and Beijing's crackdown on graft and conspicuous consumption have been cited.

Economists predict that the latest change will knock down retail sales by 2 or 3 per cent. They expect shop rents in border towns to take a hit, but see little impact on the wider economy.

ANZ Bank estimated that the measure would reduce retail sales by about HK$10 billion a year or 2 per cent of the total.

That would represent 0.09 per cent of gross domestic product, and mean 7,000 job losses.

Mariana Kou, senior investment analyst at brokerage CLSA, expected retail sales to drop by 2 to 3 per cent, with cosmetics businesses badly hit.

Joe Lin, executive director of rental services for CBRE, said rents for pharmacies and shops selling daily necessities could fall 20 to 30 per cent.

This article appeared in the South China Morning Post print edition as: Business as usual in border towns
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