Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more

Lucky strikes it rich as smugglers targeted

Mark O'Neill

In the dirty, overcrowded alleys of Qianmen, everything is cheap and most goods are stolen or smuggled - socks, shirts, puppies and even workers from distant corners of the country for hire are on offer.

Just as it was when the emperor lived in the Forbidden City, on the other side of Tiananmen square, Qianmen is famous for its poor, and bargain shopping - a good place to ask what has happened to the government's anti-smuggling campaign.

It was launched with much fanfare by Premier Zhu Rongji on July 16, with the aim of boosting import duties, win back market share for domestic manufacturers and raise the prices of smuggled items.

Customs targeted raw materials for the chemical industry, oil products, steel, cars and plywood.

According to the official press, the campaign has been a considerable success. Television reported gun battles at sea between smugglers in boats equipped with state-of-the-art telecommunications being chased by customs vessels full of soldiers with machine guns. Shenzhen customs stopped two cargo vessels from Hong Kong and found 1.13 million pirated compact discs.

In the first 30 days of the campaign, the authorities seized 1.03 billion yuan (about HK$958.41 million) worth of smuggled goods - a record for a single month.

Prices of some of the targeted items have gone up - soyabean oil to 9,500 yuan a tonne in mid-October from 7,500 yuan in June, polyester pieces to 7,300 yuan a tonne in mid-September from 5,800 yuan in July, plywood to 30 yuan a plank in mid-August from 19 yuan in July. Prices of fertiliser, diesel, cold-rolled steel, cigarettes, computers and computer parts have also risen.

These price changes have saved companies like Yamei Polyester of Guangzhou which was able to resume production after a nine-month shutdown.

If there is one company in the entire mainland most in need of the anti-smuggling campaign, it is Lucky Film of Baoding in Hebei, the country's last domestic maker of colour film and photographic paper.

Last year it accounted for about 27 per cent of the market of 150 million rolls of film, with 10 million legally imported and the rest, accounting for 66 per cent of the market and mainly Kodak and Fuji, smuggled.

For years, Lucky has been appealing for just such a crackdown, claiming that without the duty of 13.6 yuan on each roll of imported film, it cannot compete against Kodak and Fuji, which, thanks to heavy advertising and thousands of franchise outlets nationwide, dominate the market.

So what has the campaign done for Lucky in the alleys of Qianmen? 'It has pushed up the price of Kodak and Fuji,' said Wang Liguo, running a small one-hour film developing shop.

'Kodak and Fuji sell for 25-28 yuan a roll, up from 21 before, while Lucky costs the same, at 12 and 15 yuan for different grades. But people still prefer the imported brands, because they think they are better quality,' he said.

A photographic shop manager said: 'Nothing has changed. We have ample supplies of Fuji and Kodak and the price is still 21 yuan. They remain the preferred brands.

'But Lucky, at 12 yuan a roll, has its customers. I see its market share growing about 10 per cent this year.' An official at Lucky said that the campaign had a big immediate impact and sales doubled in the month from mid-July. The price of Kodak and Fuji's photographic paper rose to 620 yuan a roll in mid-August from 480 yuan but then fell back. Lucky kept its prices unchanged.

'But then the smuggling resumed. It is well organised, involving groups and individuals, and on a large scale. It is hard for a company like ours to investigate. It is hard to say where the goods come from,' he said. 'Colour film is not one of the priority products in the anti-smuggling campaign.

'Our market share this year will rise from 26.7 per cent last year but will still be less than 30 per cent,' he said.

'Kodak will be the market leader in 1998, ahead of Fuji, both with over 30 per cent. We would like the campaign to intensify and more efforts made against those who smuggle film.'