![Parallel Traders in Sheung Shui](https://upload.wikimedia.org/wikipedia/commons/8/87/Parallel_Traders_in_Sheung_Shui.jpg)
Parallel trading in Hong Kong is the phenomenon of Chinese
parallel traders taking advantage of
multiple entry visa policy to import goods from
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
to
Mainland China
"Mainland China" is a geopolitical term defined as the territory governed by the People's Republic of China (including islands like Hainan or Chongming), excluding dependent territories of the PRC, and other territories within Greater China. ...
, causing shortages of household goods in various locations starting in the
North District and expanding to
Tuen Mun
Tuen Mun or Castle Peak is an area near the mouth of Tuen Mun River and Castle Peak Bay in the New Territories, Hong Kong. It was one of the earliest settlements in what is now Hong Kong and can be dated to the Neolithic period. In the more re ...
,
Yuen Long
Yuen Long is a town in the western New Territories, Hong Kong. To its west lie Hung Shui Kiu (), Tin Shui Wai, Lau Fau Shan and Ha Tsuen, to the south Shap Pat Heung and Tai Tong, to the east Au Tau and Kam Tin (), and to the north Nam Sang W ...
,
Tai Po
Tai Po is an area in the New Territories of Hong Kong. It refers to the vicinity of the traditional market towns in the area presently known as Tai Po Old Market or Tai Po Kau Hui () (the original "Tai Po Market") on the north of Lam Tsue ...
and
Shatin
Sha Tin, also spelt Shatin, is a neighbourhood along Shing Mun River in the eastern New Territories, Hong Kong. Administratively, it is part of the Sha Tin District. Sha Tin is one of the neighbourhoods of the Sha Tin New Town project.
The ne ...
. Problems related to this include increasing congestion from day traders, overloading of infrastructure and disruption of the everyday lives of residents in the northern districts of Hong Kong.
Demand for significant volumes of daily necessities favoured by Shenzhen residents has progressively decreased the numbers of those catering to local needs, and caused rent inflation and shortage of certain goods such as infant formula.
Situation
Visitors from mainland China have risen from 2.3 million in 1997, to nearly 41 million in 2012 and 53 million in 2013. Since 2012, the problem of parallel trading in Hong Kong became more serious. Media reported that 95% of multi-entrance travellers were Chinese parallel traders. The Shenzhen customs department reported in 2015 that of 33,000 arrests made for trafficking parallel goods across the border since 2010, 80 percent were Hong Kong residents.
Zhang Xiaoming
Zhang Xiaoming (; born 3 September 1963) is a Chinese politician. He was the director of the Liaison Office of the Central People's Government in Hong Kong and then of the Hong Kong and Macau Affairs Office, before being demoted to deputy direc ...
, Director of the
CGLO in Hong Kong, was satisfied overall with the implementation of the
Individual Visit Scheme
The Individual Visit Scheme begun on 28 July 2003 allowing travelers from Mainland China to visit Hong Kong and Macau on an individual basis; prior to the Scheme, Mainland residents could only visit on business visas or on group tours.
The outb ...
, and said the problem of parallel trading should not be exaggerated for political reasons. Zhang asserted that 60 percent of parallel traders were Hong Kong residents, and Shenzhen residents on multiple-entry permits accounted for the remainder.
Through multi-entrancing within a day, separating goods into small boxes, exchanging goods in and out between the gates of the MTR station exporting goods to China, parallel traders earn 'transporting charges' by claiming themselves as travellers and that their products are for self-use, saving the costs of tax. Traders mainly gather in
Sheung Shui station
Sheung Shui (; : , literally "Above-water") is the penultimate northbound station on the in Hong Kong. This station serves as the terminus of northbound trains after the Lo Wu and Lok Ma Chau boundary crossings have closed for the day. It is ...
Exit C and the platform as trading centres to pass on goods to buyers in China. They linger thus causing serious blockage and crowding in the station. Targeting the problem,
MTR hired hundreds of staff, erected barriers and gates in attempt to control the situation.
Station staff claimed that traders behaved negatively towards them. Although the MTR and the police had enhanced law enforcement, traders persisted. Some of the traders break down large appliances such as washing machines into pieces in an attempt to avoid the inspection of the staff and policemen. Others forcefully broke through the blockades of MTR staff and police.
Causes
There were several reasons behind the parallel trading in Hong Kong. First, the strength of the
Renminbi
The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022. ...
against the
Hong Kong dollar
The Hong Kong dollar (, currency symbol, sign: HK$; ISO 4217, code: HKD) is the official currency of the Hong Kong, Hong Kong Special Administrative Region. It is subdivided into 100 cent (currency), cents or 1000 Mill (currency), mils. The H ...
and the absence of taxes and duties in Hong Kong make goods and everyday commodities more attractive to Mainland Chinese consumers. Secondly, the multiple entry visa policy allows visa holders crossing the Hong Kong-Mainland border many times with one application, so that they can export goods from Hong Kong frequently. Due to the prevalence of counterfeiting in Mainland China, Hong Kong-sourced products and daily necessities are preferred for their perceived quality and demand for Hong Kong goods is insatiable. Parallel traders who profit by buying goods locally and reselling them in the Mainland push up the local prices.
Effects
Milk powder shortage
Despite the increasing importation of
infant formula
Infant formula, baby formula, or simply formula (American English); or baby milk, infant milk or first milk (British English), is a manufactured food designed and marketed for feeding to babies and infants under 12 months of age, usually prepar ...
(powdered formula) from foreign countries, the milk powder shortage intensified greatly due to the intense parallel trading activity in Hong Kong. According to the
Neo Democrats
The Neo Democrats was a pro-democracy, localist political group in Hong Kong composed mainly of former and disenchanted members of the Democratic Party New Territories East branch after the 2012 constitutional reform proposals. It had held o ...
, during January 2013, parallel traders hired elderly persons and housewives, giving them $20–$50 per can of milk formula, to line up in front of stores at night to purchase multiple tins of milk powder and then transfer it to traders. Furthermore, ringleader traders hired women with children and the elderly to help them to transport the milk powder across the border to avoid inspections.
According to a staff member in a chain pharmacy, although the store limited each customer to purchasing no more than four cans of milk formula at once, shopkeepers who wanted to meet sales targets often sold more than four cans to mainlanders. Also, there were stores that only sold formula to mainlanders, causing a shortage of milk formula for local consumers.
Inflation
Parallel trade activities have redistributed supplies of a lot of goods between Hong Kong and the mainland, increasing prices of the goods. For example, milk powder prices increased by 0.4 – 12% from 2009 to 2011. Apart from milk powder, prices of daily necessities in the
New Territories
The New Territories is one of the three main regions of Hong Kong, alongside Hong Kong Island and the Kowloon Peninsula. It makes up 86.2% of Hong Kong's territory, and contains around half of the population of Hong Kong. Historically, it ...
also increased. Due to the appreciation of Renminbi against Hong Kong dollar, branded goods sold in Hong Kong which are denominated in Hong Kong dollars gave rise to big discounts for mainlanders who settle bills in Renminbi. Also, the Hong Kong government does not levy any custom tariff on both imports and exports of most products. Therefore, Hong Kong goods are cheaper compared to those in China. Moreover, competition for shop space to open pharmacies, cosmetics and jewelry shops to support parallel trade in the New Territories has driven rent in the New Territories up by two to three times from 2010 to 2012. Small shops catering to local needs are forced to close down and residents have fewer choices. Regional prices rise and increase residents' cost of living.
Social disturbance
North District of Hong Kong is the hub for parallel trading activities. Crowding of smugglers together with the large amount of commodities and garbage blocked pedestrians, causing environmental problems and endangering the safety of children and the elderly, negatively affecting daily life of citizens in the community.
According to a survey done by New Start () on 27 January 2013, among the 500 Northern District citizens interviewed, 100% of them were discontented with the Government on the issuance of multiple-entry permit. 57% and 72% of the interviewees believe the government was ignoring public grievance and were planning on moving away from gathering areas of parallel traders respectively.
Intensification of Hong Kong-Mainland conflict
Parallel trading problem marked the penetration of
Hong Kong–Mainland conflict Hong may refer to:
Places
* Høng, a town in Denmark
*Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China (abbr. Hong Kong SAR or HKSAR), is a city and specia ...
from cultural aspect to livelihood aspect. As parallel traders carried large quantities of products, treating Sheung Shui MTR station as a transaction centre that disturbed the livelihood of residents nearby, discontent among Hong Kong citizens towards Mainland parallel traders surged. Furthermore, since parallel trading worsened inflation and caused serious milk powder shortage problems, some Hong Kong citizens regarded Mainlanders as resource marauders. Conflict arose between the groups.
Citizens' response
![Reclaim Sheung Shui 1](https://upload.wikimedia.org/wikipedia/commons/a/ac/Reclaim_Sheung_Shui_1.JPG)
Anti-Mainland netizens formed 'North District Parallel Imports Concern Group' on Facebook to monitor the government on solving the problem of parallel trading and advocate law enforcements against the parallel trading problem. When government officers claim the problem has been relieved, members of the group upload photos to social network, contradicting the claim made by governmental officials. Besides, Hong Kong citizens started the "Reclaim Sheung Shui" campaign in September 2012 to expressing their discontent toward parallel trades in Sheung Shui. About 100 Northern District residents gathered outside Sheung Shui Station and protested with slogans and banners. Protesters argued with parallel traders or even fought with those supporting the traffickers. Some even rioted outside chained pharmacies to express their discontent as these shops stock up milk powder for sale to mainlanders at higher prices.
On 1 February 2015, an arsonist targeted a warehouse that was used by suppliers to parallel traders in Sheung Shui. Since 8 February, the northern territories of Hong Kong have experienced demonstrations most weekend that descended into violence due to clashes between
localist groups and police and/or pro-establishment groups. An authorised rally of 400 people that took place in Tuen Mun on 8 February ended with the invasion of two shopping malls which were closed off by police for several hours; Police used pepper spray and batons inside the mall against protesters, and arrested 13 people.
[Luo, Qi (9 February 2015)]
"Tuen Mun parallel protesters pepper sprayed"
. ''The Standard'' At another authorised rally attended by about 200 people on 15 February in Shatin culminated also in mall invasions and six people were arrested.
[Luo, Qi (16 February 2015)]
"Sha Tin protesters pepper sprayed"
. ''The Standard'' A small protest march on 22 February organised by Population Policy Concern Group and North District Parallel Imports Concern Group and attended by a dozen people headed for the office of New Territories legislator
Michael Tien
Michael Tien Puk-sun (born 25 August 1950) is a Hong Kong politician, businessman and member of the Legislative Council for New Territories North West. He is the founder and chairman of the G2000 clothing retail chain and former chairman of ...
that was inside the Discovery Park shopping mall in Tsuen Wan.
At a rally in Yuen Long on 1 March, many shops along the protest route drew their shutters in anticipation of disturbances. Localist groups
Civic Passion
Civic Passion was a radical, populist, localist, and nativist political party in Hong Kong. Founded by Wong Yeung-tat as an activist group in 2012, it held strong localist views and opposed the involvement of the Chinese government in the ...
and
Hong Kong Indigenous
Hong Kong Indigenous is a localist political group established in 2015. It is known for its hardline localist stances and militant methods of protesting. It has been actively involved in protests and engaged into violent clashes with police, ...
clashed with anti-protest groups such as
Voice of Loving Hong Kong, and 38 arrests were made by the police.
[Eddie Luk and Hilary Wong (2 March 2015)]
"Stores pull down the shutters"
. ''The Standard'' Wildcat demonstrations occurred on 8 March successively in Sheung Shui, Tuen Mun and Tsim Sha Tsui.
[ Approximately 20 people met up in Sheung Shui at 2 pm; the numbers of protesters increased to 100 when rallied moved on to Tuen Mun in the late afternoon. The protesters then adjourned to Tsim Sha Tsui at around 9 pm. A total of six individuals were arrested that day.]
Government's response
Responding to the parallel trading activities, The Hong Kong Immigration Department
The Immigration Department of the Government of Hong Kong is responsible for immigration control of Hong Kong. After the People's Republic of China assumed sovereignty of the territory in July 1997, Hong Kong's immigration system remained la ...
and the Police had jointly mounted anti parallel trading and employment operations on 19 September 2012 and 22 January 2013, codenamed Windsand () and Realpower () respectively.
Hong Kong had taken action against parallel trading activities together with Shenzhen
Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
. From September to November 2012, the Hong Kong Immigration Department, the Customs and Excise Department and the Police Force had arrested 406 people in total, within which 60 had been convicted. At the same time, the Shenzhen Customs had arrested more than 4500 parallel traders, persons for receiving goods and 'Observatories'.
The Import and Export (General) (Amendment) Regulation 2013 prohibits the unlicensed export of powdered formula, including milk and soya milk powder for infants and children under 36 months. The Regulation 'does not apply to powdered formula that is exported in the accompanied personal baggage of a person aged 16 or above leaving Hong Kong if the person did not leave Hong Kong in the last 24 hours and the formula does not exceed 1.8 kg in total net weight.'
See also
* Daigou
Daigou () is an emerging form of cross-border exporting in which an individual or a syndicated group of exporters outside China purchases commodities (mainly luxury goods, but sometimes also groceries such as infant formulas) for customers in Chi ...
* Parallel import
A parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product and are implicated in issues of international trade, a ...
* Early 2012 Hong Kong protests
* Liberate Yuen Long
The 2015 Yuen Long protest, called Liberate Yuen Long or Recover Yuen Long () by the protesters, was part of a series of anti-parallel trading protests in the northern districts of Hong Kong that took place on 1 March 2015 in Yuen Long. It was ...
(2015)
References
{{reflist, colwidth=30em
External links
More measures against parallel traders
ATV World Inside Story- Parallel trading Part1
ATV World Inside Story- Parallel trading Part2
Economy of Hong Kong
2012 in Hong Kong
2013 in Hong Kong