26 October 2016
Parallel traders are seen outside Hong Kong's Sheung Shui MTR station. Photo: HKEJ
Parallel traders are seen outside Hong Kong's Sheung Shui MTR station. Photo: HKEJ

Why smuggling syndicates are unfazed by the new visa policy

For anyone hoping that the new Hong Kong travel curbs on Shenzhen residents will stem the problem of cross-border smuggling and parallel trading, a visit to some border districts will serve as a quick eye-opener.

During a recent trip to Sheung Shui and the Lo Wu border checkpoint area, this reporter found that the grey market business was thriving as usual, with no visible fall in commercial activity.

Landmark North, a shopping mall directly accessible from the Sheung Shui MTR station and one of the barometers of the cross-border trading business, was teeming with punters.

With lists in one hand and large suitcases in the other, people could be seen visiting personal care, cosmetics and pharmacy stores and negotiating prices in Putonghua.

Clearly, many self-employed parallel traders are still at work.

While some Shenzhen residents may have been rushing to the territory to snap up goods before their multiple entry visas expire, it is the organized activities by gangs that hit you in the face.

Trolleys of Yakult dairy drink, Wyeth baby formula, Ferrero Rocher chocolate, Tiger Balm heat rub, Body Shop skin toner and many other goods can be constantly seen flowing in and out of shabby industrial buildings in close vicinity of the Sheung Shui station.

You can find words like “R&D” or “research center” in the English names of these venues but they are actually just warehouses for stocking up on goods to be sneaked across the border.

What becomes obvious is that cross-border parallel trading syndicates and smugglers have found ways to get round the new visa policy — Shenzhen residents are now restricted to one Hong Kong visit per week, against unlimited access previously — and carry on with their business as usual.

One of the key strategies being deployed is enlisting the services of more Hong Kong people to smuggle things across the border, replacing the army of mainland ‘mules’.

Given the enormous profits involved in reselling things in the mainland, trading syndicates are able to offer attractive financial incentives to the Hong Kong carriers. 

Reports say that one can earn HK$30 for carrying an iPhone across the border and HK$65 for two cans of powdered formula, the allowed amount per person under an amended regulation since March 2013.

With a large backpack and a suitcase, if one carries two iPhones, two cans of formula, four bottles of wine and some other daily necessities on a single trip to Shenzhen, he or she can pocket around HK$300.

Multiply that with several trips, not to mention surreptitiously carrying more than the allowed quantity of goods, and you can see how much money is there to be made. 

Mainland authorities have been issuing the new one-visit-a-week multi-entry visa for Shenzhen residents since April 13.

During the “grace period” in which old visas are still valid, mainlanders who travel between Hong Kong and Shenzhen more than twice a day may find themselves on a watch list. This means their baggage will be checked.

But Hongkongers face no such scrutiny.

If a Hong Kong ID cardholder makes parallel goods trading his full-time job and goes to Shenzhen twice a day, a monthly income of HK$20,000 looks like a sure thing. 

Not surprisingly, many are tempted. 

Smuggling syndicates don’t have any problem recruiting enough full-time “employees”, while part timers during weekends are also welcome.

Media reports have it that the monthly rent for a 200-square-foot warehouse in a building called Advanced Technology Center in Choi Fat Street in Sheung Shui is around HK$15,000.

Though the rent has moderated from earlier levels — before the government’s new crackdown, the rent was said to be as high as HK$20,000 — it still reflects the bullish outlook of traders.

Organizers who rent subdivided spaces and recruit individuals to take goods to Shenzhen can earn HK$40,000-50,000 a month, according to AsiaFortune magazine.

That said, one must acknowledge that life has become a bit tougher for the parallel traders now.

Those looking to make a quick buck will have to avoid certain checkpoints and pick those with relatively easier inspections.

“Always avoid Luohu,” advises one veteran parallel trader from Shenzhen.

Luohu is the busiest of all the six checkpoints between Hong Kong and the mainland, with daily passenger throughput of 250,000.

It is said that if you have lots of stuff with you, it is better to choose Futian, Huanggang and Shenzhen Bay as there are fewer customs officers and X-ray machines at those places.

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A new visa policy limits Hong Kong visits by Shenzhen residents to one a week, but the move is unlikely to stem cross-border smuggling activities.

EJ Insight writer

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