Please.  Drop the euphemism.  “Parallel trading”?  It is smuggling by any other name.  Over the Labour Day long weekend, protests against “parallel traders” in Sheung Shui were abruptly called off amid allegations of pro-Beijing and criminal organizations having infiltrated the protesters’ ranks, intent on stirring up trouble and inciting violence. Cancelling was probably the right thing to do – protesters’ and residents’ safety is paramount – but past demonstrations have largely failed to curtail smuggling activity in the affected neighborhoods.

parallel trading
Photo: North District Parallel Imports Concern Group.

One of the problems lies with the general public’s somewhat laissez-faire attitude towards “parallel trading”.  Although many agree that such activity constitutes a nuisance, most fail to recognize the culprits for what they really are – smugglers, petty criminals engaged in a blatantly unlawful activity.  Whether it be an elderly Hong Kong resident making daily trips across the border with two cans of infant formula at a time, or a mainlander bribing customs officials to turn a blind eye to his boxes of iPhones and pharmaceuticals, both are instances of illicitly moving commercial goods from one jurisdiction (I dare not say “country”, that’d be seditious!) to another with the intention of subsequent resale and thus avoiding the proper import/export channels.

Sheung Shui Parallel Traders
Parallel traders in Sheung Shui. Photo: Irene Law via North District Parallel Imports Concern Group.

Hongkongers have enjoyed a cozy relationship with “parallel trading” for decades, so it is no surprise that, besides residents living in the beleaguered North District, many have come to view the practice as somewhat innocuous, just “business as usual”.

During the 1990s, the boom in consumer electronics and quirky home appliances in Japan was brought to Hong Kong (more precisely, to the shops on Apliu Street in Sham Shui Po) via “parallel traders”, as many of those gadgets were not originally intended for export outside the domestic Japanese market.

A decade later, computer peripherals, mobile phones, and digital cameras smuggled from abroad were openly sold in electronics stores throughout the city. Traditionally high rents in Hong Kong meant persistently high retail prices, whereas seasonal rebates and promotions, tax refunds, and online shopping in the USA and elsewhere enabled such goods to be purchased cheaply abroad then sold locally at a profit.  In recent years these arbitrage opportunities have extended to fashion accessories and luxury items like watches, no doubt to accommodate the demands of mainland shoppers.

sham shui po
Sham Shui Po. Photo: Wikicommons.

Trading in smuggled goods has become so commonplace and accepted that many electronics stores the likes of those in Wan Chai and Mong Kok routinely list two prices per merchandise: one price for the “official” version from the licensed distributor carrying a local warranty, and a second, cheaper price for the “parallel import” or “grey market” version.  The latter usually sells at a discount of anywhere from 10% to 30%, depending on the item’s popularity.  Similarly, price comparison web sites like quote two prices for most goods, ranging from electronic gizmos to baby products.

Some local travel agencies offer bargain-basement priced air tickets to popular destinations like Japan but require passengers to forfeit their check-in baggage allowance and help haul suitcases filled with goodies back to Hong Kong on behalf of parallel traders, essentially serving as “mules”.

bay formula parallel trading
Photo: Wikipedia.

In the past, parallel trading has brought variety and price savings to many Hong Kong consumers. Times have changed, and the trade in smuggled goods is no longer just about economics but has turned into a sizzling-hot political powder keg. Sadly, the need to crack down on smuggling activity has been equated with the battle-cry of localist sentiments; such politicization is unlikely to alleviate the problem because it forces an already incompetent GovHK to turn to Beijing for instructions.

Rather than adopt more rigorous border checks, riot police are deployed into shopping malls, as they were last year, to defend mainlanders’ “right to shop”, and hundreds of officers are mobilized at a moment’s notice to counter crowds of youngsters waving Union Jacks. By denouncing parallel trading as plain simple criminal activity, it may be possible for both sides of the political divide to agree on legislation and law enforcement measures to tackle what is quickly becoming a local livelihood problem.

Frank Siu is a financial econometrician working in the private sector. Born and raised in Hong Kong, he takes a keen interest in local affairs, particularly issues of rising social inequality and deepening political uncertainty. He enjoys curry fish balls and rubik's cubes.