Everybody knows Sheung Shui is a smuggler’s hub where thousands of goods are trafficked over to Shenzhen. So why are the police turning a blind eye? Shirley Zhao reports. Photography by Brett Elmer

It’s like a massive shopping jamboree where the greatest bargains are going on right outside the door – or, in this case, Sheung Shui MTR station. Sheung Shui is the closest stop to Lo Wu, the border between Hong Kong and Shenzhen. Every day, hundreds of ‘shoppers’ rush out of the station with trolleys and suitcases to nearby Choi Yuen Road, where around a dozen ‘wholesalers’ are waiting with discounted goods. However, there’s a twist: the shoppers don’t purchase the goods. In fact, they’re the ones who are getting paid.

On Choi Yuen Road you’ll find piles of cardboard boxes filled with all kinds of domestic products like milk powder, diapers, bottled wine, dietary supplements, cosmetics and even iPhones and iPads. Within 20 minutes these boxes will have been emptied and the ‘shoppers’ (with satisfactory smiles) will rush back into the station and disappear among the crowds. Soon, new boxes arrive and a fresh wave of shoppers swarm Choi Yuen Road again; and so the spree continues. The shoppers are actually smugglers who take parallel-market goods from dealers in Sheung Shui, then cross the border into Shenzhen and give their goods to dealers waiting on the other side, who will pay the smugglers according to the contents of their merchandise.

“It’s easy and quick money,” a parallel-market dealer tells Time Out at Sheung Shui MTR station. It is worth noting that Time Out posed as a mainland student interested in earning money by smuggling goods over the border. If the dealers had known they were speaking to a reporter, the situation could have become threatening – or even violent. (Time Out’s photographer was verbally abused during the research of this story).

According to this anonymous dealer, smugglers can fetch $10 for transporting a can of milk powder or a pack of diapers; $10 for a bottle of skincare cream; $15 for a bottle of dietary supplements; $100 for eight bottles of wine; and $100 for an iPhone or iPad. “My sister is looking for students studying in Hong Kong and living in Shenzhen [like you] to help us transport cell phones,” the dealer tells Time Out. “You can come here with your classmates and friends next time. I promise no one will suspect you.”

Time Out also spoke with an elderly female smuggler. “I can go three to four rounds [between Sheung Shui and Shenzhen] a day,” she says. “I can earn about $100 dollars a round; that’s at least $300 a day. These days nobody wants to hire a woman over 60 like me, and I don’t want to end up scavenging in Sham Shui Po. Where else can you earn money so easily?”

Smugglers make so much easy money that, as a result, the parallel imports end up much more expensive in the Mainland market. According to Legislative Councillor and North District Councillor Nelson Wong Sing-chi, in Guangdong the parallel imports are sold at prices 50 percent higher than the prices at which they were bought in Hong Kong; sometimes the prices can be double the amount. Though more expensive, many customers in the Mainland prefer products labeled ‘imported from Hong Kong’. The most popular are milk powder and diapers. In a pharmacy in Guangzhou, a can of a Hong Kong-imported milk powder costs around $100 more than that in Hong Kong. Mr Huang, the pharmacy shop assistant, tells Time Out that Hong Kong-imported milk powder brands are ‘the bestsellers’ in his shop.

Li Huifen, whose sister-in-law just gave birth, bought two cans of Hong Kong-imported milk powder. “It’s more expensive,” she says, “but this is the brand we can trust.” She adds that if she lived in Shenzhen she would visit Hong Kong to buy milk powder at lower prices. “This shows that mainland people are losing confidence in mainland brands,” says Wong. “Especially after the tainted milk powder scandal, milk powder brands sold in Hong Kong have become highly popular among mainland buyers.”

According to Wong, Sheung Shui is the best ‘drop off point’ near the border because it has many discarded industrial buildings for dealers to stockpile goods (Sheung Shui has been popular for parallel imports since 2003). “At first, most smugglers were unemployed Hong Kong locals,” says Wong, “but as it became easier for Mainlanders to visit Hong Kong a lot of smugglers are now either Mainlanders or fresh immigrants.”

Wong says that although the prosperous market in Sheung Shui has boosted the retail business and helped Hong Kong’s economy, dealers who buy milk powder in mass quantities cause a shortage in supply, leaving Hong Kong citizens with an unfeasible demand for daily necessities. At the same time, dealers around the MTR are causing major traffic congestion and serious littering along the bicycle lanes.

According to Wong, another problem caused by the parallel market is that of big retailers grabbing as many shops as they can in order to sell popular goods and gain a greater market share, thereby heating up rentals for shops.

“I know they are just trying to make a living,” says Ho Wing-yee, a 32-year-old businesswoman who lives nearby, “but they are really annoying. Look at all the garbage they leave every day. And it’s illegal for them to block the bicycle lanes. Once I was going back home by bike and four women were walking in front of me with their trolleys. To avoid them, I lost control of my bike and fell over. The police should do something.”
In fact, there is a police presence on Choi Yuen Road, and you will see patrolling constables throughout the day, but seldom will they intervene in the smuggling process. According to the Hong Kong Police Force, their dealings do not breach the current Hong Kong laws and regulations. However, most smugglers are Mainlanders on a travelling visa which does not allow them to ‘work’ in Hong Kong, therefore they are in violation. The distributors could also be accused of supplying illegal labour. Since early 2010, the Police Force and other government departments have conducted joint operations in Sheung Shui. The last was conducted on October 19, with eight males arrested for breach of conditions of stay.

To control parallel importation, the eighth amendment to the Criminal Law of the PRC was implemented on May 1 in the Mainland, thereby making it a criminal offence for those found crossing the border with undeclared goods at least three times in a year. The penalties can be as severe as three years in prison. Before this amendment, it would only be a criminal offense when a smuggler was caught evading customs duties of more than RMB50,000 (HK$61,000) at one time.

While welcoming the amendment, Wong believes the government has become heavy-handed on parallel importation only out of concern that increasing amount of Hong Kong products have caused intense competition to Mainland products. “Why don’t Chinese people trust their own products?” asks Wong. “The central government should really think about this question.”