Archives For Non-commercial trade

Border Madness!

October 27, 2012 — Leave a comment

Mainland Chinese visitors line up and wait for check in outside Hong Kong’s Sheung Shui train station with packages of diapers to be parallel imported into Shenzhen for resale.

While communist China bears the brunt of criticism for its exportation of low cost and in many cases inferior products to the rest of the world, the following article suggests one should spare a thought for the Chinese citizens themselves given what they have to put up with from the authorities between Hong Kong and Shenzhen.

The recent hard crackdown on smugglers and couriers across the boundary between Hong Kong and Shenzhen has cut deeply into the business of parallel trading on both sides of the border, and thus far, appears to have reduced the nuisance problem caused to residents of the northern New Territory. However, with the crackdown on-going and the Mass Transit Railway Corporation (MTR) adding further pressure by restricting the dimensions and weight of passenger luggage going across the border, complaints have started buzzing, that the move may have frightened away the passenger couriers, but not the syndicates coordinating them behind the scenes.

Effective 9 October 2012, the Mass Transit Railway Corporation (MTR) imposed a maximum weight limitation of 32 kilograms or 130 centimetres in length for passenger luggage on the East Rail Line, under a three-month trial scheme. Could you just imagine this at an African border crossing? Passengers are allowed only one piece of baggage. All their small parcels and suitcases are required to be bundled up into a single “package,” all part of the bid to curb the passenger-couriers whose clamouring and crowding had become a serious issue for neighbours of MTR in New Territories.

The restrictions were seen as MTR’s contribution to the collaborative effort that involved governments on both sides of the border, to cut down on so-called parallel traders and smugglers. MTR’s new rule has, in general, earned praise from residents of northern New Territory because the nuisance problem caused by the traders/smugglers has been alleviated. However, for residents of Shenzhen, who travel back and forth every day, or residents of `other parts of the mainland who come to Hong Kong for shopping, the size and weight limitations seem be “unnecessary” and “troublesome”.

“I was often asked to buy things in Hong Kong on my way home: cooking oil, rice, baby formula, tissues, etc. I really don’t have time to care about how heavy they are or how long they are,” said Go, a resident of Shenzhen. He Hua, also a Shenzhen resident living in Luohu district who comes to Hong Kong to go shopping two to three times a month, also doesn’t like the new limitation. “I came to Hong Kong regularly to buy things for myself and my family. I paid my money and followed regulations of the Customs, why should I worry about my weight and length? If the goods are all legal, why can’t I take them on the train at one time?” said Hua, who had carried six cans of baby formula with her, which she claimed were for her elder sister’s baby.

Recently, there has been a strengthened effort to combat parallel trade, with a collaborative effort between the Customs and Excise Department of the SAR and the Shenzhen Anti-Smuggling Bureau. The action uncovered 120 cases of parallel trading and made 123 arrests, with the unpaid taxation of the confiscated goods amounting to one million yuan. On the other side of the border, business associated with cross boundary goods was also affected. In North Huaqiang district in Shenzhen, which had been long recognized as the “centre of parallel trading” of “grey goods” from Hong Kong, business has shrunken since the crackdown.

A shop owner in North Huangqian area told China Daily that he had expected to make a huge profit by selling iPhone 5, the latest release by Apple Corporation. It never happened, because his Hong Kong supplier informed him that it was too difficult and that it was risky to get the iPhone 5 across the border. And the seller couldn’t get the supply he had counted on.

“The whole business chain of parallel trading depends on the ‘suppliers’ to smuggle goods from Hong Kong to Shenzhen, especially electronic goods. Now the suppliers have trouble getting through the border, (so) we have trouble getting the goods,” said the anonymous shop owner. Because of serious supply shortage, the price of “grey goods” has soared significantly on the mainland side of the border. The best example was iPhone, which sold originally at HK$5,688 (US$733.8) at the Apple Store in Hong Kong, but was priced at 8,000 yuan (US$1276.5) at the anonymous shop owner’s store. Insiders of the courier industry also told China Daily that the price for smuggling goods across the border with “ant house-moving” tactics had increased from 22 yuan per kilogram to a record high of 50 yuan per kilogram.

The business of stores that sell Hong Kong goods in Shenzhen has picked up since the crackdown, as people who live along the border in Shenzhen choose to buy daily-use goods in local stores – like cooking oil, rice and baby formula, instead of going to Hong Kong by themselves. “We have adequate Hong Kong goods, don’t worry; they are all fresh and delivered to us fresh every day,” said the owner of a store selling Hong Kong goods in Shatoujiao, or Sha Tau Kok in Cantonese, in eastern Shenzhen. The store owner refused to answer how he managed to get “adequate supply” from Hong Kong every day.

The crackdown on smugglers, especially the MTR weight limitation, had stopped individual couriers; however, it didn’t shut down the syndicates coordinating behind the scenes. What’s more, there are some 157 online stores that sold Hong Kong goods on Taobao, the biggest online shopping market in the mainland. The record on the website showed that one of the big shops had sold out 1,357 pieces of Hong Kong goods in the past week, 90 percent of which are daily use goods and food. Source: The China Daily

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Spare a thought for the informal traders in this region. The terminology is also somewhat humorous, if not ‘offensive’ to an overly liberal mind – democratic South Africans in particular.

Trade along the Rwanda-DRC border is still going strong, although with some difficulty, despite the ongoing political tensions between the two neighbors.The Rwanda Focus visited Gisenyi, from where it has been reported that several Rwandan civilians who have attempted to cross into DRC for business have allegedly been arrested and tortured.

“You can’t go in there but if you insist, then be ready to die or to be tortured by the authorities in Congo,” said Safina Mukankusi, a cross-border trader. According to locals here, anyone with links to Rwanda in form of passport, looks or language is a target for the Congolese authorities. The irony is Gisenyi is full of Congolese civilians loaded with all sorts of merchandise bought from Rwandan markets which they then carry to the DRC.

It’s also here that massive petty smuggling takes place. “There are so many ‘fat’ women around here,” said a Rwandan customs official, explaining they are stuffed with several garments in which they then hide commodities such as alcohol and sell them on the Rwandan side at a profit. “Some make more than 20 trips per da,y often smuggling a single commodity per journey… but these are poor people who are looking for a meal from their petty deals,” the official revealed. From the proceeds from smuggled goods, the Congolese then buy food and all sorts of stuff which they take back home to sell.

With the current instability however, there’s a new development. “Many Congo-men are coming to sleep here at night and go back home during day for fear of attacks,” said Fidel, a resident of Gisenyi. He says most of them sleep on the streets while others have rented some cheap houses in which they spend the night, often in groups.

Looking at the people here, it’s quite hard to imagine that their country is home to some of the world’s most valuable minerals such as gold and diamonds. Bribes and other corrupt dealings are the quickest ways to get a service done according to Rwandan traders. “Once they know you have money, they will detain you until you part with some of it, it’s mostly those that don’t have anything who are tortured,” explained Laurent Makubu, who claims he has been detained but bribed the Congolese police with $15 to secure his freedom.

While the Congolese who cross to Rwanda report no harassment, it remains a mystery why their Rwandan counterparts are the target of mistreatment on the other side. As a result, most Rwandan traders say they have resorted to using Congolese middlemen to get goods from the DRC side but at a much higher cost as the middlemen charge for their service. Source: Rwanda Focus (Kigali)

Heartless!

January 15, 2012 — Leave a comment

Fellow blogger ZIMDEV paints a bleak picture for casual cross border traders – Cross border trade has been the lifeline for many unemployed Zimbabweans who make a living buying and selling goods from various neighbouring countries. Late last year, the Zimbabwean government together with the Zimbabwe Revenue authority have introduces a ban on the use of the $300 rebate on most goods. The new tariffs are quite steep and leave no room for profit for the traders. Cross border traders, fed the nation when Zimbabwean shops were empty. They travel across borders, bringing in goods that are not available in Zimbabwe and play a vital role in the economy. One visit to Beitbridge will prove just how vital the cross border trade is to Zimbabwe. It is disheartening to see the government’s reaction to cross border trade.

Instead of enabling and facilitating trade, the government is stifling and discouraging trade and enterprise. Importers of blankets, footwear, refrigerators, stoves and other electrical gadgets now pay 40% of the purchasing price plus a flat rate of US$5 per unit as duty. Government is also now charging between 10% and 25% duty on basic commodities such as maize meal, cooking oil, potato chips, baked beans and mixed fruit jam. The consignment of goods is also charged according to the weight of the goods, each kilo being charged at $3. Cross border trade has been dealt a heavy blow.

While continental and regional efforts wax lyrical about future ‘free trade’ in the Africa, domestic efforts and policy appear to be in contradiction, or perhaps the political utterances at regional trade and AU conferences are mere hot air!  Read the full article here! Surely this should be a case for closer diplomatic collaboration between Zimbabwe and its neighbours, or are the ‘cross border traders’ the enemy?