Students join ranks of parallel traders
2014-07-18, Chai Hua

Parallel traders using retirees, youths and housewives to smuggle baby formula and cigarettes across the border are changing tact. As mainland Customs have tightened restrictions, smugglers are recruiting students as runners. Chai Hua reports.

Carrying a big backpack, a mainland student studying at a Hong Kong university, surnamed Liu, walked out of the Lo Wu checkpoint and turned into Shenzhen railway station. 

 But, he was not going there to take a train — he was there to do business.

The student arrived at the second floor of the train station and found an express delivery company he usually works with. Taking out goods from his bag, he started to fill out several delivery forms — a smart phone to Beijing, two cans of stage-one Anmum baby milk powder to Jiangsu Province, several cosmetics and medicines to different places. 

“The price of this phone is HK$1,000 higher on the mainland than in Hong Kong,” said Liu, aged 23, and who has been living in Hong Kong for almost four years to pursue his bachelor’s degree.

During his studies in the shopping paradise, Liu has accumulated many shopping tips that can help him earn money. For example, many people buy cosmetics at pharmacies for their cheap prices, but he chooses brandname stores. He explained: “I have VIP cards of many cosmetic brands and I can get additional gift samples or discounts when buying products for others.”

“Medicine is also very popular. Mainlanders always buy several fixed brands. After a while, I got very familiar with their functions and can even recommend some for buyers.”

Though he is very well-versed with the industry, he refused to admit he is a parallel trader. “I am not a professional parallel trader. I do this just to earn some transportation fee,” he said.

“At first I just bought things for my friends and relatives. Gradually, they introduced me to their friends, who also wanted me to buy some for them. So, I started to charge for the errands,” Liu told China Daily. These friends pay him through online banking, which includes the cost of the products and the delivery fee.

They usually pay him at the currency rate of 0.9:1. As the latest conversion rate of renminbi against Hong Kong dollars at the Bank of China is about 0.8:1, Liu pockets the difference. 

Taking his latest trip as an example, he spent about HK$8,000 for all the products and was paid 7,200 renminbi (HK$8,954). Minus about HK$70 on transportation, Liu made a neat profit of HK$884 for this trip. 

Though highly profitable, Liu only does this business about twice a month. He admitted that his school work kept him busy and he was aware that it was dangerous to do this too often. Liu said he was afraid to be caught as it would affect his student’s visa. His prudence has kept him out of trouble so far, and he has never been caught by the cross-border authorities so far, enabling him to keep a clean record. 

Another reason that he is able to make every short “trip” safely is because he doesn’t look like a professional parallel trader at all. 


Hard to distinguish

Customs officials said a typical parallel trader usually has messy hair, dresses in sweaty clothes, carries a big suitcase, or trolley, and walks together with many others like him in a herd. Unlike these parallel traders, Liu dresses in T-shirt and shorts, wears earphones for listening to music and carries only one bag, and crosses the checkpoint alone in a relaxing and calm manner. 

Though he is not a full-time parallel trader, he still has his QQ chat platform number under a recruitment advertisement in an online parallel trading forum. “I work for real parallel traders when I have more free time, but I never transport the goods placed in a box prepared by the parallel trader,” Liu said. “I’m afraid they may put something illegal in it.” 

“In their forum or chat groups, you can find the work shifts of China Customs’ officers. Though I don’t know if the information displayed is true, I guess they have some contacts inside the Customs to enable them to slip through with their smuggled goods (when those officers are only duty). But I can’t afford even one mistake,” Liu said.

He is also cautious about the category of smuggled products. “I carry only two cans of milk powder on every trip —which is legal under Hong Kong Customs regulations. The total value of all these products I carry at one time is also within the HK$5,000 limitation, excluding the smartphone.”

“Even if I got caught, I would claim the phone is for me or is a gift for my friend.” When one uses this reasoning, it is difficult for the Customs to challenge such a claim.


Tough regulations

According to Hong Kong immigration regulations, a person who lands in Hong Kong either as a visitor or a student shall not take any employment, whether paid or unpaid; and he shall not establish or join any business. It doesn’t matter what the value of the product one brings through the checkpoint is. The nature of the action itself is against the law. 

For non-local students, if they have an internship and are studying or engaged in a curriculum-related course endorsed by an institution they are studying in, they can accept part-time employment with effect from March 17, 2014.

An immigration officer explained that the key issue is to identify whether a certain kind of action is regarded as employment. “If the student insists that he or she is just bringing a gift for a family member or a friend, then it is legal and it’s difficult for the authorities to take action. 

“If some students got the information through a recruitment advertisement and then started to engage in such activities regularly, then their aim obviously is to make money, which is the same as employment,” the officer added.

“We encourage citizens to report such cases and the investigation division will look into it. However, there is no specific definition of employment.”

As to how to deal with such students if the bureau finds out his or her action is indeed against the law, it is up to the judge to decide. 

From January 2011 to April 2014, seven smuggling cases involving cross-boundary students were detected at land boundary control points by Hong Kong Customs. The offenders were each fined between 1,200 and 1,500 yuan in court. 

These students, under the age of 18 and who were in school uniforms, were all studying in Hong Kong high schools. The cases involved the smuggling of 2,099 cigarettes and 11.7-kilograms of infant formula on which duty had not been paid. 

Secretary for Security Lai Tung-kwok said on June 4 that Customs officers have been working with their Shenzhen counterparts on the issue, and had enhanced publicity to increase students’ awareness of customs clearance policy.

Hong Kong Customs said the two sides may take joint action against any syndicate which takes advantage of students for smuggling, based on site monitoring and real-time notification mechanism.

There are many people who like to hire students to do the smuggling for them. One recruitment advertisement for parallel traders said only “young women or students are preferred” and encouraged them to apply for the “job” in a group. An experienced parallel trader said students are easy to manipulate and difficult for the authorities to penalize.

When applying for such a “job”, students have an advantage. 

Some of these students have been so experienced in the “business” that they bargain with buyers about service fees in professional jargon. 

A Hong Kong newspaper had reported that a professional student-smuggler can earn more than HK$10,000 each month during the summer vacation by smuggling powder milk, electronics goods and other daily necessities. 

While there are many who participate in parallel trading to earn sizeable incomes, yet there are others, like Liu, who do it occasionally to earn pocket money although they know they are breaking the law.

If the Customs officials’ advice is to be heeded, everyone, including students, should not carry out such activities —whether full-time or part-time — as they are illegal.


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