‘10 days to sell just 1 box’: businesses on Hong Kong side of border struggle as mainland Chinese shoppers, parallel traders return in low numbers post-Covid

‘10 days to sell just 1 box’: businesses on Hong Kong side of border struggle as mainland Chinese shoppers, parallel traders return in low numbers post-Covid

It is noon and there are only three customers in HoKo Beauty, a cosmetics shop in Sheung Shui, a town just one train stop into the Hong Kong side of the border with mainland China.

Over about 30 minutes, each spent less than HK$100 (US$18).

Owner Yau Man, 40, sighed as she recalled better days before the Covid-19 pandemic, when her shop was packed with mainland Chinese visitors and bulk-buying agents, and the daily turnover could hit HK$100,000 on a good day.

Yau said sales were down by almost two-thirds and she had to rely on her online business to get by.

Pointing to the empty space in the shop, she said: “There used to be stacks of boxes filled with face masks and we’d sell five or six boxes a day. Now it takes 10 days to sell just one box, even after lowering the prices.”

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A shop in the border town of Sheung Shui. Business owners say sales have been slow as tourists have failed to return after the lifting of Covid-related restrictions. Photo: Sam Tsang

Other businesses in the area told the same downbeat story. Before the pandemic, Sheung Shui was a magnet for parallel traders who bought goods tax-free to resell at a profit across the border.

That was when its streets were crowded with people who could be seen stuffing suitcases full of everything from baby milk formula to skin care products and medicine.

The area returned to the spotlight after Chief Executive John Lee Ka-chiu revealed on Tuesday that the government was in talks with mainland authorities to reinstate a visa scheme to allow more day trippers to Hong Kong.

Mainland tourists, the largest group of visitors to the city before the pandemic, have returned in lower numbers than expected since travel restrictions were lifted and the border reopened a year ago.

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More than 26 million mainlanders visited last year, about three-fifths of the number who came in 2019.

A multi-entry visa scheme introduced in 2009 allowed Shenzhen residents unlimited visits to Hong Kong within a year.

The crowds of mainlanders who turned up in North district provoked the ire of locals who protested, complaining about hygiene, difficulties for pedestrians, price inflation of goods and the depletion of stocks in shops.

There were concerns about parallel traders who bought products in bulk to resell for a profit across the border, evading the mainland’s hefty import and value-added taxes.

Locals and cross-border students eligible for multi-entry visas were also hired as couriers by bulk-purchasing agents to carry goods to the mainland.

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Tourists have returned in lower numbers than expected since travel restrictions were lifted and the border reopened a year ago. Photo: Sam Tsang

Their activities and the surge in single-day visitors led to the multi-entry visa being replaced in 2015 with a once-a-week annual pass.

Ronald Leung Kam-shing, spokesman for the North District Parallel Imports Concern Group, remained cautious about bringing back more visitors.

“The biggest concern is that resuming the visa scheme could lead to the resurgence of parallel trading,” he said.

But North district councillor Ko Wai-kei said that while many shop owners hoped the multi-entry scheme would be resumed and more visitors would come, consumer behaviour had changed significantly.

“The rise of online shopping has almost eliminated mainland people’s need to buy through parallel traders,” he said. “A wider range of imported products that are even cheaper are available in Shenzhen, which is now attracting Hong Kong residents to travel across the border to shop there instead.”

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Most of the parallel traders in Sheung Shui had also changed jobs during the pandemic, he said.

Still, some parallel trading activity returned after the border reopened last year, prompting Hong Kong customs authorities to intensify efforts and work with mainland authorities to curb smuggling.

Shenzhen resident Zhang Ping recalled the years before the pandemic when she was a parallel trader who made frequent trips to Sheung Shui and took two suitcases across the border without scrutiny.

The 42-year-old, who worked in the real estate industry and started parallel trading in 2006, said customs checks were now “excessively strict”.

She resumed visiting Sheung Shui last year to buy cosmetics and skincare products as before, but no longer in bulk. Aside from having drastically fewer orders, she was wary of the customs checks.

Zhang said that in the past, customs inspections were rare and the worst that could happen was having the imports rejected. Now there was a high likelihood of being taxed heavily or having the items confiscated.

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“Many mainland people are afraid to take anything back from Hong Kong,” she said.

HoKo Beauty owner Yau said the strict customs checks deterred bulk buyers and even discouraged individual visitors from shopping.

“We have survived the most difficult times,” she said. “But if things continue like this, we will have to close our doors like many other nearby shops.”

Last Wednesday afternoon, fewer than 10 people were seen pulling large bags or filling them on shop-lined San Fat Street.

Seven cosmetic stores, two pharmacies, a mother and baby products shop, and a general goods shop each had fewer than 10 customers. Some shops had no customers. Five vacant shops had “for rent” signs.

District councillor Ko was concerned that more businesses would close down after the Lunar New Year.

But he acknowledged that the district had not yet broken away from depending on bulk-buying visitors and parallel traders, and the shops there lacked diversity.

“Indeed, for Hong Kong to thrive, it needs to undergo changes and, most importantly, cultivate its unique tourism characteristics,” he said. “Only by doing so can it regain its appeal to visitors.”

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