Corner shops priced out of parallel trade hotspot

In a narrow, and dim alley at the once serene community, dozens of small shops sell packaged foods, infant formula and personal care items not for the locals but parallel traders.

Lam Wai Yu

Parallel traders flood the once serene community.

Parallel traders flood the once serene community.

Along San Kung Street, 17 out of the total 25 shops, or nearly 70 percent of them, are trading parallel-goods, some even are pharmacies.

“Parallel traders” buy goods from Hong Kong, where is renowned for its free port status, and then sell them on the mainland taking advantage of tax free and price discrepancy. They mainly trade packaged foods, infant products, cosmetics and personal care items in small quantities in an attempt to avoid carrying excessive amount of goods being seized at the mainland control points when crossing the border.

There are makeshift signboards sticked at the wall of the shops showing the profits of some hot picks. A parallel trader may buy a tiny box of chocolate for HK$180. But soon after it is being taken across the border, the parallel trader can pocket HK$50 profit.

As Sheung Shui is close to Shenzhen, the residents claim that the increasing number of parallel traders has pushed up local retail prices and been causing nuisance.

Day trippers accounted for nearly sixty percent of the total 47 million mainland visitors to Hong Kong last year and most of them are said to be parallel traders.

Owners of small corner shops next to the parallel-goods trading shops are frustrated. They said that at least four small shops of this street had closed down last year. The landlords stood firm to raise rentals, leaving those corner shops once selling grocery, furniture and daily products to serve the neighbourhood were priced out of the community.

Mrs. Lee, a shopkeeper, foresaw the future looked bleak. “If landlords keep raising the rent, we will fold up,” she said. “A 500 square feet shop rents for fifty thousand dollars monthly,” Mr. Wong, a local real estate agent said, “Retail rentals at San Kung Street and San Hong Street have been fourfolded since 2012.”

Miss Chau, a resident who lives near San Kung Street said the rent of a 100 square shop is close to those shops at rustling Sheung Shui MTR Station. Also some of the small shops cannot bear the hefty rentals fold up eventually. Recently, a 30-year-old bakery has closed down due to the king’s ransom rental. The situation goes from bad to worse.

The Chinese Ministry of Public Security took action to restrict mainlanders to Hong Kong last April after waves of protest against the increased number of parallel traders flooding the Special Region once renowned for its hospitality.

Shenzhen authorities announced a limit on cross-border trips by the city’s residents. Concurrently, the multiple-visit permit has been replaced by a new one-visit-per-week permit.

A shopkeeper said he hope the new policy would benefit local shops that serve the neighbours.