By Yang Xingyun (杨兴云)
Issue 591, Oct 22, 2012
News, page 1
Translated by Li Meng
Original article: [Chinese]

Chung Ying Street (中英街), a narrow shopping street in Shenzhen’s Yantian district, once generated annual tax revenues of over 1 billion yuan and attracted more than 15 million visitors each year.

The neighborhoods phenomenal wealth was all thanks to its location on the border between Hong Kong and mainland China.

Back in the boom days before reunification in 1997, around three or four hundred stores lined the bustling little street which is a mere 250 meters long and less than 4 meters wide. A great variety of goods that were brought over tax-free from Hong Kong – everything from video recorders and cameras to gold jewelry, garments and even soap - were sold on Chung Ying Street.

Almost every item sold well due to the price differential across the border. Hence many of the locals made their fortune out of the trade and many of them were not only able to buy property but also support their children's education in Hong Kong.

However, since Hong Kong's return to China in 1997 and the introduction of the Individual Visit Scheme (IVS), the small street has lost its status as a gateway to Hong Kong and the neighborhood suddenly turned from being one of the most affluent villages in the country into one of the poorest in Shenzhen.

Once mainlanders were permitted to travel to Hong Kong on an individual basis in 2003, the annual number of visitors to Chung Ying Street began to plummet. According to the Yantian District's statistics, the number of annual visitors fell from 8 million in 1998 to only 1.28 million people in 2002. In the following years, the yearly visitor numbers hovered at around 1 million and fewer than a hundred tourists could be found wandering the street on any given day.

The small businesses that lined the street were hit badly by the sudden fall in customer numbers and only 100-odd stores survived. More than 90 percent of stores were converted to residential use. The last financial institution in the neighborhood - a local branch of the Industrial and Commercial Bank of China (ICBC) – closed its doors in 2005.

A New Lease on Life

But Chung Ying Street now seems to have an unexpected second lease on life after more than 10 years of stagnation due to a recent crack down on the increasing number of people who have been smuggling certain goods unavailable in the mainland over the border from Hong Kong.

 A growing number of these “parallel traders” - who make their money by dodging import duties - have begun to turn their eyes to this once-booming shopping street as a new trading port since an intensive crackdown was launched. Retailers on Chung Ying Street have been extremely busy in recent months, picking up orders from Hong Kong and delivering them to parallel traders waiting to carry them further afield into the mainland.

To make the transportation of goods more difficult for cross-border traders, the MTR Corporation, which runs the Hong Kong metro system, announced a new baggage weight limit in September at four stations along the East Rail Line. These four stations were frequented by parallel traders who took the train to cross the border into Shenzhen. After the policy came into effect, Chung Ying Street suddenly became an ideal alternative port through which to import goods from Hong Kong.

Moreover, with more food safety scandals exposed in mainland China in recent years, imported or made-in-Hong Kong food products are now in hot demand. It certainly has helped to boost the street's business volume and attract hordes of new “customers” to the area.

The majority of people now traveling to and from the shopping street are parallel traders and they normally cross the border many times each day in order to transport more goods to the mainland.

Before the joint crackdown against parallel trading, the main imports were mostly articles for daily use. More recently, confiscated smuggled goods have begun to include large amounts of electronic products, especially various brands of smart phones and, of course, plenty of iPhones.

The whole of Chung Ying Street has now turned into a large warehouse, with all kinds of goods from Hong Kong stacked up all over the place. Each and every day, the small street is bustling with the noise of traders, delivery carts and forklifts. Deals are conducted in public and deliveries are received on the street.

Parallel Traders

So how much can these parallel traders earn? It mainly depends on the type and quantity of the carried goods. Traders can earn between fifty to hundreds of yuan on each border crossing. Some traders return to the street for as many as five or six times a day. Tempted by the high profits, some Chung Ying Street residents, including high school students, have also started getting involved in the illegal trade.

Chung Ying Street has never served as an immigration control point in a real sense and this has put the Chinese customs agency in a tricky situation. As the area is treated as a “Frontier Closed Area” instead of an official port of entry, the trading hub for parallel imports falls into a gray area that is officially located within the national boundary but is outside the customs territory. It is the area's special status that has made it difficult for the customs agency to regulate trade in the street. This is especially true when permanent residents of the area are involved as they are able to carry goods back and forth freely and thus in effect are parallel traders.