The challenge of parallel trading in HK

This week the Ministry of Public Security took action to restrict visitors to the Hong Kong Special Administrative Region after the increase in day-trippers and traders buying goods in the city led to weeks of protests. As Shenzhen authorities announced a limit on cross-border trips by the city's residents, Hong Kong Chief Executive Leung Chun-ying issued a warning against parallel traders. Concurrently, the multiple-visit permit will be replaced by a new one-visit-per-week permit.

What will be the effect of the policy change?

"Parallel traders" buy their supplies in Hong Kong, which does not charge a goods and services tax, and then sell them on the mainland in small quantities to avoid paying import duties. The trading focuses mainly on packaged foods, infant products, cosmetics and personal care items, such as shampoo. It is not exactly a luxury business.