They come in droves, by the hundreds - the queue of mainland "mercenary" traders allegedly recruited by syndicates stretches for nearly 200 meters almost every day outside the Sheung Shui East Rail station. Edmond Tang / China Daily

The problem with so-called parallel traders swarming stations along the East Rail Line is getting out of hand again. Sheung Shui residents say the roots of the problem can be traced to a huge syndicated operation. SL Luo reports.

Standing on the overhead bridge and looking down at the western entrance to Sheung Shui East Rail station can be, at once, exhilarating and disturbing.

On the concourse below, a scene that comes as if from an action movie unfolds. Two opposing sides square off in an ongoing confrontation that has seen sentiments boiling over and an almost daily occurrence of fist fights. But this is no movie.

The taunts being tossed across the invisible barrier that separates the two groups are real ... so are the cheers that erupt when the opposite side suffers a setback.

Every day between 2 and 6 pm, at the height of their routine, hundreds of people show up here building a queue that stretches for up to 200 meters, snaking its way across two road junctions.

The people in that queue are so-called "parallel" goods traders, people who buy day to day necessities in Hong Kong and then re-sell them at a profit across the border. Most come from the mainland. The people of Sheung Shui, who are at the forefront of this tense, drawn-out stand-off with the traders who function at the shadowy fringe of the law, call them mercenaries.

The term "parallel" seems to have been appropriately though intricately coined. It refers to people moving in the same direction at fixed intervals and for a fixed purpose - in this case, hugely-profitable cross-border trade.

The mainlanders are not illegal immigrants. They enter the HKSAR every day on valid multiple exit and re-entry permits issued by the Hong Kong and mainland authorities strictly for tourist travel.

Their trade is illicit in the sense that it is hooked to a massive, billion-dollar business - transporting tons of much sought-after products daily, including electronic goods and all sorts of daily commodities like baby milk formulas, diapers, tissue paper and soft drinks, sold or manufactured in Hong Kong, back to the mainland for resale at astronomical profits.

A fast-appreciating yuan and a sinking Hong Kong dollar have whetted the appetite of these cross border traders immensely while prompting authorities on both sides of the border to crack down with equivalent zeal.

Hundreds of cross-border traders have been arrested, hauled before the courts, convicted for breaching their conditions of stay. They have been fined or sentenced to imprisonment for up to two months in Hong Kong, repatriated and put on a "monitor list" so their movements across the border can be monitored by police and Customs and Immigration authorities.

The crackdown has had no lasting effect and after some initial success, the measures put in place appear to be no deterrent at all. The parallel traders keep coming back in ever increasing numbers and they get bolder and bolder all the time.

Evidence seems to point to a highly-organized, sophisticated and syndicated network, allegedly well connected to some corrupt officials across the border.

It all started some years ago after a baby formula health scare on the mainland triggered a wild scramble by mainland visitors to buy Hong Kong products. The number engaging in this type of trade escalated when the Hong Kong government extended its individual visit scheme to almost all mainland provinces.

Parallel trade eventually grew into a full-fledged operation, with visitors emptying virtually everything on the shelves at major retail chains in Hong Kong and at small grocery stores in districts close to the border, notably Sheung Shui, Fan Ling, Tai Po and Yuen Long.

The consequences have been devastating. Local residents have been utterly frustrated by soaring commodity prices caused by a worsening supply-and-demand crisis, jam-packed medical and public transport facilities, on top of an already skyrocketing property market.

Patience eventually snapped, with Hong Kongers blowing fuses and bringing their animosities out into the open, accusing the mainlanders of engineering their misfortune and social ills.

Things reached a boiling point last year when hundreds of residents formed a group that they called "Reclaim Sheung Shui Station Movement". Members took to the streets on two consecutive days to confront and denounce the mainlanders, demanding they be barred from entering Hong Kong ever again.

Sheung Shui Station has resembled a combat zone ever since. The local protesters and the mainland traders hurl insults and other abuses at one another. The local folk refer to the mainlanders as "parasites" and "dog".

Journalists have been among the victims caught up in the fracas. In one incident, a photographer from a Chinese-language newspaper was wrestled to the ground and had his camera and glasses smashed and trampled upon.

The stand-off tapered off after the locals found themselves cornered and heavily outnumbered by the mainlanders by almost 50 to one.

The public outrage, which sparked the subsequent police crackdown and abrupt implementation of Customs regulations restricting the weight of duty-not-paid goods to be transported on MTR trains to 32 kilograms per trip, did appear to have somewhat restrained the menace.

A false sense of comfort prevailed immediately after the boisterous protests and the ensuing crackdown. But it was not to last.

Hong Kong's security chief, Lai Tung-kwok, came under intense pressure to get to the bottom of the problem and defuse the hostilities. James Tien Pei-chun, founding chairman of the pro-business Liberal Party, spoke out in support of the residents, suggesting that mainland visitors be issued with only single-trip instead of multiple-entry visas.

Lai threw down the gauntlet, admitting that the chaos and disruption caused by the "parallel" traders to vast areas of the New Territories was becoming too much to bear. He vowed they will have to face the music, closely monitored and barred from entering the HKSAR unless they have a legitimate reason for coming here.

Intense collaboration with the mainland side will also take place, with the mainland authorities saying their campaign will focus on "parallel" traders slipping through at the Luohu, Futian, Shatoujiao and Shenzhen Bay checkpoints.

The tough talk, however, fell on deaf ears. Two days after Lai spoke, it was back to Square One at Sheung Shui East Rail Station, with hundreds of mainlanders back in the queue.

Trucks conveying carton after carton of goods, professionally sealed and packed onto identical wheel carts, can be seen arriving at the Sheung Shui rendezvous daily for the traders to pick them up, get in the queue and trudge their way onto the train to Lowu.

After crossing the border, a massive unpacking exercise begins outside the Luohu Commercial Center. The mountain of goods will be separated, categorized and distributed by the syndicates to retailers, organizations and individuals across the country.

For the couriers, payments are made by automatic bank transfers, minimizing the hazard of payment in cash. Thousands of these "mercenaries" are reported to have been recruited by the syndicates from all over Guangdong province - from as far as Guangzhou and the less affluent cities of Jiangmen, Dongguan and Haifung.

In an apparent bid to outwit the Hong Kong authorities, the couriers have lately switched to new tactics, with goods being picked up intermittently along almost the entire stretch of the East Rail Line, down to Mong Kok East Station.

Security officers tasked by MTR Corporation to keep the order at stations along the East Rail Line say their job is only to ensure that the queues are orderly and the goods are within the stipulated weight limit, and they have no powers of arrest.

"Putting them behind bars? That's the job of the police. As far as I understand, they'll be arrested only if they breach their conditions of stay or are engaged in illegal business activities," an officer told China Daily.

Sheung Shui residents say they are at their wits' end and are prepared for the worst. "It's getting out of control. The people of Hong Kong are not that naive. Everybody knows what's going on and the ball is not in our court," says an irate resident as he stood helplessly on the overhead bridge linking Sheung Shui Station with Choi Yuen Estate, staring at the comings and goings down below.

What are the real problems and the root causes?

The general consensus is that highly-sophisticated, well-organized syndicates are at play in a business running into the billions. The other major contributing factor is that the temptation is too great for the couriers to resist. "I know of one guy working for the syndicates who runs at least five errands a day between Sheung Shui and Shenzhen, earning HK$200 per trip. This amounts to nearly HK$1,000 per day, an amount that an average worker in the less affluent mainland provinces can hardly make in a month," says one source.

Initially, he says, many Hong Kong people were also involved, but they have been "squeezed out" as word of the enormous operation spread like fire on the mainland.

"Some of these Hong Kong people now work merely as 'gate runners' for the operators, making a mere HK$10 each time by just walking in and out of the turnstiles at Sheung Shui Station, passing the goods onto other syndicate members who would proceed to Shenzhen," the source says.

Another consensus is that no matter how many arrests you make every day in Hong Kong, it's not going to work.

"Don't forget, Guangdong province alone has a population of close to 120 million. You may throw 5,000 of these guys in jail every day, but what difference does it make? They can easily amass another 5,000 the next day and they'll be in the queue in Sheung Shui any time," the source argues.

Perhaps, Deng Xiaoping was apt and sharp when he warned the then British prime minister Margaret Thatcher at the height of the Sino-British talks on Hong Kong's future as the discussions appeared to have reached an impasse: "We don't need to use the People's Liberation Army to get back Hong Kong. We just open the floodgates, and Hong Kong will get drowned."

How to get to the bottom of these problems and nail them once and for all? It's a very difficult job.

Let's face it. It's not a case of Hong Kong calling the shots. It has never been and will never be. Hong Kong has neither the authority nor the political acumen and capability to find a way out on its own.

The unshakable onus appears to be on the Guangdong authorities, exercising an iron-fisted determination to root out the menace at the highest levels of government.

People claiming to be well-versed with the issue have come up with one deadly solution - hit them hard in the pocket. "What they ought to do is to adopt the killer approach - hit them hard financially. They bought those goods in Hong Kong dollars. Impose, say, a 10-percent tax in yuan on each of the items taken into the mainland. This will definitely put them out of business," says a retired former Hong Kong civil servant living in Shenzhen.

"Clamping down on the operators alone may only have a temporary effect. It may not be the long-term solution," he added.

Hong Kong legal experts adopt a less radical approach, saying the Hong Kong government has done what it needs to do.

"These people (the mainland traders) are legally entitled to visit the city on valid entry visas. This is purely an executive and administrative problem," says Kelvin Ng, a partner with a prominent local law firm.

He says barring all of them from coming here is out of the question. "You can't scrap the mainland individual visit scheme which has brought huge economic benefits to Hong Kong. A lot of our businesses depend on the visitors to lift the local economy. It overrides everything," Ng argues.

"The problem demands arduous resolute action. Some of the grey areas can be plugged. I'm not that pessimistic after all. If we can get drastic orders, maybe from the highest levels of government in Guangdong, there could be a way out," he says.

(HK Edition 01/18/2013 page4)