By Anita LiPublished March 10, 2015Since February, tensions between Hong Kong and Mainland China have resurged after last year's pro-democracy Umbrella Movement. Days before the Chinese New Year, some Hong Kong residents marched into shopping malls and confronted shoppers from Mainland China. Some were holding up the British colonial flag and shouting disparaging slogans. They claimed that Mainland Chinese money has distorted the local economy, driving up commodity prices. Others complained that the influx of shoppers has worsened traffic congestion, and created piles of garbage in the streets.
Most protestors expressed the strongest resentment toward cross-border traders, some called parallel traders. Many shoppers from Mainland take advantage of Hong Kong's zero sales tax, buying up powdered baby formula, medicine, cosmetics and other goods that are cheaper and considered to be of better quality, and then resell the goods at higher prices on the mainland. Especially due to numerous food safety panics in China in recent years, many mainlanders have lost confidence in the made-in-China label, and turned to imported goods. Demand for baby formula is so high that the Hong Kong government restricts the takeout limit to 2 tins per traveller.
Last year, more than 47 million mainlanders visited the city of 7 million, increasing 12% from the previous year, while the total spending rose 9%, to more than 350 billion Hong Kong dollars. Mainland arrivals account for 75% of Hong Kong's total tourist visits in 2013. While many places yearn for such high-spending tourists, some Hong Kong residents are agitated by the massive amount of mainlanders, not only because of the rampant parallel trading, but also of what is seen as the boorish behaviors of shoppers.
In response, criticism of Hong Kong people has spread among mainlanders online, including spiteful comments and calls for travel boycotts to the territory. Some even angrily upload pictures of shredded Hong Kong travelling permits, vowing to never visit the city again. Reasons for such confrontations sometimes lie deeper than the protest itself. In fact, conflicts and tensions between Hong Kong and Mainland China have surged in recent years over the identity of Hong Kong after the British concession in 1997, and some Hong Kong residents' lack of respect for mainland travellers.
Some resentment originates from protectionism and xenophobia. For Hong Kongers, harassing mainland tourists, and blocking entrances and hallways in shopping malls will only hurt the local businesses, as many shopkeepers have to close up because of the protests. Residents yelling derogatory terms such as "locusts" at tourists further embarrass themselves in public. Hong Kong is an aging society, with about 15% of the population 65 years and older, and another 15% (55 to 64 years) approaching retirement age. It needs to do more to attract young laborers, but hostility against tourists may drive away other potential young migrant/foreign workers.
To ease tensions, Hong Kong authorities need to crack down on illegal cross-border trading, maintaining a free but legal market. The bulk of smugglers avoid import duties such as paying taxes by carrying a small amount of goods each trip. Such activities have disrupted the local market and discouraged the legally operating importers. In fact, the arrests of illegal parallel traders have spiked since 2012. In the most recent incident, The Immigration Department and Police have arrested more than 10 mainlanders for parallel trading. Meanwhile, the Hong Kong government can also put up signs and posters warning the risks of parallel trading in transit stations where the travellers enter the territory.
Hong Kong residents should also adjust their attitude toward integration with Mainland China, which is increasingly the trend. Exposure to mainland interests accounted for 10% of Hong Kong banking system assets in 2008, but that figure rose to 40% in 2014. Especially since the 2008 financial crisis, Beijing has intentionally tied more closely with Hong Kong to strengthen the latter's capital, both through trade and financial linkages. In the long run, the integration adds to Hong Kong's competitive advantage due to Mainland China's enormous market and cheap labor.
For mainlanders, travelling to Hong Kong to buy some necessities is a desperate reaction to Mainland's frequent food safety scandals. But hoarding Hong Kong's infant formula can't solve the problem. It's time for mainland consumers to stand up and put pressure on local authorities to enforce stricter safety standards. Often times, consumers in Mainland China have little power over what is offered them. Consumers deserve goods to be of better quality, but they have to demand the right of entitlement.
The Chinese government should raise standards for regulation of consumer goods and enforcement of consumer protection laws. This not only can restore Chinese consumers' confidence in the manufacturing business, but also can foster a healthy competitive business environment. To curb the illegal trading activities, the government needs to educate the travellers about the illegitimacy of parallel trading. Mainlanders need to be informed on the risks of illegal parallel importing; once convicted, they can face jail time.
Business can do more too. More ethics education is the key. Businesses are profit-driven, but following the laws and led conducting business ethically should be the bottom line of business practices. Additionally, management should communicate with workers about what their expectations are, ensuring that uniform standards are enforced by all workers at all stages of the supply chain.
Only when prejudice and bigotry are put aside, can people from Hong Kong and Mainland China move forward to solve the problem itself. Get ready for a challenge, because the required solutions will be more difficult than the rants and raves.