Is it just me, or have the streets and sidewalks in Central been a bit less crowded over the last few days? Protests against parallel traders seem have prompted a fall in the number of Mainland smugglers in the New Territories – presumably following a clampdown of some sort in Shenzhen. Maybe the decline in visitors has trickled down to the urban areas. Or maybe it’s a seasonal thing. Or it’s just my imagination.
While most Hongkongers rejoice at a fall in visitor numbers, landlords and other grubby interests want to keep the influx coming. Sensing that local residents are finally losing patience, they are proposing large shopping centres on land near the border, so Mainland traders 
can come in, stuff their suitcases full of diapers and Yakult, and go back, without clogging up New Territories towns and transport. The latest idea involves Sha Tau Kok.
The underlying assumption is that the cross-border trade in milk powder, toothpaste and Ferrero Rocher chocolates is some sort of natural and normal economic activity. Of course it’s not. It’s an aberration resulting from tax/price differences and perceived differences in product quality/safety, combined with an open border and – where the organized trading is concerned – a ready supply of cheap labour. No-one seems to have examined the economics of this phenomenon, perhaps because it would highlight the scale of corruption among Mainland Customs officials or the amount of tax revenue Beijing is losing to smugglers. But it seems like a staggeringly inefficient and wasteful way to add value.
I would love to know…
- How many man-hours per day/week/month are devoted to the cross-border transportation by wheeled suitcase of all the Yakult, milk powder, etc?
- How many passenger-kilometres of bus/MTR travel do the traders account for per day/week/month? What is the carbon footprint?
- What are the profit margins on idiotic commodities like Yakult and Ferrero Rocher, after transport/smuggler/bribery/distribution costs? Just how much of a premium does Hong Kong-sourced toothpaste command over the border, given that the Pearl River Delta is full of Watsons and Park N Shops with shelves groaning under the weight of Darlie and Colgate?
- How is the margin broken down? How much is due to Mainland tax, retail pricing practices or business overheads? How much is due to belief in Hong Kong goods’ superiority or fears of counterfeit/adulterated Mainland products – and are these psychological factors justified or do vested interests encourage them?
- What are the costs of all these back-and-forth trips to taxpayers in terms of HK/Mainland immigration/customs processing and facilities? What are the costs to New Territories residents in terms of extra travel time, higher local prices, mental health, foot injuries from kicking of suitcases, etc?
This is one of the rare occasions when a genuinely useful subject for a doctoral thesis has appeared – graduates pondering a PhD in recontextualizing gender roles or something, please note.
Basically, what I am saying is, forget the locusts and just look at the economics: this is nuts. Hundreds of men and women trundling suitcases of diapers by foot across what is basically an international border all day every day. Even if the stuff weren’t already on sale on the Mainland, you could load each week’s thousands of cans of milk powder, tubes of toothpaste, bottles of Yakult and little round globules of Ferrero Rocher into a few dozen 20-foot containers and carry them to Shenzhen by truck or cargo ship in a few hours and be done with it. This isn’t market forces – it’s perverse.
Back to Singapore. It seems to be the done thing right now to dig up old photos of the Lion City to show how ramshackle the place was before Towering Genius of the Universe Lee Kuan Yew performed his miracles. So, for people who like this sort of thing, here are my late father’s, taken in 1946. This was around the time Harry Lee was on a ship heading to England and complaining about the smell of Negroes (according to his memoirs – can’t make this sort of thing up)…
Bravo.
All I wanted to write but my comment was too short apparently.
Thank you for the pictures. I find it perverse that even the international media would believe the Singapore government’s propaganda, without doing basic fact-checking, that Singapore was a swampland, etc. etc., when the late Lee took over as prime minister.
Singapore looks a lot nicer then than now……
Just noticed the price of LKYs memoirs on Amazon. You can have it for the bargain price of $99.99 hardcover. That’s big green dollars.
There are few places where citizens in these times are willing (without a threat) to put up with a pompous autocrat telling them to “fuck off I know what’s best for you”. Or my particular favourite, “vote for the PAP or I’ll turn your district into a slum”. Ok I paraphrase and the words were said by Lee’s “successor” during an election campaign back in the ‘90’s.
Interestingly as your Father’s pictures show Singapore was not a “backwater” “slum” “colonial outpost” “putrid sweltering swamp”. Singapore was far more advanced and important than Hong Kong back then and yet Hong Kong managed to stumble onwards and upwards. Do the towering geniuses of the CCP and their sycophants really think the “Singapore” model will work on Hong Kong or a country the size of China ? It won’t and my guess it won’t in Singapore in the long run either.
Lastly are there any figures that can compare the Lee family net worth of say 1959 and today?
In not so many words, Hemlock’s pointed out that the problem with building a gigantic border mall is that you’ve got to convince investors that the regulatory clusterf**k that produces these opportunities for arbitrage will continue to be around for the useful lifespan of the building, say, 30 to 40 years. Good luck with that.
When it ends, what you’ll have left is a big useless building in the middle of nowhere. Laser tag, anyone? Or else they’ll have to propose building another New Town next to it to justify the continued existence of the mall.
I do much of my shopping in Sha Tau Kok , so was surprised, well not really if I’m honest, to see the mistakes in the SCUM article. For a start, the whole of STK, which is officially a village, is closed area, not just part of it.
STK is at present the nicest part of HK, being dog-free, tourist-free, virtually car-free and with few smugglers (they mostly trundle suitcases along the path to Kuk Po, as fishermen from both sides of the border are free to come and go without let or hindrance). The harbour is a traditional-style fishing port (the only one in HK as far as I know).
Some of the best-preserved town houses, up to a century old, would be knocked down under the plans. So it would be a disaster to build malls for the Chinese hordes.
Nice photos! And this was after the Japanese occupation: it must have been pure paradise before the War.
One of the most incorrect descriptions of Singapore (used again by the BBC the other day) is that the place used to be a “colonial backwater”. Given its strategic location sitting on the main sea route between the Indian and Pacific Oceans it was never anything of the kind. Raffles recognised its potential from the outset.
Another reason China likes LKY, even if he was a step behind CKS in the island state as a family business concept. He was a colonial emperator of the rare type, who gets credit for “saving” Singapore from the Malaysians, from whom the British and then the Chinese successfully stole the place. Perhaps one-day Indonesia will get it’s act together and roll over the fly spec.
On the subject of parallel trading – well said @Hemlock and @Cassowary.
I reckon if you also take into account the opportunity costs and sunk costs of investing wide-ranging social and economic resources into what is ultimately a short to medium term regulatory arbitrage play, the current focus on luxury retail and mainland cross-border smuggling goods retail becomes less unwise and more insane. Using information architecture and integrating new technologies across platforms to address systematic economic and social problems; innovating design and new point-of-use or point-of-consumption manufacturing systems; developing new solutions for sustainable urban living – with dignity – in overcrowded environments; leveraging financial capital in socially responsible ways that are also economically attractive in a global zero-yield interest rate environment; these are capabilities and know-how that can stand HKG in good stead for the challenges we face in the 21st Century and support our continued existence as a global nexus for entrepreneurialism.
This phenomenon also highlights the intricate mesh-like interrelationships embedded in the political economy in mainland China. Parallel trading, as @Hemlock has mentioned before, is a very easy problem to solve – cut taxes on imports for retail items; implement a serious and effective national product quality system, i.e. a set of achievable minimum standards, a system for sampling product quality at the point of sale or manufacture, and a transparent and reliable system of redress for product failure; and then allow the market to determine the equilibrium outcome of what is sold where, by whom, and to whom. And this ultimately is one of the CCPs biggest achilles heels – the unbelievable parasitic inefficiency of the Chinese state and political apparatus, and the incredible economic burden shouldered by Chinese citizens and business owners (as a % of national income) which is needed just to allow the CCP to survive, let alone thrive, in its current form and structure. The CCP is between a very big rock and a very hard place on the issue of political reform, which I believe the Xi faction is seeking to resolve through the backdoor, by gradually (attempting) to liberalise the state sector and open the current account, and mean-whilst allowing the lefties to get re-involved in the political space to neutralise their potential resistance…. but that is a topic for another post.
As far as LKY and the ridiculous fawning: the man did some good for Singapore building alliances with Western powers, and then with China that helped to maintain Singapore’s status as an independent and relatively prosperous city-state. The whole authoritarian/confucianism/kowtow to your betters is a load of BS messaging designed to keep the plebs obedient and submissive. And as occupy central and recent demonstrations in Singapore demonstrate, there is a major rub – namely that protesting and advocating for consent, accountability, participation, integrity, equality of means and opportunity in politics – in other words active participation in civil society, embracing the rights and obligations citizenship, based on an awareness or comprehension of personal, individual responsibility for the collective well-being – is occurring across a plurality of different interest groups and economic sectors (regardless of PCMP or Xinhua spin) in a lot of country’s in the “confucian belt”. And this posture, of authentic civic-minded citizen participation in the politic space, is the antithesis of unthinking, mindless obedience to your entitled “betters” based on “historical Asian values” and “Confucianism”. What we observe happening in Asia is a paradigm shift in the consciousness of the polis, and it is going to become increasingly disruptive for the existing economic and social order, which is in my book a very good thing that it is worth perceiving, recognising and even applauding, irrespective of PCMP and Xinhua and other mainstream media attempts to spin this way or that way.