The View | Shades of Ku Klux Klan in stir against parallel traders

Parallel trading has created inconveniences for a large number of Hong Kong residents. The blame has been placed on mainland visitors. However, they are not the only ones moving goods across the land border between Hong Kong and Shenzhen.

According to reports, an estimated 60 per cent of them are Hong Kong residents. The rest are predominantly Shenzhen residents since they are the only people granted multiple-entry endorsements.

There have been calls to cap these one-year multiple-entry permits. However, if Shenzhen traders are effectively curtailed then Hong Kong traders will immediately replace their numbers. Capping multiple-entry permits would therefore have no effect on parallel trading activity.

Capping the individual visit scheme and how to do so is a matter where many diverse interests are involved. According to a government study, the scheme contributed US$26.1 billion in value-added (1.3 per cemt of GDP) and 114,280 jobs (3.1 per cent of total employment) to the economy in 2012. These are very large figures.

Two alternatives could offer more effective relief from parallel trading activities. First would be to build border shopping centres in Hong Kong, located away from local communities. Transportation and border crossing arrangements could be organised to reduce inconvenience to others who cross the border.

Second would be to set up duty-free shopping centres in Shenzhen that could be rented out to Hong Kong operators and obviate the need for parallel cross-border trading altogether. Over time these centres could be rented out to local operators, which could lead to innovation and competition in retail services in Shenzhen and may over time spread to other mainland cities.

Creating border area shopping centres in Hong Kong would be relatively easy to do and would not hinder the significant numbers who come to Hong Kong to enjoy a shopping experience and other tourist services that contribute to the economy.