Harbour View: Retort to Big Lychee on Parallel Traders

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HT is honoured Big Lychee took savage aim at our Harbour View on parallel traders. Here, our response.

It was an honour to notice that prominent witticist writer Big Lychee, aka Hemlock, took aim at a Harbour Times op/ed concerning parallel traders. Our apologies for not responding earlier, but a CNY traveling holiday meant we weren’t making our daily visits to the site. Given Hemlock’s discrete nature makes a public live debate impossible, we are happy agree with some points and provide a rebuttal to his points and some made in the comments section.

The original piece took issue with criticisms of parallel traders and instead encouraged accommodation to make their small business ventures easier for them and less disruptive to the people of Hong Kong with an appeal to Hong Kong’s history of small traders. You can read it here (Parallel traders are who we are).


The main points of the retort and comments are below. You can read Big Lychee’s (BL) piece here (Smugglers are honourable, and you count for nothing).


“the thrust of the piece was to suggest ways to essentially, push them [parallel traders] aside and make them pay for the privilege of using Hong Kong”


The madding crowds

“Protesters are not opposing the trading: they are against the extreme over-crowding and other nuisances making life intolerable for residents.”


Understood and we completely agree. This is why the thrust of the piece was to suggest ways to essentially, push them aside and make them pay for the privilege of using Hong Kong transportation and other facilities paid for by Hong Kong taxpayers and land-buyers. BL takes issue with implementation and enforcement of recommended measures. Point taken. Many traders are known to be aggressive and come from a culture where rules are to be skirted, ignored, or broken. Popular media is replete with stories about such visitors, when gently chided or directly confronted in Hong Kong by locals, throwing monumental hissy fits, tantrums and even turning violent.


Aggravating the situation is that enforcement of minor transgressions in Hong Kong is extremely patchy, putting it mildly. The idling engine ‘ban’ is a case in point, where it seems to have had no impact at all on driver behaviour, allowing a negative externality to afflict pedestrians. The results of wide-spread littering, formerly hidden by legions of cleaners in our streets, seems to be evident now that cleaning staff and hours have been reduced as minimum wage takes it toll. This all raises a good question as to whether or not police are up to the task of enforcing new measures to corral traders. They seem to have no lack of manpower to face down protests in the afflicted shopping areas, but their willingness to take on aggressive traders would be an open question.


“enforcement of minor transgressions in Hong Kong is extremely patchy, putting it mildly.”


Ban them for life

A hard line may be the best approach here. One strike and you’re banned from Hong Kong. Those traveling on multiple entry visas could have it made clear that if they are found in violation of an even minor transgression, they are banned for life. Travel on a regular MTR car, not one designated for those with baggage? Banned. Repacking in a non-designated zone?  Banned! Magistrates have not shown any reluctance to convict, nor shown clemency for, those breaking the two-tin milk powder limit and could be counted on to convict rule breakers (although we would still need the police to get them in court). Over 5,000 cases were heard in 2014. An approach like that would also change the calculus of cost-benefit for such traders if their ‘business’ could be shut down for even a minor infraction.


It would be hard to do the same, however, for Hong Kongers participating in the trade. Many have pointed out to me that many in ‘the business’ are not from the mainland, but Hong Kong locals. However, other sanctions and perhaps Hong Kong civil behaviour norms would moderate their behaviour. Perhaps.


Been there?

“Harbour Times has not witnessed the scenes in border towns at first hand. We can tell because it begins a sentence: “If the MTR has a problem with overuse of their facilities…”


Well, that was just an if-then construct. There is no denying the issue here. This author isn’t too fussed by crowds, but has a spouse who abhors them and makes her views known, very vocally. A busy mainlander packed Ocean Park doesn’t discombobulate me, but one can understand how a constant presence would infuriate others. Hence the push to isolate them. Setting up designated shopping areas near the border looks like it may indeed be on the books.


BL does seem to appreciate the argument for loosening restrictions on industrial space to fulfill traders needs. Large lifts and wide open spaces in industrial buildings would work for suppliers, shop operators and traders – and keep them out of residential and commercial areas. It wouldn’t keep them completely out of those areas, but would be one way to relieve some pressure.


Lords and soldiers

“In feudal East Asia, merchants were the lowest class of society, ranked beneath gentry, soldiers, artisans and even peasant farmers. Charging more than you paid for something was considered almost immoral. Harbour Times seems to turn this upside down.”


Indeed. No apologies there and no regrets for celebrating the role merchants play in a free society. Many in the comments section noted the libertarian leanings (proudly guilty as charged) and connections to The Lion Rock Institute (co-founder and director). The feudal civil structure is not one to emulate. Gentry used soldiers to maintain their privilege through coercion. The development of centres of power outside that were considered dangerous and still are by dictators everywhere. The political class does what it can to keep the commercial classes under their thumb, as useful tools. The development of market economies and liberal democracies has not created a perfect world, but is certainly an improvement on feudal eras. This writer will take merchants’ honest exchange over the hand of government any day.


People engaged in this cross-border arbitrage are so noble that everyone else must make way for them, whatever the inconvenience. This echoes the Hong Kong government’s assumption that developers’ and landlords’ interests automatically override the well-being of the rest of the community (and broader economy).”


Again, the suggestions are not to have them over-ride Hong Kongers’ interests, but to rather, contain the traders and have them pay a fair price to conduct their business. BL’s point on enforcement arises again. This kind of containment suffers from wildly divergent enforcement in Hong Kong. Courier companies commandeer large portions of busy streets near HT’s office for distribution daily, while al fresco restaurants suffer from fierce crackdowns for even the slightest transgressions.


“Number cuts may be temporary while the government takes on advice proffered in exchanges like this, banning traders while creating means to accommodate them in a way that works for Hong Kong people. “


Valuable business?

“From an economic-policy viewpoint, Hong Kong’s ‘opportunity’ to make tons of lovely dough from Mainland shoppers is transitory, unsustainable and short-sighted.


It relies on an artificial distortion in the form of import and sales taxes on the other side of the border. The Chinese government could reduce levies on foreign milk powder, designer-label fashions and so on tomorrow, and the whole incentive for cross-border smuggling would vanish.”


Well, all business is transitory in a sense, but it doesn’t mean people shouldn’t do it. Long-term industrial planning by governments normally seems to lead to massive misallocation of wealth better left with the people. If it’s hot out today, sell ice cream. This author would rather transitory and short-sighted independent operators, rather than have the government take entrepreneurs earnings to plan out long-term industrial policy to give us wonders like Cyberport and Disneyland.


The point that it is an ‘artificial distortion’ is 100% correct. If Chinese consumers could trust their own people not to poison their compatriots or their government to not be so corrupt so they could properly police contamination of foods and adulteration of consumer products, the trade would disappear. Hong Kong retailers and their landlords shake in their boots every time a drop in the Chinese luxury tax is rumoured to be in the works. As a good libertarian, this author generally agrees every tax is a form of legalised theft. One can’t get too upset with people avoiding Chinese taxes given their government makes it such that they can’t even trust basic foodstuffs for themselves and their children and feel compelled to source such products from Hong Kong. And no, this author doesn’t consider LV products a necessity, but still has no love for luxury taxes.


“It imposes growing burdens on transport, retail space, living costs and the streets that we have no hope of alleviating with extra capacity in any conceivable or reasonable time-frame. And the displacement of other economic activities is narrowing our economic base and reducing opportunities for entrepreneurs.”


‘A reasonable time-frame’ is open to debate, but the fact is this has been going on a long-time and we have suffered a failure of political will and imagination in this area – until citizens pushed it up on the government’s agenda. BL continues, “But look at officials’ total refusal to do anything serious about Mainland smugglers (which means cutting the numbers).


What a difference a couple of weeks make. BL didn’t have the advantage of hindsight this author has and can be forgiven for not foreseeing the change in political will. Nobody did. Recent days have seen a flurry of messaging that numbers will indeed be cut. It remains to be seen if it actually happens, but it will arise as a result of inaction to address the issue years ago. People who thought it would never happen as it would suggest a lack of brotherly love for our mainland cousins by the SAR government forget that Beijing is very comfortable with restricting freedom of movement of her citizens to achieve policy aims.


This author maintains that while the political will has been developed by protesting citizens making their voices heard, imagination still lacks. Number cuts may be temporary while the government takes on advice proffered in exchanges like this, banning traders while creating means to accommodate them in a way that works for Hong Kong people. There is little we can do to change the culture of 1.3 billion people that sees manufacturers knowingly put melamine in milk powder. But there are things we can do to allow some of those people to get what they need and enable people from Hong Kong and China to create their own businesses to earn a living. It isn’t a great living, but if you are conducting this type of trade, you probably don’t have the option of becoming a well-paid banker or engineer, gentry or a soldier, and far be it for us to criticise people making the best decisions they can given their circumstances.


BL makes good points about why the trade exists, loosening restrictions on industrial buildings and, most importantly, if measures are introduced to control and contain traders, would enforcement make measures effective. But the point holds that a lack of imagination has aggravated the problem and now the government’s preferred resolution seems to be heading to the least imaginative solution – banning people from traveling to Hong Kong. Restricting freedoms for people to travel and conduct business will have to do where efforts to solve the problem years ago could have resulted in a workable solution for everyone.