Mainland Chinese Traders Milking Hong Kong for All Its Worth

  • Share
  • Read Later

People transporting boxes of baby formula line up to get their packages weighed at the Sheung Shui train station prior to their journey back to mainland China in Hong Kong on Jan. 29, 2013

Tensions between Hong Kong people and their mainland Chinese compatriots have deteriorated further — and this time, it’s not over politics, clashing cultural attitudes or northern carpetbaggers driving up Hong Kong property prices with their lavish investments. Instead the point of contention is a product that is seemingly innocuous but says much about relations between China’s freest city and its vast hinterland: infant-milk formula.

Stocks of baby-milk powder have become alarmingly scarce in Hong Kong because of the activity of so-called gray-market traders from mainland border towns. They turn up in Hong Kong on multiple-entry tourist visas, often making several runs a day to buy up tins of formula from Hong Kong retail outlets and sell them back in the mainland, where the item commands a stiff premium. (Buying products in Hong Kong and taking them into China to sell is not illegal.)

The dearth of formula in Hong Kong shops led the government to announce on Friday that, with effect from later this month, people leaving the city will only be allowed to take two cans of formula with them. The possibility of designating milk formula a “reserved commodity” like rice — meaning that its export would be restricted, price ceilings set and a reserve stock created — has also been mooted, alongside proposals to ban mainland visitors from entering Hong Kong more than once per day.

(MORE: Trouble Down South: Why Hong Kong and Mainland Chinese Aren’t Getting Along)

Since 2008’s contaminated-formula scare — in which hundreds of thousands of mainland babies fell ill after being fed Chinese-made formula and related products that had been adulterated with melamine — foreign milk-powder brands, such as those on sale in affluent Hong Kong, have been seen as safer. But while the desire of any parent to secure the best possible supplies of food for their children is understandable, the milk-formula issue has come to crystallize for Hong Kong people the disquieting ease with which the mainland is now no longer a brooding, remote power, at a distance behind the Kowloon hills, but instead an intrusive force in the daily life of this semiautonomous enclave.

To be sure, it isn’t the only source of friction. In broad political terms, Hong Kong is worried about China’s encroachment on its traditional freedoms in areas from media to education to the judiciary. Culturally too, there has been little love lost between mainlanders and Hong Kong people, who are often viewed by mainlanders as crass, arrogant, even strangely foreign. (Hong Kong Chinese repay the compliment in kind.)

Still, often it’s the personal and social issues that loom largest. Although authorities have finally cracked down on the practice — arresting and jailing several hundred “birth tourists” in 2012 — for years, local mothers were forced to compete for maternity-ward beds with mainland women who wanted to secure residency rights for their children by giving birth in the tiny territory. Thousands of those locally born children of mainland mothers have now reached primary-school age, further exacerbating tensions with local parents, who resent the new pressures on the school system. (In the Sheung Shui district alone, lying closest to the mainland border, the shortfall in primary-school places is estimated at 1,000.)

(PHOTOS: Hong Kong: Anger and Protest as City Marks 15 Years Since Its Return to China)

But while the form filling and balloting required for school admission gives the competitive nature of the process an abstract quality, there is something raw and direct about the struggle to find milk formula that many Hong Kong parents face. Feeding their babies requires them to compete on a regular basis against the tireless gray marketers and the opportunistic local retailers in collusion with the mainland traders.

The grubby, hectic hub of the business is Sheung Shui train station. Although activity there has quieted since the announcement of the government crackdown, it has not been unusual in recent weeks to see hundreds of traders snaking into the station entrance, with police looking on. Each trader pulls a cart loaded with large parcels of everyday commodities from diapers to toothpaste — but the most sought-after item is baby formula. A local English-language paper, the South China Morning Post, estimates a hard core of about 3,000 mainlanders engaged in the gray market. But the lack of faith in China’s food security is well founded, so even genuine tourists will often buy items like milk formula to give to relatives in the mainland.

The result is misery for Hong Kong parents, who complain of being unable to find milk formula in the stores, especially those in suburbs near the border. “Out of necessity, I have become a bona fide hoarder of formula,” says Evelyn Kuong, a local surgeon who notes that she often drives across several districts of the city to find milk powder for her 7-month-old son. “It’s already exhausting enough being a full-time working mother. It is all the more stressful to be constantly popping into drugstores everywhere I go, on the off chance that they may have one remaining can of formula.”

(MORE: On the Streets of Hong Kong, a Vast Display of Discontent)

Through a popular online forum for baby-related topics, Hong Kong mothers have banded together to report to one another on the availability of milk formula in stores around town, and to help buy whatever is available in their own neighborhoods and then meet up to trade with those in need. After the announcement of the impending two-can limit, many of the forum’s users expressed relief that something was being done but also anger at what they had been put through. “Hong Kong’s parents, grandparents and their friends and colleagues have had to work together just to find milk powder. We feel so dispirited now,” one user wrote.

“I sympathize with mainlanders. Even if it’s the same brand as what they are buying here, they don’t trust the product sold on the mainland,” says Vincent Lau, who recently led a protest calling for the protection of Hong Kong’s milk-formula supply. But he says China’s food-safety problems should be fixed at the source, not at the expense of Hong Kong’s supplies. “Hong Kong is tiny. Seven million people can’t take care of 1.3 billion.”

It must be said that a more porous border with China hasn’t been all bad for Hong Kong. In fact, mainland tourists have provided a much needed boost to Hong Kong’s economy ever since they were allowed individual entry for leisure purposes in 2003. (Before then, only tour groups and individuals on business could obtain visas.) Spending by mainland Chinese accounts today for more than one-fifth of the city’s retail business, as the visitors snap up luxury goods at prices lower than in China, where steep duties and differences in exchange rate add about 20%. Even in matters of basic sustenance, Hong Kong simply couldn’t survive without China, which supplies up to 80% of city’s drinking water and most of its fresh meat and vegetables. Some would argue that means Hong Kong should have a more accommodating attitude toward its vast neighbor. But the problem is that when it comes to their babies, there’s not one parent on earth who would compromise.

MORE: Can Hong Kong Trust Chief Executive Leung Chun-ying?