HONG KONG — China’s Ministry of Public Security has ruled that Shenzhen permanent residents will be restricted to just one visit a week to Hong Kong.
This story first appeared in the April 14, 2015 issue of WWD. Subscribe Today.
Permanent residents in Shenzhen currently hold multiple entry permits that allow them unlimited visits to neighboring Hong Kong. It’s unclear when the change will take hold. Hong Kong retailers, which are already seeing slowing traffic and reduced spending, are likely to see some impact from the move.
The ease of transportation and the lower price of imported goods in Hong Kong — where there is no sales tax — have made it inviting for Shenzhen residents to pop into the city for quick shopping trips.
The porous border has also been blamed for giving rise to a gray market in which “parallel traders” buy up milk powder, imported shampoo, toothpaste and other goods to resell in China. The thriving trade has created tension with local Hong Kong residents, especially those in communities in the new territories near Shenzhen, who blame parallel traders for buying up all the diapers and other essentials, creating lines at local supermarkets and for driving up rents.
Hong Kong authorities have made some small moves to placate angry Hong Kong residents — limiting Chinese visitors to just two bottles of milk powder per visit and limiting the size of carry-on luggage allowed on trains. Despite this, residents are still unhappy and there were a handful of protests in recent weeks about the parallel trade.
Hong Kong’s chief executive CY Leung told a press conference Monday morning that Beijing’s decision to limit the number of visits was not a result of the protests.
“We put forward our proposals to the central authorities back in June last year. It’s now nearly a year…the reason why it’s taken nearly a year for the central authorities to make the announcement that they made this morning is partly because this is a major move. Secondly, there is preparatory work to be done. But thirdly…the unruly protests by certain members of our community have been counterproductive,” he said.
About 40 percent of Hong Kong’s retail spending comes from tourists, the majority from mainland Chinese visitors. Last year, there were 47.2 million Chinese visitors to Hong Kong, making up 77 percent of all visitors to the city.