OPINION-A New Pattern of Cross-Border Crime: Smuggling of Luxurious Goods between Hong Kong and Mainland

Since the outbreak of Covid-19, a new pattern of cross-border crime has been emerging between the Hong Kong Special Administrative Region (HKSAR) and mainland China. As Covid-19 has been minimizing the cross-border human traffic, individual smuggling in the form of “ants carrying out smuggled goods” has become relatively difficult. However, massive and large-scale smuggling of luxurious goods and products through both the land and sea route has become far more prominent than ever before.

According to a press briefing on June 10, the Hong Kong custom and excise department from June 2 to 7 cracked down on a large-scale smuggling case in Lau Fau Shan, where four people were arrested for being involved in the smuggling of prestigious handbags, watches, precious food products and endangered species, which amounted to HK$120 million. Of the four arrested Hong Kong people, they aged between 35 and 62 years old. One of them was a core member of the smuggling syndicate, while the other three were responsible for supervision work in storage and transportation. About 66,000 items of goods were confiscated by the custom authorities, including bird nests, sea cucumbers, and shark fins. Furthermore, about 186 kilograms of endangered species, such as devilfish and cactus. It is reported that parts of devilfish can be used to deal with rheumatism, cancer and female-related diseases in the mainland and that each catty of devilfish is fetched up to HK$2,700. 

According to the Hong Kong customs, smugglers changed their tactics by firstly collecting all the precious products from all parts of the world, utilizing powerful speedboats to engage in smuggling activities within a short period of time, and mobilizing a large number of speedboats to achieve their illicit and profit-making activities. From early March to late May, the customs department had  uncovered three smuggling cases that amounted to HK$2,000,000, HK$3,000,000 and HK$4,000,000 – a total amount equivalent to 70 percent of the captured smuggling goods in the entire year of 2020. Because all these captured smuggling products incurred a tax levy of 100 percent to 160 percent in the mainland, these smuggled goods could have evaded HK$120 million.

An interesting but a significant tactic used by smugglers was that they used two drones to detect the presence and pursuit of customs and police authorities. Speedboats were also utilized as patrol boats to detect customs boats and marine police. Combined with the detection work of smugglers on land, the use of drones and speedboats as additional “defensive” line had already made it difficult for Hong Kong customs to detect smuggling activities.

On the other hand, the warehouse of smuggling syndicates was installed with 24-hour video cameras to detect whether customs and police might raid their premises. Their warehouse was protected by tight security in which smugglers and their accomplices slept there and detected suspicious persons outside. Clearly, the tactics used by smuggling syndicates became far more sophisticated and much tighter than ever before, especially as the amount of smuggling goods was extraordinarily large.

Another new tactic used by smugglers was that they had classified all the smuggled goods well and put them into various numbered boxes to speed up the process of sending the goods rapidly to the mainland receivers. At least five to six receivers from the mainland side were arranged in the smuggling case that was cracked down from June 2 to 7.

Thanks to the cooperation between the Hong Kong customs department and its mainland counterpart, many cases of smuggling were cracked down effectively. The mainland customs authorities also cracked down on many cases of smuggling in Guangdong, Guangxi and Anhui, where smugglers used warehouses to hide their smuggled goods. From March to April, the mainland customs arrested eleven people who were involved in the smuggling of 2.4 tons of Manidae, specifically pangolin scales which costs Renminbi 50 million. 

Pangolin scales have been used in the mainland for stimulating blood circulation of patients. In August 2018, the Hong Kong customs arrested a 38-year-old man at the airport for smuggling a consignment of pangolin scales and he was sentenced to 18 months’ imprisonment in April 2021, for he violated the Protection of Endangered Species of Animals and Plants Ordinance.

In April 2021, the Hong Kong customs busted a smuggling syndicate that smuggled 300 graphics cards, specifically Nvidia’s Cryptocurrency Mining Processor (CMP). The syndicate used a fishing boat to transfer boxes of cards to a speedboat early in the morning outside the Hong Kong international airport. Other smuggled goods captured by the customs included exotic food like sea cucumbers and shark fins.

Smuggling activities across the border of Hong Kong and the mainland have been commonplace since 2020. 

In December 2020, contraband products of HK$540 million were seized by the Hong Kong customs in Hong Kong waters, including iPhones, bird nests and abalone that were attempted to be smuggled from the HKSAR to Shenzhen by speedboat.

On June 4, the Hong Kong customs captured a batch of suspected smuggled diamonds and other jewels with an estimated market value of HK$25 million. The jewel embraced 1,300 diamonds, 10 sapphires, one emerald, and 30 grams of point-size diamonds which were all stored in a light good vehicle at Sha Tau Kok control point. The smuggling of diamonds from the HKSAR to the mainland has become commonplace because smugglers could evade customs duty of 4 percent, especially as China remains a hub of manufacturing diamond-studded jewellery. 

As early as January 2010, 22 Indian diamond merchants from Gujarati were held by the mainland Chinese customs authorities for allegedly smuggling polished diamonds worth US$7.3 million. Nine of them were sentences for six months to six years. Hence, the smuggling of diamonds took place long before the outbreak of Covid-19. 

In September 2020, according to the Indian Express, a Gujarati diamond merchant in Hong Kong was questioned by the Hong Kong customs, while two local Chinese were arrested by the mainland Chinese customs for allegedly smuggling 150 packets of polished diamond from Hong Kong to the mainland through courier services. 

Many Indian diamond merchants who have manufacturing units in Surat have trade offices in Hong Kong. Very often, diamond trading firms in Hong Kong, many of them run by Indians with local Chinese as staff members, use courier services to send parcels of diamonds to Shanghai, Shenzhen, and Guangzhou in the mainland. If cross-border trade involves some Indian merchants, the use of courier to send diamonds from Hong Kong to the mainland could be regarded by mainland customs as allegedly engaging in cross-border crime.

In April 2021, twenty people were arrested by police in Shanghai, Beijing and Guangzhou for allegedly smuggling diamonds of Renminbi 40 million. The mainland customs said that the smuggling syndicate had been not only buying diamonds from an overseas website since July 2020 but also delivering them to Hong Kong and then smuggling them into China without proper declaration or paying the required tax.

In the same month of April, the Hong Kong police seized 700 kilogram of cocaine and arrested three men, believing that the drugs were imported from South America and would be transported from Hong Kong to the mainland through speedboats. The cocaine bricks were carefully wrapped in plastic and a lot of waterproof bags were found in an industrial building.

On May 29, the Hong Kong customs captured two air consignments arrived at Hong Kong’s international airport from Mexico and found HK$2.2 million of shark fins. 

On June 7, the customs seized 3.3 tons of dried shark fins with an estimated value of HK$4.6 million from a container at the Kwai Chung Customhouse Cargo Examination Compound.

On June 9, the customs seized 1.4 tons of suspected scheduled dried Gekko gecko, an endangered species with a market value of HK1.24 million at the international airport. Two air consignments were confiscated as they claimed to carry pet food from Indonesia, but there were 59 carton boxes of dried Gekko gecko.

All the recent examples above have shown that smuggling activities via land and sea have been much more large-scale, far more luxurious, and increasingly characterized by sophisticated smuggling syndicates that utilized speedboats, warehouse and even drones. Clearly, the destination of all these smuggled products is mainland China, where the demand for such precious food, luxurious products, endangered species persist. At a time when Covid-19 remains an uphill battle in many parts of the world, including the Greater China region embracing Hong Kong and the mainland, this new pattern of cross-border smuggling is natural, inevitable but illustrative of the highly lucrative, risky and adaptative nature of transnational crime.