Parallel Traders:It’s Origin, Harm And Countermeasures

The word "parallel trader" can be traced back to over1700years ago in Western Jin Dynasty of China. Since then, the implication of the word has changed from fisherman to itinerant merchant and then today’s parallel trader who smuggles goods crossing the Hong Kong-mainland border. Parallel trading is not new; however, it has become a hot issue receiving much attention from both Hong Kong and mainland in recent years, thus, bring the treatment of parallel traders into focus. By taking Shenzhen Customs as an example, this paper analyses the history, causes, effects and the defects of existing policies and measures, and proposes countermeasures.The paper presents an overview of the history and characteristics of parallel trading since the establishment of People’s Republic of China in1949, pointing out that the once individual parallel traders have developed into parallel trading organizations taking advantages from policy, supply and demand of market and environmental factors and forming a cross-border trafficking chain. At the same time, Customs, as the gatekeeper at border, mainly focus on intercepting traffickers while hardly strike a blow on ringleaders. This paper borrowing the theoretical framework of new institutional economics suggests customs, instead of positive interception and combat, should pay more attention to the profit resource of parallel trading, that is, customers, provide support to new consumption patterns, and win back the market from parallel traders. Based on this policy while still combating parallel trader gangs as well, customs will find a novel way-out settling the parallel trader issue. Therefore, this paper designs countermeasures from the following four aspects, namely, reducing the parallel trading profit due to tariff barrier, making use of customs supervision advantages to help establishing new trading platforms and compress the market of parallel traders, cooperating with local enforcement agencies to destroy storage places of parallel trader gangs and to seize the gang masters, and drawing support from the credit evaluation system being established by the government to deter the potential parallel traders.