Beijing has raised the purchasing limit for mainland tourists visiting Hong Kong and Macau, aiming to boost Hong Kong’s sluggish retail sales. However, this move has sparked concerns about incentivizing larger-value, cross-border wine smuggling.
Increased Duty-Free Limit
Starting from July 1, mainland residents aged 18 or over visiting Hong Kong and Macau can bring back duty-free products worth up to RMB 12,000 (HKD 12,900), an increase from the previous limit of RMB 5,000. This limit is further raised to RMB 15,000 if the purchases are made inside duty-free shops at border crossings. The initial roll-out covers six cross-border checkpoints: Lo Wu, Futian, Shenzhen Bay, the West Kowloon high-speed rail terminus, the Hong Kong-Zhuhai-Macau Bridge, and Gongbei. Full implementation will begin on August 1.
Implications for Wine Purchases
For wine, this means mainland visitors can now legally purchase higher-end premium wines that were previously above the purchasing limit. For example, a bottle of Chateau Lafite Rothschild 2009 sells for HKD 10,800 on Watson’s Wine website, while a 2009 Penfolds Grange sells for HKD 5,980. Mainland tourists visiting Hong Kong and Macau are legally allowed to bring back one bottle of wine in a 750 ml format, but when transiting through Hong Kong, the quota is raised to two bottles.
Potential Economic Impact
The move is estimated to increase tourist spending in Hong Kong by at least HK$8.8 billion, potentially reaching up to HK$17.6 billion a year. This increased consumption could add between HK$2.7 billion and HK$5.4 billion to the economy, according to the Hong Kong government.
Concerns About Wine Smuggling
However, the increased limit has also raised concerns that it might incentivize wine smugglers to transport higher-value bottles from tax-free Hong Kong into mainland China. It’s an open secret that a portion of fine wines arriving in Hong Kong are smuggled into mainland China through large operations via speedboats or cars, but more commonly via individual operators known as “coyotes,” who hand-carry wines into the mainland on a commission-based operation.
Recent Smuggling Cases
In recent years, several cases of wine smuggling using these individual smugglers have been uncovered by Chinese customs. In 2022, the anti-smuggling department of Zhuhai Gongbei Customs seized 598 bottles of smuggled Penfolds during a delivery drop. Investigations revealed that since March 2022, the gang had been ordering Penfolds and other fine wines from Macau, then employing coyotes to carry them across the border to a designated collection point in a Gongbei mall, where the wines were repackaged and distributed nationwide.
In 2023, another smuggling case disclosed by the Shanghai High People’s Court involved a Shanghai-based wine importer. The company’s legal representative was found to have collaborated with a smuggling gang, using body concealment methods to smuggle tax-free wines from Hong Kong into mainland China. The value of the involved goods reached RMB 14.9754 million.
Conclusion
While the increase in the duty-free limit aims to stimulate retail sales and boost the economy, it also presents significant challenges in terms of preventing illegal smuggling of high-value wines into mainland China. The authorities will need to implement stringent measures to address these concerns effectively.
