Trade in smuggled meat keeps some restaurant operators in business, according to an August 10 report by China's Ban Yue Tan (Comment) online magazine. China's small restaurant owners and processors struggling to remain profitable may be the most vulnerable to China's tariffs on imports from the United States. As tariffs rise higher, the incentive to smuggle is increased proportionately and China's customs authorities say they are cracking down (again).
The Comment reporter said most of the 40 merchants he interviewed in two wholesale meat markets in Chongqing--a major hub of commerce in southwest China--sold both legal and smuggled frozen meat products. Smuggled products included frozen pork, beef and poultry.
Vendors asked the Comment reporter, "Do you want [meat] with a certificate or without? It's much cheaper without a certificate."
The product without certificates was smuggled meat that lacked import clearances and inspection documents. The smuggled meat was in boxes labeled only in English, a violation of China's requirement that imported foods be labeled in Chinese. Smuggled boxes were covered with plastic bags to prevent mixing with legal products.
A vendor quoted prices of 460 yuan for a 20-kg box of smuggled chicken feet or 540 yuan for a box of legal chicken feet--a 17 percent discount for smuggled product.
Another vendor offered a bigger discount on smuggled beef that the reporter said was not discernibly different from legal beef: 720 yuan for smuggled and 960 yuan for 20-kg of legal beef, a discount of 33 percent.
The Comment reporter said there is no way to estimate the volume of smuggled meat sold, but he was told selling smuggled meat is an "unspoken rule." The meat arrives at the market on trucks with license plates from all over China. One driver from Henan Province told the reporter that he has been transporting meat for 5 years and has done business in 10 provinces.
The main buyers are food service establishments from all over southwestern China. The restaurant business is highly competitive and every operator is looking for ways to cut costs.
The Comment reporter described the pressure to use smuggled meat as a "Gresham's Law" in which bad meat drives out good. Many companies deal in illegal meat "as a last resort" because the high cost of legal meat would put them out of business, the Comment reporter said.
One buyer told the Comment reporter, "Business is not good now and tax-free meat is cheap, saving me money. Many people in the industry use this kind of meat, and if I use only legal meat the cost pressure would be too great."
The article in Comment--a news site operated by the communist part--appears to be part of an anti-smuggling campaign. The article concluded by recommending a crackdown on smuggling and market regulation to prevent loss of tax revenue, eliminate hidden food safety risks and maintain order in the market.
An "opinion" piece from Hangzhou's newspaper posted on Peoples Daily and Xinhua news sites on August 13 worried about the Comment article's revelation that officials who operate the Chongqing markets send text messages to give vendors advance notice of inspections, allowing them to hide smuggled product or close their shop before inspectors arrive. The Hangzhou paper noted that merchants and market managers had incentive to collude so they can split the profit from smuggled meat.
On August 14, Guangzhou customs inspectors said they intercepted a vessel carrying 427 metric tons of smuggled frozen meat on July 19. Smugglers carried 16 containers of beef, pig feet and tongues and chicken feet that originated in the United States. The decommissioned boat stripped of monitoring gear and fitted with a fake name plate was apprehended on a river in Guangdong. Authorities say they will step up patrols on rivers in Guangdong as part of the 2018 "national sword" campaign focused on grain, frozen foods, sugar and other agricultural products.
Merchants told the Comment reporter they had seen news about crackdowns from time to time, but the cost of dealing in smuggled meat is still relatively low.
The Comment reporter said most of the 40 merchants he interviewed in two wholesale meat markets in Chongqing--a major hub of commerce in southwest China--sold both legal and smuggled frozen meat products. Smuggled products included frozen pork, beef and poultry.
Vendors asked the Comment reporter, "Do you want [meat] with a certificate or without? It's much cheaper without a certificate."
The product without certificates was smuggled meat that lacked import clearances and inspection documents. The smuggled meat was in boxes labeled only in English, a violation of China's requirement that imported foods be labeled in Chinese. Smuggled boxes were covered with plastic bags to prevent mixing with legal products.
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| Described by Comment as smuggled meat on a loading dock. |
A vendor quoted prices of 460 yuan for a 20-kg box of smuggled chicken feet or 540 yuan for a box of legal chicken feet--a 17 percent discount for smuggled product.
Another vendor offered a bigger discount on smuggled beef that the reporter said was not discernibly different from legal beef: 720 yuan for smuggled and 960 yuan for 20-kg of legal beef, a discount of 33 percent.
The Comment reporter said there is no way to estimate the volume of smuggled meat sold, but he was told selling smuggled meat is an "unspoken rule." The meat arrives at the market on trucks with license plates from all over China. One driver from Henan Province told the reporter that he has been transporting meat for 5 years and has done business in 10 provinces.
The main buyers are food service establishments from all over southwestern China. The restaurant business is highly competitive and every operator is looking for ways to cut costs.
The Comment reporter described the pressure to use smuggled meat as a "Gresham's Law" in which bad meat drives out good. Many companies deal in illegal meat "as a last resort" because the high cost of legal meat would put them out of business, the Comment reporter said.
One buyer told the Comment reporter, "Business is not good now and tax-free meat is cheap, saving me money. Many people in the industry use this kind of meat, and if I use only legal meat the cost pressure would be too great."
The article in Comment--a news site operated by the communist part--appears to be part of an anti-smuggling campaign. The article concluded by recommending a crackdown on smuggling and market regulation to prevent loss of tax revenue, eliminate hidden food safety risks and maintain order in the market.
An "opinion" piece from Hangzhou's newspaper posted on Peoples Daily and Xinhua news sites on August 13 worried about the Comment article's revelation that officials who operate the Chongqing markets send text messages to give vendors advance notice of inspections, allowing them to hide smuggled product or close their shop before inspectors arrive. The Hangzhou paper noted that merchants and market managers had incentive to collude so they can split the profit from smuggled meat.
On August 14, Guangzhou customs inspectors said they intercepted a vessel carrying 427 metric tons of smuggled frozen meat on July 19. Smugglers carried 16 containers of beef, pig feet and tongues and chicken feet that originated in the United States. The decommissioned boat stripped of monitoring gear and fitted with a fake name plate was apprehended on a river in Guangdong. Authorities say they will step up patrols on rivers in Guangdong as part of the 2018 "national sword" campaign focused on grain, frozen foods, sugar and other agricultural products.
Merchants told the Comment reporter they had seen news about crackdowns from time to time, but the cost of dealing in smuggled meat is still relatively low.
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