Chinese authorities appear to be cracking down on rampant smuggling of seafood, with jail sentences and hefty fines handed down in a high profile court case in southern China. A court in Jiangmen, a city in wealthy Guangdong province, near Hong Kong, has sentenced eight offenders to sentences ranging between three and 12 years for smuggling RMB 1.3 billion (USD 212.1 million; EUR 171.2 million) worth of seafood — principally shark fins and sea cucumbers — into mainland China using forged documents and by understating cargo records.
The court sentenced Kuang Moupeng, founder and CEO of Jiangmen Rong Xing Seafood Co., to 12 years for one of the biggest seafood smuggling cases to come to court in recent years. Kuang, charged the court, used fake invoices and receipts to bring seafood from a shell company, Hong Kong De Xiang Global Co., over the border into mainland China.
The state argued that RMB 1.3 billion in revenue had passed through the company’s hands since 2009 and has ordered that RMB 189 million<?> (USD 30.8 million; EUR 24.9 million) in tax is payable on that figure. Shark fins with a real value of USD 10-30 were listed at USD 2-3/kg in customs declarations with sea cucumber valued at USD 43.28 listed at USD 2.80/kg in customs declarations. Also, during the case company accountant Ma Mouxia testified he’d been ordered to keep two sets of books.
With Chinese authorities keen on raising revenue in the face of slower economic growth the case shows intent in China to crack down on smuggling and collect more taxes. Seafood traders operating in the Hong Kong and mainland have seen a tightening of enforcement at Chinese customs recently, “…both for import and export,” explains Chris Hanselman, head of Pacific Rich Resources in Hong Kong.
“This is not a bad thing overall. The only problem is the CIQ [China Inspection & Quarantine] impose new regulations on a whim and do not promulgate,” said Hanselman. “So you only find out as you ship, this causes major issues. But they are getting better. For instance I now know that if I want to export from Qingdao, I need to have my order confirmed and sorted at least two months prior to shipment. The factories get the order, place it into the CIQ computer database and then it is in the system. Changes can be done but are a pain.”
One of the world’s busiest ports, Hong Kong has often been used by Chinese smugglers as a landing point for expensive imports. Aside from seafood, IT products and furs have also been seized by customs officials in periodic crackdowns on tax evaders. Such is the value of avoiding tariffs which can reach a cumulative 35 percent for so-called luxury seafood species like shark fins and sea cucumbers.
Seafood smuggling remains a challenge for law enforcement, particularly in the southern provinces like Guangdong, a magnet for seafood importers using neighboring Hong Kong’s tax-free status to import seafood ultimately destined for mainland buyers. A recent seizure of 1.4 million tons of high-end seafood included 68 boxes of Australian lobsters and 12 boxes of oysters featured in the Guangdong-based Yangcheng Daily News. The report include a police report detailed a high-speed chase at the mouth of the Pearl River across the water of Zhuhai near Macao and Hong Kong. Smugglers use high-speed boats coming out of Hong Kong and drop off to small crafts off the Guangzhou shore.
While seeking to contend with an influx of smuggled seafood China’s State Administration of Quality Supervision (AQSIQ) earlier this year issued the “Circular on Further Strengthening Supervision, Inspection and Quarantine of Imported Chilled Seafood,” which called for “better enforcement by food safety management personnel responsible for food safety” of imported seafood.
