China-Australia relations: how smuggled lobsters take ‘grey channels’ to Chinese plates via Hong Kong

·11-min read

As the summer heat began to bear down on Hong Kong in the early hours of May 21, four men loaded ice-cold styrofoam boxes onto two speedboats off a pier in the small fishing village of Lau Fau Shan in the city’s northwest.

Their suspected destination was mainland China, just a few kilometres across Deep Bay, in Guangdong province, according to Hong Kong customs.

One of the speedboats never made it out of Hong Kong waters. The other sped off carrying all four men as Hong Kong customs and marine police arrived on the scene and gave chase in a dramatic raid.

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The alleged smugglers had evaded authorities, but much of their illicit haul was left behind at a pier near Nim Wan Road. And the seized contents serve to highlight the rising demand in mainland China for a delectable crustacean that was supposed to have disappeared from Chinese markets and restaurants in recent months: the Australian rock lobster.

A month-long investigation by the South China Morning Post has revealed the increasing pervasiveness of “grey channels” being used to smuggle Australian lobsters from Hong Kong to mainland China, according to multiple trade sources who spoke on condition of anonymity.

“Most of the smuggled lobsters are western rock lobsters from Australia,” a Hong Kong seafood trader said. “Mainland consumers are so used to its taste that the Chinese market demand is still huge, even though direct imports have been banned.”

In addition to relatively run-of-the-mill contraband – handbags, jewellery, sharks’ fins, smartphones and bird’s nest – police in the May raid confiscated well over a half-tonne of the live shellfish in styrofoam boxes lined with ice packs and small wood chips.

While Hong Kong authorities did not reveal the origin of the 569kg (1,254 pounds) worth of lobsters, valued at HK$150,000 (US$19,300), the creatures bore the flaming-red colour and the spiny, forked antennae unique to Australian rock lobsters – a staple delicacy at Chinese wedding banquets and parties in recent years. That is, up until eight months ago.

That’s when the supply was said to be cut off as China unofficially banned their imports amid a simmering political and trade dispute with Australia.

Western rock lobsters are transported from Perth, Australia, to Hong Kong before being smuggled to mainland China. Image: SCMP Graphics
Western rock lobsters are transported from Perth, Australia, to Hong Kong before being smuggled to mainland China. Image: SCMP Graphics

Now the situation calls to mind challenges that authorities faced around a decade ago, when they similarly struggled to curtail the rampant illegal trade of Australian lobsters to mainland China via Hong Kong.

Highly valued before they became cheaper as tariffs fell, the crustaceans made regular crossings like those seen in recent months.

When the China-Australia Free Trade Agreement (ChAfta) was signed in 2015, tariffs were wiped out, making smuggling unprofitable.

That free-trade deal also turned China into Australia’s main market for fresh and live rock lobsters. In 2019, more than 90 per cent of Australian rock lobsters were exported to China, where the market was worth about A$750 million (US$553.7 million) a year, according to the Australian agriculture department.

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Mainland customs authorities did not respond to a request for comment for this report. Hong Kong customs replied with a boilerplate statement about how smuggling was a serious offence and that authorities were committed to combating all forms of smuggling, including that of seafood, through regular patrols of maritime and land borders.

“Customs officers vigorously conduct checks on passengers, cargoes, postal packets and conveyances at various control points and [the] sea boundary for combating smuggling of contrabands, including smuggled seafood,” Hong Kong customs said.

May’s raid followed an even bigger one on the mainland side on March 31. Police in Zhongshan city, next to Shenzhen, seized 100 boxes containing the same variety of red lobsters – weighing a whopping 1,274kg, with an estimated market value of 300,000 yuan (US$46,500).

A total of 26 alleged smugglers were arrested, while 14 vessels and a truck were seized.

Police said the gang had been shuttling seafood – including lobsters – various frozen meats, cigarettes and other goods between Hong Kong and the mainland since December.

Before their trade became a political casualty last year, western rock lobsters made up the lion’s share of lobster exports from Australia, followed by southern and other rock lobsters, trade data shows.

The trade and geopolitical conflict escalated in April 2020 after Canberra pushed for an international probe into the origin of the coronavirus without first consulting Beijing at the height of the pandemic.

In the following months, Chinese authorities warned traders that they faced the risk of delays to their imports of Australian barley, log timber, copper, coal, wine, sugar and live lobsters.

An official ban never occurred, but many of the banned goods – as well as unrestricted Australian exports such as fruits – were met with various levels of increased customs inspections or delays or were detained altogether.

Seemingly overnight, the lucrative rock lobster trade into China vanished.

And with it went a bit of tradition – many Chinese diners had to do without their usual luxurious centrepiece during this past February’s Lunar New Year celebrations. A bright red lobster on a big plate is often associated with prosperity and status.

Chinese retailers say Australia’s most valuable fishing export is popular for its tough texture and its saltier, fishier flavour. The price of live Australian rock lobsters in China traditionally surpasses US$100 per kilogram in peak seasons such as around the Lunar New Year. When that occurs, prices are similarly pushed up in Australia. But with China’s ban diminishing demand, Australians saw prices fall to about US$30 to US$45 per kilogram during the peak season this year.

Trade data suggests that the crustaceans are finding their way back to Chinese dining tables via illicit channels through Hong Kong, which is a separate customs region unaffected by the mainland’s bans on Australian goods.

Australian lobster exports to Hong Kong have increased heavily, figures from Hong Kong’s Census and Statistics Department show.

In April, Hong Kong imported 157,978kg of Australian rock lobsters – about 50 times the amount imported in October, just before the ban took effect.

But none of those lobsters have shown up as cargo being re-exported to mainland China, the department said. Meanwhile, 5 per cent of them headed to Macau, Hong Kong’s neighbour on the other side of the Pearl River Delta.

Even after that small percentage of re-exports to Macau, Hong Kong diners would not suddenly be consuming the much higher volume of imported lobsters, the Hong Kong seafood trader said.

“How could people in Hong Kong consume so many lobsters?” he asked rhetorically. “Of course they must have ended up on the mainland.”

On major Chinese e-commerce platforms such as Xianyu and Taobao, suppliers in Beijing, Guangzhou and Hangzhou have been promoting live Australian lobsters, with prices ranging from about 300 yuan to 1,000 yuan (US$45-US$155) a kilogram.

China's import ban sees Australian lobster disappear from Beijing markets, restaurants

Diners in Shanghai told the Post that restaurants were offering fresh lobsters. In Yunnan, a restaurant was promoting them as part of a buffet, according to a social media post.

At Beijing’s Sanyuanli wet market, the Post spoke with a market vendor who had a tank featuring live Australian lobsters for sale. The vendor, who declined to reveal her supplier, said that because the ban was technically unofficial, she could still get her hands on Australian lobsters, but that the supply was not “stable”. She had priced them at about US$140 per kilogram.

Indeed, a Sydney-based e-commerce trader also said that the only way to get lobsters from Hong Kong to the mainland in the current trading climate was to smuggle them, as attempting to re-export the lobsters legally would invite intense scrutiny by Chinese customs.

“When we get fruits like grapes from, say, Melbourne into Shenzhen transiting through Hong Kong, we need the same sets of export documents as if they were being sent directly from Melbourne. Sometimes we would need even more detailed and onerous ones,” he said.

How are the lobsters smuggled?

There are three ways to smuggle goods across the Hong Kong-China border, according to traders who spoke to the Post. The first is to transport the goods via waterways. The second is to mix them with legitimate goods in trucks. And the third is to have human couriers carry them across Hong Kong’s border checkpoints of Lo Wu or Lok Ma Chau, although both of these have been closed to the public due to the coronavirus pandemic.

Whichever route is used, speed is crucial, as a lobster’s value diminishes greatly if it dies en route.

Before they are sent to Hong Kong, or to any port, live rock lobsters are first chilled – not frozen – as the low temperature puts them to sleep. Ice packs and wood chips then help keep them cool and alive in styrofoam boxes.

Once they complete their eight-hour flight from Perth to Hong Kong – in the case of western rock lobsters – and clear customs, local traders “wake them up” in fresh seawater and keep them in tanks for two to three days until their vitality is restored.

A live Australian rock lobster seized in May by Hong Kong customs and marine police awaits its fate atop a styrofoam shipping box filled with wood chips and ice packs. Photo: Hong Kong Police
A live Australian rock lobster seized in May by Hong Kong customs and marine police awaits its fate atop a styrofoam shipping box filled with wood chips and ice packs. Photo: Hong Kong Police

Once strong enough, the lobsters are repacked into the styrofoam boxes they arrived in, to be taken on the illegal part of their journey.

The waterways are the primary choice for most smugglers, as there are many points of entry along long stretches of the coast. Chinese fishing vessels that travel freely in and out of Hong Kong and mainland waters could also be used to sneak the lobsters in, traders say.

Smugglers transport the animals to vessels waiting on the high seas, or fishermen may even pick up the boxes at Hong Kong piers.

Then it’s off to their home port on the mainland, where the lobsters are unloaded alongside their usual fishing haul. Through their connections at piers and general freedom of movement, fishermen can easily evade the watchful eyes of customs inspectors.

Other smugglers use speedboats to swiftly shuttle the lobsters directly to the mainland.

Of course some smugglers will be caught, but they are always the minority

Hong Kong seafood trader

“All coastal provinces along the southern border of China can be potential destinations,” the Hong Kong seafood trader said.

When it comes to smuggling by roads, Australian lobsters are usually mixed with various goods and stashed in the back of trucks to evade inspectors at the Hong Kong-Shenzhen border.

“Previously, the land routes were more frequently used. But now, because of the pandemic, the border inspection has been stricter, so it has become harder to muddle through,” the trader said. “Of course some smugglers will be caught, but they are always the minority.

“The high profits will still drive many people to take risks.”

Once the lobsters are on the mainland, they can be flown or driven throughout the country, generally to major cities.

Not fresh, but still lobster

Australian exports of frozen Australian lobsters – while not as highly prized as their live counterparts – remain legal in China. And among diners who cannot get their hands on smuggled goods, demand for the frozen shellfish has surged in popularity this year.

Chinese customs data shows that the value of imported frozen lobsters leapt nearly a hundredfold between March and May: US$1.88 million in frozen lobsters were imported in May, compared with about US$20,000 in March.

The biggest western rock lobsters fishing group, the Geraldton Fishermen’s Co-operative, declined to comment on their frozen exports to China or alleged smuggling activity in general. When approached for comment, industry lobby group Western Rock Lobster CEO Matt Taylor deferred questions to the lobster fishers. South Australian lobster fishers said they had not been exporting any lobsters to mainland China since the ban.

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Be they live or frozen, there is little doubt that China loves its Australian lobsters.

“There is a long queue to eat Australian lobsters at this restaurant, but it is worth it,” one diner said on Weibo last month.

“I had a whole Australian lobster to myself. What a luxury,” another said.

One diner bragged about having purchased a live Australian lobster straight out of the chilled styrofoam box last month.

“I haven’t thought about how to eat it yet,” she said on Xiaohongshu, a Chinese social commerce platform. “I just opened the box to check the quality. The meat is first-rate!”

Additional reporting by Amanda Lee

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