By Adam Jourdan and Clare Baldwin
SHANGHAI/HONG KONG (Reuters) - On a dusty industrial lot in northern Hong Kong, a group of travellers sheltered in the shade away from the pressing July heat, packing old cloth bags and backpacks with Styrofoam to protect a more precious cargo: smuggled meat.
Crowded amid the warehouses of Sheung Shui, a remote suburb near the mainland border, the group of around 40 are about to take frozen Brazilian beef into China to feed a growing demand for meat that is unsated by local produce or approved imports.
The part-time smugglers, known as "feet" within the trade, are part of an underground industry that has boomed since Beijing launched a crackdown on meat smuggling last year.
"Before they used trucks, but those were for high-quality beef from Japan and New Zealand and maybe America," one Hong Kong smuggler Alan Wong, 36, told Reuters, explaining smugglers could earn 200-300 yuan ($30-50) per trip. The meat now being carried across the border was of lower quality, he added.
Wong's story, along with interviews with a dozen customs agents, anti-smuggling officials and traders, paints a picture of an illegal trade along China's borders with Hong Kong and Vietnam, where smugglers are taking bigger risks with food safety as the crackdown drives them deeper underground.
The scale of the smuggling has infuriated legitimate exporters from countries such as Australia, who say black market meat is 30-60 percent cheaper due to high import duties, while the methods now being used raise consumer health concerns.
"You have people stuck with meat on the Vietnam side of the border they can't sell. They start taking it up and down the river and breaking it into smaller units to bring it in," said a Shanghai-based meat industry advisor. "It's more underground and therefore more dangerous."
"ZOMBIE MEAT"
China is the world's top meat consumer, but the mainland has long kept a tight grip over imports, often citing safety worries such as mad cow disease as the main reason behind bans on major producers such as the United States and India.
Consequently demand has run ahead of domestic production, creating an opportunity for smugglers. U.S. officials said in March "huge" amounts of beef were still getting into China.
Seizures of smuggled meat have jumped close to threefold this year and generated headlines that have alarmed consumers even in a country wearily familiar with food scandals.
Local media reports said in June authorities had seized 100,000 tonnes of smuggled frozen meat, some of it so-called "zombie meat" up to 40 years old.
Customs officials and police told Reuters the oldest meat found this year had been 4-5 years old, but said chicken feet dating back to 1967 had been seized in 2013.
The greater scrutiny means customs agents often no longer turn a blind eye to refrigerated trucks coming into China, forcing smugglers to take more hazardous routes.
"People are bringing [meat] over one box at a time, just like ants moving home," a customs official in the city of Changsha, surnamed Huang, told Reuters.
In Hong Kong, Reuters reporters saw people repackaging cases of meat labelled "Boi Brasil" and "Cargill".
A spokesman for Boi Brasil said the Brazilian company had no knowledge of smuggling of its produce into China and had no further comment.
Cargill spokesman Mike Martin said the U.S. agribusiness giant sold beef to well-established, government-regulated distributors in Hong Kong.
"Once the beef is received by distributors, we have no control over subsequent sales and movement of the beef," he said.
NIGHT RAID
In one of a spate of recent raids, anti-smuggling agents surrounded a 20-tonne container truck in the early hours of June 1 in Changsha, in southern Hunan province.
What they found churned stomachs in China and beyond - rotting, expired beef, originally from India, that had been smuggled in small batches from Vietnam.
"When we opened the container it reeked because it hadn't been put back into cold storage," said Changsha's Huang.
The meat typically enters China through border towns like Dongxing, in coastal Guangxi province, separated from Vietnam's Mong Cai by the narrow Ka Long River.
Smuggler gangs take the meat in container trucks from Vietnamese ports such as Haiphong to bonded warehouses in towns like Mong Cai, where shipments are broken into small parcels, breaking the "cold chain" and allowing to meat to thaw.
"They then stick it onto 50 or so motorbikes which slowly drip it out along the border where it's carried on small sampan boats to a truck waiting on the other side," said Hanoi-based Scott Roberton, who has investigated border smuggling for the Wildlife Conservation Society.
SUPPLY CHAIN
Once in China, the meat is transported, often in unrefrigerated trucks, to massive wholesale markets across the country's south, where it is finally put back in cold storage and sold on to supermarkets, processing plants and rural markets across the country.
Among the biggest is the Red Star cold meat market in Hunan, site of one recent bust, whose sprawling warehouses cover an area the size of 17 football pitches.
Changsha customs say around one-third of the 800,000 tonnes of meat that goes through it every year is from "unclear origins" outside mainland China.
Su Weijun, the market's deputy general manager, said that was "nonsense". "Perhaps before a small amount of meat got through, but now we are inspecting much more strictly," he said.
But a steady stream of food scandals in recent years, from tainted infant formula to fox meat passed off as donkey, have made traders and consumers wary.
Tang Ming, 23, a student from China's southwestern Guizhou province, said she now avoids low-end food stalls and opts for better-known brands.
"In wet markets I try now to avoid buying frozen meat - you just don't know how long it's been kept."
(Additional reporting by Dominique Patton in BEIING, Viola Zhou and Venus Wu in HONG KONG, Caroline Stauffer in SAO PAOLO, Theopolis Waters in CHICAGO and SHANGHAI newsroom; Editing by Alex Richardson)
