With the rapid development of China's economic environment, more and more Hong Kong manufacturers have moved their production lines to mainland China in recent years in order to lower their production costs. However, at the same time, they have had to bear the risks of theft and burglary. Public order is not good in China and theft of cargo before and during shipment is common.

Last month, a Hong Kong handbag manufacturer, whose factory is located in Shantou, hired a shipping company to transport over 700 cartons of handbags to the container port in Shenzhen to ship to the US. However, while waiting for loading, he was informed by the Chinese Customs authorities that his cargo needed to be inspected during which it was discovered that over 400 cartons of handbags had been replaced with bags of cement. Theft cases such as this happen frequently in China with manufacturers not only losing their cargo but also having to pay compensation to buyers for late delivery. Additionally, manufacturers may face accusations from the Chinese Custom authorities that their cargo does not match their Customs declaration.

Another common scenario is theft during the packing process. Packing is part of the production process and, even if cargo owners have taken out cargo insurance, this cover will not become effective until the voyage starts. This means that loss or damage during the packing process is not normally covered by cargo insurance. It is also very difficult to prove when the loss or damage actually took place.

It is strongly advised that cargo owners employ a reliable surveyor to provide evidence of the loading of cargo into containers and to perform sampling checks to ensure that cargo has not been removed or replaced. This practice is especially important when shipping valuable items, such as watches and electronic goods. Employing a reliable and reputable shipping company will also help to minimise the risk of theft and mishandling of goods. By taking these precautions, if loss does occur, investigations and claims procedures are simplified as it can be proved that the loss did not occur before the start of the voyage.

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