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First Wave of iPhone 4S Smugglers in Shenzhen Brought to Trial

Smuggling goods from Hong Kong to the Chinese Mainland has been a common occurrence for years.  The nature of tax differences between the two “systems” makes it an attractive way to make money, and in recent years due to a soaring demand for luxury products and electronics, it has become common to smuggle Apple products across the border.

For smugglers, Alibaba’s Taobao is a great method for distribution, and it has become one of the primary mediums for exchange of contraband, and every year smugglers put new iPhone models online for sale before the model officially reaches the Mainland market. The government is now making an effort to crackdown especially with a case that opened this week.

Allegedly a Taobao website called Lanyou smuggled 160,000 iPhone units last year from Hong Kong to the Mainland, evading 54.87 million RMB in taxes ($8.8 million USD) normally levied for electronics. As a seller, Lanyou was well known on Taobao for phones and electronics. The website, which closed in April this year most likely due to this case, was among the top ten in phone sales and was number one for digital products, selling 20,000 Apple devices a month on average.

Yesterday, a total of 25 people from 5 smuggling gangs who used Lanyou to sell on Taobao stood on trial in Shenzhen’s Intermediate People’s Court. Most of the 25 defendants pleaded guilty.

In total 104 smugglers are accused of trafficking Apple products across the border and selling via Lanyou. Is this trial an indicator of a large-scale crackdown in the making? Apparently not, as the iPhone 5 has already appeared on the black market in China, even though it is scheduled for release in December.

Source: Sina Tech

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