World
A man crossing the Hong Kong-China border with 146 iPhones strapped around his belly was apprehended by Shenzhen officials before he even got a good core workout. The 47-pound bundle, confiscated on March 6, was reportedly the biggest iHaul ever found on a single smuggler. When his homemade belt set off the metal detector at border security, officials told CNN that the man assured them he was wearing metal accessories, “but we didn’t believe him.”
Whether or not the man will face charges is unknown. But he is far from the first to concoct such a scheme: China is home to a widespread “gray market” of clandestine iPhones, which are hocked to tech-thirsty urban tastemakers.
Most units trickle into the mainland from places like Hong Kong or Japan, where the newest models hit stores simultaneously with the U.S. launches. The delay between the device’s official launch and its arrival to China can be anywhere from several weeks to a few months. During this critical waiting period, a new iPhone can fetch up to $3,000 in China. But entrepreneurs like the Shenzhen arrestee don’t quit after Apple rolls out the products locally. Smuggling continues year-round, largely because of China’s hefty 17% import tax - a considerable chunk added to an already hair-raising price tag. As a result, smugglers can still claim a decent profit margin on smuggled phones. (In an effort to inject life into a slower-growing economy, China lowered charges on certain imported goods late last year but the iPhone was unaffected by the change.)
While plenty of larger iPhone smuggling attempts involving sea vessels, vehicles and shipping cargo have been foiled, a common small-scale technique entails strapping the phones to one’s body. The Shenzhen arrest uncovered the highest known quantity found on one person, but the security agents there say they’ve uncovered hundreds of iPhones over the years. One January smuggler at the same border crossing was nabbed with 96 phones strapped across his torso and arms like body armor. (Security caught onto the ruse when they noticed the traveler was walking stiffly - as if struggling with a weight - despite carrying only a tiny duffel bag.) Photos of the ill-fated smuggler went viral online, prompting questions as to the ethics surrounding the public release of such pictures, even if a black bar obscured the man’s eyes.
Even more troubling, a photo surfaced weeks earlier of a busted man who had taped phones to his underwear. It’s not hard to feel sorry for these “phone mules,” who in many cases are lower-level employees of a larger smuggling ring. The New York Times reported in September that such rings typically work with Hong Kong residents who buy the products on the early launch date. They then scalp the phones to mules for a higher fee, leaving only a sliver-sized margin for the smugglers themselves. (The U.S. has its share of “middlemen” as well, with many first-day iPhone 6 buyers claiming to be buying phones for contacts overseas.)
Apple has refused to comment on China’s notoriously illicit iPhone trade, which is so pervasive that salesmen have been known to loiter outside electronic stores to unload their wares. While the import tax reforms didn't touch Apple products, other market forces will. With each new ballyhooed product, the gulf between American and Chinese launch date has narrowed, meaning there are fewer Chinese techies willing to buy the devices before the imminent price dip. Furthermore, in the past few months, smart phones made by Chinese companies have started to catch up in quality.
It’s tough to imagine ever shelling out four figures for an iPhone – and Chinese city dwellers are finding it harder too.
