iPhone tales: The little Chinese drones that could

Did Chinese drones really transport hundreds of thousands of iPhones from Hong Kong to Shenzhen?

“Any headline that ends in a question mark can be answered by the word no.” — Betteridge’s law

From Reuters: China busts smugglers using drones to transport smartphones:

Customs officers in southern China’s technology hub Shenzhen busted a group of criminals using drones to smuggle 500 million yuan ($79.8 million) worth of smartphones from Hong Kong to Shenzhen, the official Legal Daily reported on Friday.

Authorities arrested 26 suspects who used drones to fly two 200-meter (660-feet) cables between Hong Kong and the mainland to transport refurbished iPhones with a total value of 500 million yuan, the paper said in a report on the crackdown by Shenzhen and Hong Kong customs…

The smugglers usually operated after midnight and only needed seconds to transport small bags holding more than 10 iPhones using the drones, the report quoted customs as saying. The gang could smuggle as many as 15,000 phones across the border in one night, it said.

My take: This story may be getting more play than it deserves. (See here, here, here, here, here, here, here and here.) $80 million U.S. at a street price of $200 each works out to 400,000 refurbished iPhones. Could there be an extra zero or two in that number? Also, given that iPhones are assembled in Shenzhen, isn’t this contraband moving in the wrong direction?

2 Comments

  1. Ken Cheng said:

    One, I think people are getting the wrong idea. They’re not flying iPhones over via drone. They’re flying lightweight cables. Then they attach sacks with 10 iPhones in each, to the cable and slide the sacks from one side of the border to the other. It’s no different than Errol Flynn shooting an arrow with a rope attached, and then using that rope to slide to safety. Or it could be Batman, or any other fictional hero. Flying iPhones via drone would be too slow. Sliding them down a guy wire is fast.

    As for why they’d go from HK to Shenzhen? They’ve been doing that for years. iPhones and other electronic gear is typically cheaper in HK. Bringing electronics into China requires import duty. Seems very little to your average person, but to Chinese importers, where margins are slim, it’s the difference between profit and a loss.

    And, as for iPhones even though they are assembled in China, they’re assembled in “bonded areas” which are essentially duty-free zones, so technically they’re owned by Apple Ireland, and imported into China. But, in this case, presumably we’re talking refurbed iPhones, so the smugglers are trying to avoid import duties.

    1
    March 30, 2018
  2. Gregg Thurman said:

    The secret to Hong Kong’s power house economy (WWII TO 1997) is very simple. First, it’s a duty free country (SAR since China transition). Secondly in country taxes are very low vs the rest of the world. Lastly it’s government and currency were very stable.

    This made doing business in Hong Kong profitable for everyone.

    Since 1997, and the transition from British to PRC, Hong Kong has held the status of a Special Adminstration Region (SAR), This meant taxes/duties were much less than in the PRC. It is the imbalance in taxation that makes smuggling goods from Hong Kong into the PRC so attractive (and profitable).

    1
    March 30, 2018

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