The first trial has begun in southern China for a smuggling ring that allegedly brought as many as 160,000 iPhones, iPads and other devices worth a total of $80 million (RMB 500 million) into the mainland, Southern Metropolis Daily reports. The court claims they are responsible for dodging over $8.7 million (RMB 55 million) in taxes.
This case is particularly high-profile because it involves a former top seller on Alibaba’s Taobao C2C marketplace that was closed in April after the arrests. At one point, the seller was estimated to be selling 20,000 Apple products a month.
Hong Kong and mainland officials worked together to break up five different smuggling rings, arresting a total of 104 suspects as part of the sting. The Shenzhen Intermediate People’s Court brought the first 25 of them to stand trial on Wednesday.
According to the report, most of the defendants pleaded guilty, though some disputed the amount they were charged with or their role in the operation. The group reportedly contains housewives, “stylish young men” and a person over 70 years old.
Smugglers have gotten quite creative in their recent attempts to bring high volumes of iPhones across the Chinese border, even resorting to packing them in empty beer bottles, but police have also been stepping up their game to catch them. In fact, a large shipment of iPhones and iPads was discovered at the Shenzhen-Hong Kong border crossing earlier this week.
The large number of illegal imports could have an effect on Apple’s market share estimates. For instance, one recent report estimated that Android grabbed a whopping 90 percent market share in China last quarter, but it noted that it didn’t count grey market purchases.
Shortly after the release of the iPhone 5 in Hong Kong in September, a quick survey of unauthorized vendors in Beijing showed the device to be selling for as much as double its retail price. Apple typically has at least a three-month lag between the initial release of the iPhone and its official arrival in China.
Apple said last month that it will definitely release the iPhone 5 in China by the end of the year. Wireless operators China Unicom and China Telecom have expressed expectations to begin sales of the device next month.
Even with all the smuggling, China remains a significant focus area for Apple. The Greater China region, which includes Hong Kong and Taiwan, represented a record 15 percent of its income during the last fiscal year.