From January to June of this year, 23.43 million "black-market phones or illicit phones" were sold in China according to a Beijing-based Research firm. During that same time, 71.47 million licensed mobile phones were sold according to CCID Consulting, a research firm under the Ministry of Information Industry.
In Shenzhen, there is a complete and organised industry chain of black-market phones and black-market phones can be categorised into three types :-
1. Smuggled phones which evaded customs duties;
2. knockoffs of famous brands;
3. off-brand phones that use chipsets and high-tech parts without paying patent fees which such fees typically add up 20% to the cost of a phone.
Lenovo, Bird and TCL as well as other mid- and low-end makers have been hit hard. Legitimate domestic handset makers have seen their market share drop from 50% to 30% in just a few years and Chinese companies are learning what it means when someone steals their IP.
Even the foreign giants such as Nokia say they've suffered a loss of market share to the "black-market phones" in south China, especially in the 1,000 yuan to 1,500 yuan (US$197) model segment.
Apple's iPhone was sold on domestic websites only two days after its debut despite the fact that it can't be used in China as its locked exclusively to the AT&T network in the USA.
The Ministry of Information Industry, in cooperation with the State Administration for Industry & Commerce and other bureaus, has launched an investigation into the "black-market phone" in an effort to track down manufacturing, distribution and retail facilities.