Smugglers Use Zip Line to Haul iPads Into China

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A group of smugglers were busted recently using a zip line and a crossbow to haul smuggled Apple products from Hong Kong into mainland China. According to a news report from a Chinese TV station, the smugglers were using the line to smuggle over 50 iPads and 50 iPhones into China, where the difference in taxes and retail pricing would allow them to make as much as $100 in profit per device.

Chinese Smuggler Bust

According to a PCWorld translation of the video report (below), the group used a crossbow to shoot a 300-foot zip line from a building on the Shenzhen province side of the river separating the People’s Republic of China from Hong Kong. They then attached their cache of Apple goods to the line and were hauling them up with some kind of pulley system when they were spotted by a police surveillance operation.

The value of the cache was set by Chinese police at roughly US$46,583,

Video report from Chinese TV station

Comments

sflocal

How funny and ironic.  Smuggling a product made in China back into China.

Lee Dronick

How funny and ironic.? Smuggling a product made in China back into China.

Yeah, it almost like carrying coal to Newcastle.

Nemo

Let me see.  Apple has Chinese authorities enforcing their own law and honoring their treaty obligation by shutting down the trademark infringing and most likely black market, unauthorized, counterfeit Apple Stores.  And now the Chinese authorities are arresting smugglers of Apple’s products.  In short, Apple seems to have achieved something remarkable:  Get the Chinese authorities to actually enforce their laws to protect the IP and products of a foreign company against the counterfeiting and IP infringement of Chinese criminals.  This is something that Microsoft and other Americans companies have tried to do since Nixon went to China but with almost no success, yet Apple seems to have pulled it off.

Since I am pretty sure that Steve Jobs would not authorized the payment of bribes to Chinese nationals in violation of both U.S. and Chinese law, I must conclude that Apple has arranged its affairs in China so that it has powerful Chinese partners, whose legal partnership with Apple is so sufficiently lucrative that those partners are using their connections and influence to get the Chinese government to enforce its laws and treaty obligations against counterfeiting and infringement of Apple’s products and IP.  The only partners that I can think of with enough juice in China to achieve this are China Mobile, China Unicom, and/or the Chinese partners who manufacture Apple’s products. 

In any event, it is an extraordinary achievement for Apple to arrange its affairs so that China affords Apple the protection of Chinese laws.  Other foreign companies and particularly their general counsels must be green with envy.

Intruder

It’s probably more about collecting the taxes than it is about protecting anything from Apple.

Nemo

Dear Intruder:  If it were a matter of collecting taxes Chinese authorities would be vigorously enforcing their counterfeiting and other IP laws for violations of the IP right of all foreign companies, which they most certainly don’t.  Ask Microsoft or any of the foreign media companies, which loses billions of dollars annually and which in tax revenue must costs the Chinese government million or more in tax revenue.  Those companies suffer pervasive illegal copying of their products and use of their trademarks, while the Chinese Government does little more than pay lip service to enforcing its laws and makes the occasional arrest in a specious show of enforcing its laws and honoring its treaty obligations.

No, Apple has achieve something quite remarkable in getting Chinese authorities to enforce their laws to protect Apple’s IP, and that achievement comes, I think, from at least three sources:  (1) Apple has well established IP rights in its products and services; (2) Apple’s products, because of their innovations in design and materials are hard and expensive, sometimes prohibitively so, to copy; and (3)  Apple has arranged its licit alliances so that powerful allies, who benefit from their partnership with Apple, use their influence with the Chinese Government to see to it that Apple’s IP is protected so that their lucrative relationships with Apple flourish. 

In short, for certain powerful actors in China, it is more lucrative to be a legit part of Apple’s OS X and iOS ecosystems than it is to counterfeit and otherwise illicitly infringe on Apple’s difficult and expensive to copy products.

Bryan Chaffin

It?s probably more about collecting the taxes than it is about protecting anything from Apple.

I’m with Intruder on this one, though I’ll throw in some control-of-the-border and control-over-the-flow-of-goods.

The difference between cracking down on piracy and IP infringement and halting a bunch of goons from hauling up a knapsack full of iPads is that the latter is being brought into the country.

One country, two systems, maybe, but control is still the name of the game.

Nemo

And Bryan, what about the Chinese crack down on the black market Apple Stores?  Chinese authorities don’t do this for Microsoft, where in every major Chinese city you can go into shops and buy copies of Windows and Office that look as if they came right off a Microsoft assembly line.  This is also true for media companies and for luxury goods and for anything else that can be copied or counterfeited. 

The U.S. Dept. of Commerce put out a number for losses by just American companies because of counterfeiting and IP infringement in China.  I don’t recall that number with enough precision to quote it here, but I remember it being huge.  Yet, Apple remains largely unaffected.  One must either see the hand of God in this or, and I think this is more likely, the hands of Apple’s Chinese business partners who benefit from doing legit business with Apple and who would lose revenues as the result of illicit Chinese counterfeiting and other infringement of Apple’s IP. 

When doing business in China, whether it be manufacturing or sales, it is vital to have the right business partners, while scrupulously observing the requirements of the Foreign Corrupt Practices Act and of any applicable Chinese law.

Bryan Chaffin

China shuttered two stores for not being properly licensed and let the rest of them remain open.  That’s a very weak enforcement of Apple’s copyrights.

But it is something, and you’re right that China has done slightly more for Apple than for many other American corps.

And I would argue that Apple has tried to do things properly in China, and that Apple’s large investments and high profile retail stores most likely matter to someone in the Chinese government.

Still, I personally think this Zip Line Crossbow Caper arrest was more about control than about protecting Apple’s interests.

Nemo

Bryan:  We certainly agree that the Chinese enforcement was weak, especially given the dubious provenance of the products in those counterfeit Apple Stores.  It will be interesting to see how this story develops, once China Mobile starts selling iPhones and iPads, and if counterfeiting cuts into certain Chinese manufacturers sales of legit parts to Apple for its products.

Bryan Chaffin

Aye, I should think that would play a role here.

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