Just one day after sales of the iPhone 5 began in Hong Kong last month, the hot new gadget also became available in mainland cities from Shenzhen to Beijing.

A 16G version of the iPhone 5 sells for between 7,500 yuan ($1,193) and 9,000 yuan in the mainland market, far higher than the official price of HK$5,588 ($721) at the Hong Kong Apple stores.

Apple Inc generally releases its latest iPhone or iPad gadgets in Hong Kong first and in the mainland several weeks or months later, but some Apple fans are eager to get them as soon as possible and are willing to pay the inflated prices. The time delay has also given rise to a growing business of smuggling the gadgets across the border.

Business chain 

"On the first day of the new phone's release, I made 160 yuan from bringing an unpackaged iPhone 5 across the border. But now the price has dropped to 75 yuan," a smuggler surnamed Xie told the Global Times.

Xie, an 18-year-old Shenzhen resident, has smuggled goods including iPhones and iPads across the Luohu border for more than two months. He joined the smuggling business because of the considerable potential gains.

"I carry goods across the border twice every day except Sunday and can make 4,000-5,000 yuan per month," he said.

Xie is proud that he has never been caught by customs officers. He has certain ways to avoid checks, such as carrying a backpack and putting iPhone handsets in without their packaging. He also says it's important to keep calm and not look at customs officers.

"You can bring two phones one time at the most, or it will raise suspicions from customs officers," he said. "Once you are caught, you will have a record. That will make it harder, because you will be more likely to attract the attention of customs officers and will face a heavier punishment if you are caught again."

The smuggling gangs prefer to hire people who have a Shenzhen residence permit or hold a Hong Kong passport, as they are allowed to cross the border several times a day. Among these people, those with a clean clearance record will be better paid.

"According to the current law, people who get administrative penalties like fines and confiscation of goods from the customs three times will be seen as having engaged in criminal activity," an anti-smuggling official surnamed Tang from the Shenzhen Customs told the Global Times.

Xie is just a small part of the smuggling business chain. He is responsible for carrying goods across the border and recruiting new people to join his gang. "I can get 10 yuan for every deal conducted by a person that I have introduced," he said. "The more senior you are, the more you can make."

The smuggling gangs have certain methods, like posting watchdogs near the customs' checkpoints. "Someone will inform us not to pass through the checkpoints if the customs officers have strengthened their checks," Xie said.

Xie picks up the goods from the Sheung Shui station in Hong Kong, which is close to the Luohu crossing, and hands them over to a colleague after passing through the checkpoint. The goods are then delivered to vendors in Huaqiangbei, a well-known electronics shopping area in Shenzhen.

The profit from smuggling an iPhone 5 handset is as high as 4,000 yuan, but a smuggler like Xie only gets around 75 yuan. The rest is shared by purchasing agents, vendors, middlemen, and leaders in the smuggling gang.

Crackdown 

The authorities in Shenzhen and Hong Kong launched a joint campaign on September 7 to curb the rampant cross-border smuggling.

Police in Hong Kong arrested 130 suspects from the mainland on September 19 in the Sheung Shui area. On September 22, six of them were sentenced to two months in prison by a local court in Hong Kong, because they held visitor visas but were found to be working for smuggling gangs. The others were sent back to the mainland.

Shenzhen Customs said they strengthened checks at four border checkpoints and captured 70 smugglers in one hour on September 20 at the Luohu border crossing. The smuggled goods included beverages, diapers, shampoo and even pens.

Qu Yang, a 29-year-old Shenzhen resident who travels frequently between Hong Kong and Shenzhen, found that the queue waiting to pass the Luohu border was less crowded on the Sunday evening following the crackdown.

"I was surprised to find only around 30 people were queuing. There used to be two or three hundred people queuing at the same time, mostly smugglers carrying boxes and bags," Qu told the Global Times.

Qu said the train was also less crowded. "Smugglers always get on at the Sheung Shui station and repack items on the train, making the carriages very chaotic," he said.

The smugglers have had other effects on local people's lives. On September 15 and 16, several hundred Hong Kong residents gathered around the Sheung Shui station, blaming mainland smugglers for pushing up prices and draining the local market of imported goods.

Qu held similar feelings. "I wanted to buy a bottle of peppermint cure drops, but found it was out of stock in many pharmacies in Hong Hong, as were popular items like baby milk formula," he complained.

Reasons for smuggling

Experts attribute the rampant smuggling to various issues, such as the ease of transit between Hong Kong and the mainland, and the price difference in the two areas. The mainland's short supply of certain coveted items and consumers' fears about food safety problems with domestic products are also seen as important factors.

Since the mainland started issuing multiple-entry travel permits to individual mainland tourists to Hong Kong, the amount of smuggling activity has increased sharply, according to the Shenzhen Customs.

For the same product, the price in Hong Kong is usually cheaper than in the mainland because of Hong Kong's tariff-free policy as well as the exchange rate between the yuan and the Hong Kong dollar, according to Wang Xianqing, a professor at Guangdong University of Business Studies.

There has also been a rise in the number of mainland parents buying milk formula from Hong Kong since the contaminated baby milk formula scandal in 2008.

"The mainland should further lower import taxes for consumer products. Such a move could both boost mainland consumption and reduce smuggling activities," Wang said.

"The authorities should also strengthen quality controls, which could help restore consumer confidence in mainland products," he noted.