What just happened? Chinese taxation policies have created a profitable gray market for hardware smugglers. Hong Kong, which offers much lower VAT rates and provides easy access to its border, has become a popular pick-up destination for smugglers attempting to sneak goods back to the Chinese mainland. Customs officials have apprehended countless individuals attempting everything from taping hardware to their body to wearing stuffed prosthetics. Last week, one man took a completely different route, instead relying on Mother Nature to help him slip across the border.
The money that can be made by avoiding mainland China’s value added tax (VAT) is a draw too strong for some to resist. In a report originally published by Tom’s Hardware, Gongbei customs officials were recently alerted to suspicious behavior after observing a passenger vehicle traveling through their border station. The vehicle likely drew increased scrutiny from the officials due to its attempt to cross the Hong Kong – Zhuhai – Macau bridge in the middle of a category 4 typhoon.
The vehicle’s driver, a hardware smuggler from mainland China, thought Typhoon Saola would provide the perfect cover to sneak smuggled hardware out of Hong Kong and back across the Chinese border. Unfortunately for him, Mother Nature couldn’t hold up her end of the bargain. Customs officials approached the vehicle, and upon inspection found more than 1,500 processors, 1,470 memory modules, 30 graphics cards, and over 40,000 NAND flash modules concealed in the vehicle’s trunk.
Typhoon #Saola is about to pass within 50 km of Hong Kong as a category 4 hurricane with winds reaching 220 kilometers per hour (140 miles per hour). This is Hong Kong’s waterfront earlier todaypic.twitter.com/vtpzaeDW9n
– Massimo (@Rainmaker1973) September 1, 2023
The attempt is anything but a new occurrence at Chinese border crossings. Earlier this year, the agency reported that more than $4 million in smuggled hardware had been seized by customs officials.
In 2021, customs officials confiscated more than $123,000 in Intel 10th generation Core i7 and Core i9 processors that were strapped to a driver’s ribs and calves. Authorities stopped another smuggling attempt in April of this year, when two men were discovered illegally transporting more than 70 graphics cards and 350 live lobsters. As recently as last month, a vehicle scan led authorities to discover another driver with a total of 837 Intel 12th and 13th gen processors and 900 Corsair memory modules.
Although seized by authorities before reaching its destination, the smuggled hardware will ultimately find its way into the hands of paying customers. Rather than destroying confiscated goods, customs authorities will sell the smuggled hardware in a public auction per Chinese regulations. All proceeds from the legally sold hardware will go directly to the state treasury, where it will likely be used to help thwart future smuggling attempts.