Gao Liang has a well-paid job as a medical equipment salesman, but when it came to upgrading his mobile phone to a newer model he scoured the internet for privately owned stores selling discounted smuggled phones. 'It's not that I cannot afford phones at the regular price, but they don't deserve such high prices,' Mr Gao said. 'And also I like having a design that is not so widely available on the Chinese market.' After getting advice and comparing prices, he finally took home a Motorola A835 for 1,600 yuan from a cell phone market in northeast Beijing. At the time, the model was not available on the mainland but when it did appear in the shops, it was priced around 2,200 yuan. And Mr Gao is not the only one tapping into the black market. According to research by Norson Telecom Consulting, about 8 million smuggled mobile phones were sold on the mainland last year, accounting for 10 per cent of sales. Senior Norson telecom analyst Han Xiaobing said most of the smuggled phones were better-known brands, such as Nokia, Samsung, Motorola and Sony Ericsson. Mr Han said the illegal trade had boomed over the past few years, rising from about one million units in 2000. The appeal is lower prices. Sales staff say that smuggled Samsung cell phones, in particular, have the biggest price advantage over their regular counterparts, an advantage that can be as much as 1,000 yuan. There are two main ways cell phones are smuggled into the mainland. The first involves redirecting to the mainland a fraction of the millions of phones produced in China destined for overseas markets. The smugglers return the phones to the mainland once they have passed through customs. Mr Han said this method was the main source of smuggled cell phones throughout the country. 'The smugglers divide tasks among themselves,' he said. 'Someone is in charge of shipping back the cell phones; someone takes care of the customs officers; and other people work on storage and distribution. This is a very organised system.' Another large number of cell phones are brought in from Hong Kong by individuals, a process described as 'ants-moving'. Those phones are usually only available in Europe and North America and boast better designs and more functions. Either way, the successful smuggler is guaranteed huge profits once the phones reach their underground markets. That's because they are not required to pay the country's 17 per cent value added tax and the dealers do not have to invest in research and development, after-sales services or brand management. 'For every cell phone sold, there is at least 20 per cent profit,' Mr Han said. Given the wide margins, people are still willing to risk bringing in the products despite government crackdowns. The Ministry of Information Industry said last week that it was working closely with other departments on a scheme to clear up the cell phone market. The commitment came on the back of hard lobbying from domestic cell phone producers such as Konka, TCL and China Bird. Last week, senior domestic cell phone company executives and authorised dealers of foreign brands met in Guangzhou and appealed for tougher market regulations. 'We are not afraid of competition from big foreign brands but we can't compete with smuggled ones,' Hu Guyong , deputy manager of Konka Telecom's marketing department, told the South China Morning Post. Data from Norson Telecom suggests that the market share of domestic mobile phone producers dropped to about 36 per cent in the first quarter of this year from more than 50 per cent in 2003.