Are Asian Phone Pirates Looking to Access LatAm Through Paraguay?

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Paraguay has seized over 10,000 apparently fake cell phones in Ciudad del Este, suggesting Asian phone counterfeiters are attempting to access the Latin American market through one of the region’s premier smuggling hubs.

After investigators noticed counterfeit phones being sold in the eastern city, police from Paraguay’s intellectual property unit raided a shopping area where they discovered 150 crates of phones, reported ABC.

Although the phones had no external brand markings, when they were turned on the logo of communications giant Samsung appeared, leading investigators to conclude the phones were pirated.

The shipment has been traced to an Asian man, who is currently out of the country, according to ABC.

InSight Crime Analysis

Over the last decade, the pirated cell phone business, led by Chinese counterfeiters, has boomed.

The genesis of the industry was the introduction of a new product aimed at phone manufactures — a cheap and basic make-your-own phone set selling for $15, which just requires a plastic case and new software to turn it into a new product line.

China’s notorious counterfeiters were quick to realize the potential of the phones and began flooding the black market with imitation handsets with pirated software, which sell for around a third of the price of genuine products produced by companies such as Apple and Nokia.

SEE ALSO: Coverage of Counterfeit

After successfully claiming a large slice of the phone market in China, counterfeiters began to target foreign markets, in particular India, Russia, and countries in the Middle East, Southeast Asia and Africa.

Latin America would be a logical next step for phone counterfeiters. It is a region that has seen rapid growth in use of mobile technologies, has significant contraband networks, is tolerant of counterfeit goods, and has high poverty and inequality levels, making for high levels of price sensitivity.

Ciudad del Este in Paraguay is also a sensible choice of places to bring these goods in. Located in the Tri-border region where Paraguay meets Argentina and Brazil, the city is renowned for lawlessness and corruption, which has helped turn into one of the region’s main hotspots for contraband, smuggling and counterfeit goods.

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