Phone dealers made billions selling smuggled second-hand phones in Shenzhen's Huaqiangbei. Then the party was suddenly over.
Photo from CFP
By LU Keyan
Aqiang's day starts at 4 pm when he makes his rounds in Huaqiangbei, Shenzhen’s sprawling electronics market. He stops at wholesalers and importers asking whether they’ve got any leng-gei that day. Cantonese people use the word leng for hot girls. Huangqiangbei-ers use the same word for valuable second-hand phones, such as refurbished iPhones. The hottest are those smuggled in from America and Hong Kong. Each can be flipped for hundreds of dollars.
At least ten thousand phone dealers have passed through Huangqiangbei in the past ten years, most of them young men without much schooling like Aqiang. But there was enough money for everyone. In six years, Aqiang made so much that he could get 700,000 yuan (US$97,000) of credit from anyone in Huaqiangbei, no questions asked.
That was, until this year, when the government tried to stop phone smuggling. The phone-flipping market vanished overnight.
“All of Huaqiangbei is on the run,” Aqiang said. He has moved out of his apartment, let go of two hired hands, and returned to his hometown.
Guanlong became a DJ for a while after dropping out of school at 14. In 2015, he bought a smuggled iPhone for himself, at 1,500 yuan (US$210) less than the official price. When his friends, and later friends of friends, asked him to buy phones for them, he gave up DJ’ing and moved to Huangqiangbei.
When he gets hold of a liang-ji, Guanlong checks its look, tests the basic functions, and looks for evidence of previous repairs. Any defect reduces its value. After a fair price is set, the phone is cleaned, packed and shipped to the buyer. The entire process takes less than an hour.
“You don’t need to be smart, hard-working, or good at talking. As long as you can find buyers, money just flows in,” Guanglong said. And there are more buyers than his wildest dreams. At his peak, he made a hundred thousand yuan a day,
He had no idea what to do with the money, or “even what to make of it.” He bought a Mercedes CLA200, which became a Toyota Crown, a BMW Series 5, and a Porsche Cayenne in quick succession. Having had his share of bar fights in his DJ years, now he just sneered, “How much for you to shut up?”
But Guanlong was already late to the scene. The gold rush was in the early 2010s, when iPhone4 coincided with the WeChat boom. Dashuai arrived at Huaqiangbei around that time. For a while, he could buy at least a thousand followers a day – all real users looking to buy phones. Then he blasted them with texts, blog posts and ads. “You just sit there. Maybe you hire two people to keep an eye on WeChat. Easy money,” he said.
Phone dealers are nocturnal animals. Smuggled phones were shipped in late, and it was past midnight when everything was tested, packed, and dispatched. After that, the dealers go out for “lunch,” a whole night of drinking and carousing. “Such easy money. So much free time,” said Guanlong.
“You make, like, six thousand yuan in Foxconn a month? You think it’s decent money. In Huaqiangbei, you make two million, and you stop thinking it’s money,” said Aqiang.
The party went on until 2020. That year, CHEN Feng, a house flipper in America, returned to Shenzhen to flip phones. Chen had seen real money. He said his team could “easily burn seventy, eighty million a year in America,” but he “had never seen anything like Huaqiangbei.” But that was when things started to change.
Taobao and JD.com no longer welcomed dodgy electronic, banning any insinuation that a phone was “from America.” Then, Pinduoduo, in its now infamous “ten-billion-yuan discount” campaign, sold new phones at lower prices than refurbished and smuggled ones. Customers found wholesalers directly online, bypassing the WeChat-based dealers.
The downturn spelled financial disaster for the profligate dealers, who spent everything they earned. Many were heavily leveraged, borrowing from one supplier to pay another. If a promised sale failed to materialize, the whole scheme threatened to collapse. A few of Aqiang’s friends haven’t been seen for months. Fortunes were lost as quickly as they had been made.
The entire floors of the Feiyang Shidai Building, once full of wholesalers, are now empty. Those who have remained are selling legal, refurbished phones. They are much less profitable, but at least it's a livelihood. Some, like Aqiang, have left Shenzhen for good. Back home, Aqiang realized that he knew nothing and could do nothing except sell phones. He plans to open an electronics store next year.
Dashuai, the early comer, probably has done the best for himself among the former dealers. Having realized that he couldn’t depend solely on phone dealing, in 2015, he started a small company that “specializes in repair, recycling and reselling.” Today it even has its own phone accessory brand and a Douyin account with 75,000 followers. His sales halved after the crackdown, but he is “zen about it.”
“Running a company is different from being an independent phone dealer. I had to wean myself off easy money and learn to cope with lean times,” he said.
Guanlong also founded a company, called Zhongtian Chaogou. He started by selling second-hand electronics, and is now trying to become an influencer representing phone reviewers. The age of blasting ads on WeChat is long gone, he said. “If you don’t know platforms, or analytics, or web traffic, or customers, you can’t sell phones anymore,” he said.
He might be talking about Aqiang, who thought about becoming a phone reviewer on Douyin, but none of his videos had more than a few hundred views.
“We small guys can’t beat big platforms,” he said. Second-hand phones, from influencing to sales, are moving onto “big platforms.”
But there will always be plenty of hopeful youngsters hustling in Huaqiangbei. They will just move on to the next hustle like they always have and always will.
