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Taiwan: Clampdown on Sale of Black Market Mobile Phones

(July 30, 2009) On July 9, 2009, in a news item on the crackdown on the sale of “clone phones” (shanzhai, black market or “knockoff” goods) made in mainland China, Taiwan's National Communications Commission (NCC) urged people to use authentic mobile phones in order to ensure their personal rights and interests. Online or in-store sellers of the knockoff handsets will be subject to a maximum fine of NT$300,000 (about US$9,050), the NCC has indicated; local auction websites Yahoo and Luten have reportedly begun to cancel their online auctions of the handsets. (NCC to Clamp Down on Clone Phones, TAIWAN TODAY, July 9, 2009 [citing to UNITED DAILY NEWS], available at; NCC Calls on the Public to Use Mobile Phone Equipment That Is Model-Certified and Qualified, to Ensure Their Personal Rights and Interests [in Chinese] [hereinafter NCC Announcement], NCC website, July 9, 2009, available at

According to NCC official Lo Jin-sian, the agency is concerned about valid radio frequencies, rather than whether the “clone phones” violate copyright laws. No device without a valid radio frequency can be sold in Taiwan, Lo stated, a policy “designed to ensure the rights of consumers … the same as that found in the United States and Japan.” Article 42, paragraph 1, of Taiwan's Telecommunications Act (promulgated on Oct 23, 1958, as last amended on July 11, 2007) stipulates that terminal equipment for connection to telecommunications machinery and line facilities of enterprises that install telecommunications line facilities and equipment to provide telecommunications services must conform to technical specifications (prescribed and announced by the Directorate General of Telecommunications) and be certified and approved before import and sale. (Id.; Telecommunications Act [in English & in Chinese], NCC website,
, respectively (last visited July 27, 2009).)

However, as the recent NCC announcement states, to facilitate the popular use of mobile phones, article 18, paragraph 1, of the Administrative Regulations on Controlled Telecommunications Radio-Frequency Devices (adopted on May 15, 1997, as last amended on Aug. 30, 2007) provides that there is an exemption from the requirement of an import license for such controlled devices if those who import wireless telecommunications terminal equipment and low-power radio-frequency devices for personal use limit the quantity to not more than five hand-carried sets and not more than two sent by mail (this does not apply to small earth satellite stations and satellite mobile earth stations, however). Thus, Taiwan tourists may still bring up to five shanzhai phones back from visits to mainland China or Hong Kong; those who possess the handsets are not subject to the crackdown. (TAIWAN TODAY, supra; NCC Announcement, supra; Administrative Regulations on Controlled Telecommunications Radio-Frequency Devices [in English & in Chinese], NCC website, &, respectively (last visited July 27, 2009).)

In Taiwan, the price of a shanzhai iPhone, for example, is now about NT$2,500 (about US$76) per phone, and is a popular gift. In general, shanzhai handphones “are designed for niche markets.” For example, “their loudspeakers and super-sized digits [make] them easier for the hearing impaired and the elderly to use.” (TAIWAN TODAY, supra.)

In mainland China, the market for shanzhai cellphones is booming. Thanks to advances in technology, “hundreds of small Chinese companies, some with as few as 10 employees, … churn out [shanzhai cellphones], often for as little as $20 apiece,” and “typically sell at retail for $100 to $150.” (David Barboza, In China, Knockoff Cellphones Are a Hit, THE NEW YORK TIMES, Apr. 27, 2009, available at The knockoff phones already account for 20 percent of sales in China, reportedly now the largest mobile phone market in the world, and even appear in late-night TV infomercials. Brand-name mobile phone producers have urged the Chinese government to crack down on the counterfeits and issued warnings to consumers on potential health hazards of the cheap models, such as batteries that can explode. Thus far the government has not taken much action to stop the phones' proliferation, however, even though in March 2009 the Ministry of Industry and Information Technology warned consumers that the radiation from shanzhai cellphones “usually exceeds the limit.” (Id.)