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China slammed the market for «gray» game consoles, including the Sony PlayStation 5 and Microsoft Xbox Series X
Since China allowed global brands to sell game consoles everywhere in 2021, the country has also flourished in a gray market for consoles and games. Consoles brought in without customs duties were not only cheaper, but also allowed uncensored games or versions of games to be played. But this week, the country’s authorities hit the practice with raids and arrests, and the Chinese gray box market went underground.
First delivery of Sony PlayStation 5 consoles to Hong Kong. Image source: Chris Chang
Guangdong Provincial Public Services Department said on Monday that 54 importers of gray consoles and games were arrested and 78 million yuan ($ 11.9 million) worth of Nintendo, Sony and Microsoft products were confiscated. Since 20221, the total value of such goods smuggled has reached 3.38 billion yuan ($ 514 million), including 389 million yuan ($ 59 million) in unpaid taxes. Raid information quickly spread across the country, and gray products disappeared from both online and local stores.
Japan and Hong Kong remain the main suppliers of consoles and games to China bypassing customs clearance. For example, the Sony PlayStation 5 is already on sale in Hong Kong, but not yet in China, just as the Microsoft Xbox Series X, which can also be purchased in neighboring Hong Kong, is not on sale in the Middle Kingdom. Sellers take advantage of this, and impatient fans of Sony and Microsoft gaming products get a chance to touch the dream before the official import of all new products into the country.
At the same time, China does not prohibit the purchase of goods abroad if the buyer pays all the necessary taxes (13% for individuals and 9.1% for trade). Such products remain «gray» for the exporter (Microsoft, Sony, and so on), but from the point of view of the Chinese government, it becomes permitted for import into the country. Judging by the fact that in most online stores in China, even in the largest ones, game consoles and many games from Sony, Microsoft and Nintendo suddenly disappeared from the assortment, there were not just a lot of «gray» game products in this country, but the overwhelming majority.