SHANGHAI: Members of a piano smuggling ring thought to have evaded some 10 million yuan ($1.3 million) worth of taxes appeared before the Shanghai No 1 Intermediate People's Court yesterday.

It was the first day of testimony in a case that has sent ripples through the local musical instrument industry, which has suffered at the hands of smuggling gangs.

The story started last spring, when Shanghai Customs seized eight smuggled pianos and traced them to 11 companies and 12 individuals.

In the ensuing raid, police discovered a cache of nearly 5,000 unsold pianos. The smugglers allegedly made tens of millions of yuan selling contraband instruments.

Customs officials said the smugglers had probably managed to dodge some 10 million yuan worth of taxes and seriously disrupted the piano market in Shanghai.

Sun Changjian, a representative of Shanghai Piano Co, said the city led the country in terms of demand for pianos and that interest in pianos was growing as the local economy continued to boom.

But despite these rosy prospects, Sun said his company's sales had remained fairly static. He added that other piano dealers were facing a similar situation.

The city's piano dealers noticed that secondhand pianos from abroad had been dominating the market. In 2004, they accounted for 52.27 percent of all of the pianos imported in to Shanghai, and the figure went up to 73.95 percent in 2005.

Most of those pianos had declared values of between $200 and $250, leading Customs to suspect that the whole industry was in collusion with smugglers. The suspicions proved to be reasonable.

Investigators found that smugglers had been working with overseas sellers to fake the declared prices of imported instruments so they could avoid paying taxes.

The smugglers then sold the pianos to local instrument stores, which could offer comparatively lower prices than their legitimate competitors. It is said that the illegal practise has forced some legitimate stores to close.

Yesterday, one of eight cases involving smugglers was heard at Shanghai No 1 Intermediate People's Court. Zhou Shengtao; Shen Fengchang; Zhuo Ruibiaoi; Zhou's company, Shanghai Dichun Logistics Co Ltd; and Zhuo's company, Zhuhai Longmen Musical Instrument Co, face trial for having smuggled 68 secondhand pianos into the city from March 2004 to February 2006, and for dodging more than 2 million yuan worth of tax. They all pleaded guilty.

A verdict has yet to be announced.

(China Daily 04/11/2007 page5)