TOKYO/SHANGHAI/TAIPEI, Sept 20 (Askume) – Hezbollah’s deadly hack of an Asian brand of pagers and walkie-talkies has sparked an intense search for the devices, revealing an obscure market for old technology as buyers lack confidence.
Analysts and consultants say that while supply chains and distribution pipelines for high-margin and new products are tightly managed, the same cannot be said for used electronics from Asia, where counterfeit goods, excess inventory and complex contract manufacturing deals sometimes mean the origin of the product cannot be identified.
The companies’ response to this week’s bombings in Lebanon , which killed 37 people and injured nearly 3,000, underscores the difficulty of understanding when and how these companies are weaponized.
Taiwan’s Gold Apollo blamed the European licensee of its pagers, triggering investigations into the origins of the deadly devices in Hungary, Bulgaria, Norway and Romania. Japan’s Icom (6820.T) said it was unable to tell whether walkie-talkies under its name were genuine because the market was flooded with counterfeit products.
David Finch, a China-based technology expert and consultant, said: “If the supply chain was compromised to put explosives inside… that would be an incredible undertaking. But actual supply chain compromise is not that difficult.”
Counterfeiting is very common, he said, especially in large manufacturing hubs like China, where counterfeit parts can be easily made. From counterfeit parts to supply chain compromises, it’s not a big deal, he said.
“As a technologist, I can tell you it’s not that hard to put a little bit of dynamite in a radio.”
Security sources said Hezbollah had purchased the equipment about five months ago, and the armed group believed it had bought the pagers from Gold Apollo.
Images of the explosive devices showed handheld radios, which sources said were purchased along with the pagers, bearing the name of Osaka-based Icom and the words “Made in Japan”.
Both companies ruled out the possibility that the fatal parts were produced in the factories where they are headquartered.
Taiwan’s Economic Minister Terry Gou also said that the parts used in the pager that exploded in Lebanon were not made in Taiwan.
According to a letter to the UN Security Council from Lebanon’s Permanent Mission to the UN, a preliminary examination of the devices by Lebanese authorities found that they had been fitted with explosives before arriving in Lebanon.
Fake
But no one is yet certain. It is not clear when or how pagers and walkie-talkies were developed into weapons so that they could be detonated remotely.
Joe Simon, a partner at Chinese intellectual property firm East IP, said part of the problem is that smaller brands invest less in controlling counterfeiting, mainly because of the cost, which can hit their profitability.
“The authorities are happy to deal with low-tech counterfeit goods, but intellectual property owners need to monitor, investigate and file complaints, and that’s not always the case with high-tech and big tech brands,” he said.
One problem Icom faces is that it stopped making the IC-V82 model a decade ago, about the same time it began producing holographic stickers to prevent counterfeiting, the company said.
The company has long warned about counterfeit products, especially its older models.
Indeed, according to the latest report from the Japan Patent Office, more than 7% of Japanese companies reported business losses due to counterfeit products in 2020, and nearly one-third of these cases were related to China.
Icom urges customers to only use its official dealer network to ensure they are purchasing genuine products.
However, according to a Askume investigation, there are dozens of stores in China selling Icom brand walkie-talkies on e-commerce platforms such as Alibaba, Taobao, JD.com and Pinduoduo, including several IC-V82 models.
Of the three Chinese vendors selling Icom products on the Alibaba website (none of which are listed as official suppliers on the Icom website), Guangzhou Minxing Communications Equipment Co., Ltd. and Chengdu Bingxin Technology Co., Ltd. both stated that they were selling genuine products. Quanzhou Yitian Trading Co., Ltd. admitted that in addition to original products, it also sells “counterfeit goods made in China”.
Icom says all of its products are produced in factories in Japan. The company did not immediately respond to a request for comment on Icom-branded products sold on Chinese online sites.
A Askume investigation found the discontinued IC-V82 model is also sold on Vietnamese e-commerce platform Shopee, indicating such products are widely available.
For Gold Apollo, which licenses its brand to Budapest-based BAC, the supply chain has become a mysterious production path that authorities in various countries are now trying to understand.
“The wide availability of cheap, second-hand manufacturing equipment means that counterfeiters can move beyond single components and create complete products,” said Diganta Das of the University of Maryland’s Center for Advanced Lifecycle Engineering, who studies counterfeit electronics.
“I would not call it counterfeit anymore, it is more like illegal manufacturing,” Das said.
