For years, Huaqiang North Road market in Shenzhen, just across the border from Hong Kong, has been known as the place to go for fake iPhones and cheap handsets in southern China.

An otherwise nondescript complex, Huaqiang North was once the world’s biggest bazaar for made-in-China handsets. Traders there sell phones – usually cheap copies of branded handsets and “improved” models with creative new features such as powerful speakers or flashlights – made by so-called grey-market manufacturers that, combined, produce a significant portion of the world’s mobile phones and have challenged the emerging market share of Nokia and other more established brands.

There will be some 255m grey-market phones made this year, accounting for nearly one-fifth of global mobile shipments and up 11.8 per cent from last year, according to analyst iSuppli. Most of those phones will not stay in either Shenzhen or even China. MediaTek, the biggest supplier of chips to Chinese phonemakers, estimates half of its chips eventually wind up in other markets ranging from south-east Asia to Africa.