Looking for Those Missing iPhones? Check in China.

Apple may not sell the iPhone in China, but that doesn’t mean that the touchscreen device isn’t already wildly popular with that country’s gadget junkies. IPhones are built in Chinese factories and then shipped out to the US and some European markets. However, according to a story in Monday’s New York Times, smugglers then work to get thousands of the units back in.

There’s apparently a pretty big market for iPhones purchased in the States and shipped to other countries where enterprising individuals then hack the phones and install localized software so the units will work on local networks.

This does help explain why there’s a gap of more than a million devices between the 3.7 million iPhones Apple says it sold and the roughly 2.3 million that its carrier partners have on their networks.

According to the Times, the people who smuggle the phones into China are often Chinese airline flight attendants of members of tourist groups. They’re paid roughly $30 per phone delivered.

Apple had been negotiating with China Mobile about offering the iPhone in China, but, the Times reports, talks broke down in January.