This is CBS. I in the world. I'm John Batchel. The underground black market market in Shanghai.

It must have a name, and I welcome Chris Regal, who first described it to me several years ago.

At the time, I was flabbergasted, didn't know what it meant.

However, now, with the consistent theme that the Chinese consumer will not help at all in riding

the ship of state, the real estate collapse, the reluctance, the refusal, the extreme absence of consumerism, and the

insistence upon an export-only model, which is met by tariffs and people at the border of

Europe saying, no, no, no, you're subsidizing. We're going to penalize you for this. All of that

adds up to the fact that there's no solution

for the Chinese banks. And if they can't solve their outstanding bad loans, there's no solution

for the Chinese market. So I go to that knockoff market first described to me by Chris Regal,

the CEO of Scholar.com. This is The Scholar Report.

It puzzles me because I connected with a story in the London Financial Times in these last

hours about iPhones.

If you've had your iPhone stolen or if you fear it being stolen, where is it going?

Well, it turns out there's a very well-organized chain,

like a supply chain in reverse, a theft chain, that can lead that phone to a shabby building in

Shanghai. The iPhone stolen phone building where parts are sold to Chinese consumers or sold to other

countries. It's a fascination as to the Chinese people's understanding of consumerism.

Chris, a very good day to you. I'd like you to recover what you see, what you've seen in that underground

market outside or near to the center of Shanghai. And who shops there and what it means for

Chinese consumers? Good evening to you. Good evening, John. This is a Jiangjiang market in Shanghai. It is very close to the, and nearly underground, to the Shanghai Science and Technology Museum.

The museum is fascinating, and you see hundreds and hundreds and hundreds of people coming into the

...