How a Chinese ‘smart sex toys’ company fed Russian war tech against Ukraine — and exposed an EU sanctions blind spot

“It takes years to sanction something that can be replicated in days—so what is the point of sanctions at all?”

This is a question we hear repeatedly in our work at the Independent Anti-Corruption Commission (NAKO) in Ukraine to close gaps in the sanctions regime.

And the frustration behind it is justified: several entities we submitted for designation years ago were added to the EU sanctions list only recently.

Since 2014, the European Union has sanctioned about 3,000 individuals and entities in relation to the war against Ukraine. The US has blacklisted over 7,000.

These lists include, among many others, third-country sanctions-evasion facilitators.

Read more

Macron’s ego may just have permanently damaged EU unity on Russia

One such network exposed in late 2024 supplied microelectronics and British-made optical equipment later used in Russian military aircraft.

The UK sanctioned it nearly six months later; the EU took almost two years. It is one of hundreds, perhaps thousands, of such cases.

Sanctions take time: authorities must gather evidence, meet legal requirements, and assess their impact. Meanwhile, new companies can replace those under scrutiny, keeping the network running.

The British optics case shows how the main facilitator sourced goods from an alleged Hong Kong supplier of essential oils and confectionery flavourings — at an address shared with several companies already sanctioned for evasion.

(Almost) all roads lead to China

This essential-oils supplier was hardly an isolated curiosity.

It pointed to a wider infrastructure of shared addresses, corporate service providers, and unlikely businesses through which new suppliers can keep appearing as others are sanctioned.

Our study traced roughly 1,800 foreign suppliers and more than $800m [€702m] in trade in priority Western microelectronics—only a fraction of the true scale. Most passed through mainland China and, especially, Hong Kong.

China’s role in sanctions evasion — and the shell companies that help facilitate it — is hardly breaking news. But some suppliers in our dataset run very real businesses in rather unexpected fields.

Fuxin Pharmaceutical makes medicines and agrochemicals — and trades in Western microelectronics. Taibung Piping Equipment sells steel fittings for energy and petrochemical systems, alongside integrated circuits, semiconductors, and power electronics.

Shenzhen NuanQin Technology took things further.

It advertised “smart sex toys” but shipped to Russia no “Leopard Print Beginner’s Floggers” or “OMG! Feather Ticklers”.

Customs records show industrial electronics, integrated circuits, and other dual-use components instead.

Its corporate footprint is equally eclectic: NuanQin is also linked to an FPV drone retailer.

Many others have generic names, no websites, and almost no public footprint.

To a Western dual-use manufacturer, they may look like small retailers or freight forwarders — unremarkable enough to pass conventional sanctions screening and keep trading.

Shared addresses are a red flag

Their addresses can reveal what company-by-company screening misses. Sharing one with a sanctioned firm does not warrant automatic designation, but it is a strong signal of diversion risk.

The numbers speak for themselves.

One Hong Kong office unit housed at least 45 companies, with perhaps 20 more: 14 under sanctions or export controls, and 31 unrestricted. Together, they supplied Russia with over $16m in priority microelectronics— within our dataset alone .

Other obscure suppliers lead businesses to claim they sell hats, salon equipment, or even offer immigration services.

Such links may be unsurprising in a world of virtual offices and corporate service providers, but a simple sanctions check misses them, even as tens of millions of dollars in trade pass through.

Beyond the shopfront

Offshore links recur throughout the data. We found 33 addresses associated with offshore structures and used by 66 suppliers, fewer than half of them restricted. Together, those suppliers accounted for over $57m in shipments to Russia, including $26m from unrestricted firms.

A shared office in the British Virgin Islands or Seychelles may raise an obvious red flag. Other connections are much harder to spot.

Take another Hong Kong supplier linked to millions of electronics and microelectronics supplies to Russia. Its ordinary-looking office address has also been used by offshore service providers and operators of tankers linked to Russia’s shadow fleet.

A shared address does not prove a coordinated network, but it points to corporate infrastructure serving both chip procurement and oil-sanctions evasion.

An even more striking case leads to Liu Baoxia. The United States sanctioned her in 2017, and the FBI placed her on its wanted list in 2025. Her network smuggled US electronics to Iran for its missile and drone programmes through Hong Kong front companies in the Ho King Commercial Center.

NAKO identified at least 14 companies supplying microelectronics to Russia from those same offices. Only five have been sanctioned.

Follow the address, not the company

Every company in our dataset, sanctioned or not, supplied Russia with priority microelectronics. We found more than 200 addresses linked to restricted entities. Over 450 suppliers used them, accounting for nearly $380m in trade.

Since 2024, the US Bureau of Industry and Security has listed high-risk addresses alongside company names.

Yet address-based screening remains limited, especially outside the United States. The Common High Priority List shows that governments can agree on shared diversion risks.

They should now do the same for addresses, particularly as Russian and Iranian procurement networks appear to use overlapping corporate infrastructure.

A shared list would help governments and manufacturers scrutinise replacement companies before each requires a separate investigation.

An address does not make every tenant guilty by association. But it should stop an ostensibly clean supplier from getting an automatic green light. Sanctions target companies; evasion networks reuse the infrastructure behind them.