Remember how Hong Kong iPhone 4 users earned big profits by reselling their iPhones to the gray market dealers? Well, that crazy scalping business somehow maintained for 8 months, since Apple intermittently suspended sales of the iPhone 4 in the region, presumably in response to incredible demand. Today, surprisingly, iPhone 4 supply stabilizes in Hong Kong, and the popular smartphone is now regularly available on the Apple online store in Hong Kong, with wait times of 1–3 business days. That’s not good news for scalpers.
After Apple resumed its iPhone 4 sales on Hong Kong online Apple store, the buy-and-sell price dropped insanely in the gray market. Gray market dealers are now offering HK$4,800 ($617) to accept a brand new, sealed, 16GB iPhone 4, causing scalpers to lose HK$188 ($24) if they sell it to these dealers. Some may keep it for self-use, however, for those who kept lots of stocks, thinking the price may increase someday, are now selling all the stocks they have to the dealers. There’s one scalper, who kept 260 units of iPhone 4s, sold all of them without a second thought, losing a total of HK$48,880 (about $6285). Pathetic.
Before resuming its iPhone 4 sales in Hong Kong, the Apple online store often listed all models of the iPhone 4 as “currently unavailable.” The gray market dealers have to offer a high price to ‘accept’ the iPhones from local customers, and this is how the scalping business started. Let’s say, a standalone 16GB iPhone 4 costs HK$4,988 ($640), and one could sell it for HK$6,700 ($860) to the gray market. That’s $220 profit!!! So the locals took this chance to earn big profits. You may ask, how do they get standalone units since the Apple online store is no longer offering it. Well, the smart ones will visit Fortress, a local electronics retailer like Best Buy. Fortress will offer 10-20 iPhone 4s every day, limiting purchases to two-per-customer. For the dumb ones, they will keep staying in front of their computers, refreshing the Apple online store webpage every minute, just in case Apple resumes its iPhone 4 sales in the region suddenly.
Here’s an important thing you need to know. Since Hong Kong has no sales tax, visitors from mainland China and other neighboring countries would reportedly visit the region, buy as many bargain-priced iPhones as they could, bring them home and then sell them for up to twice as much on the gray market. You can watch the video below to see how the iPhone gray market works in Hong Kong.
Actually, Apple resumed its iPhone 4 sales last week on the online store. At that time, gray market dealers were offering HK$5,200 ($668) to accept the 16GB model, so scalpers could still order the iPhone from online Apple store, and sell it to the dealers, earning HK$212 (about $27) for one. However, for those who ordered the iPhone and have not yet received it yet, they are in deep sh*it trouble. If they cancel their orders now, they need to pay 15% of the handset price, meaning Apple will only return HK$4,239 ($545) to these customers. So, scalpers have only two choices, keep it for self-use, or just sell it to the gray market if they have only a few iPhone 4s.
One more thing, our sources told us that the white iPhone 4 is coming soon, maybe that’s the reason why Apple is keeping the black version on sale full time, to clear stocks and prepare a 50/50 stock for black and white models. There’s too many black iPhone 4s!
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