iPhone 4S Selling At Crazy Prices in Hong Kong, Thousands line up for Cheaper iPhone 4

By Chris Chang, posted Oct 15, 2011 at 4:23 PM, 105,030 views,

iPhone 4S Selling At Crazy Prices in Hong Kong, Thousands line up for Cheaper iPhone 4

Apple did not announce an official release date for the iPhone 4S in Hong Kong and China, but residents can buy them at retail – for a premium, just one day after the 4S launches in the U.S. You will be shocked, a 16GB model (no-contract, unlocked) costs $10,500 Hong Kong Dollars (around $1350) in the gray market, that’s about twice the U.S. price!!! And we discovered that over a thousand people waited in line for cheaper iPhone 4 in Hong Kong Apple store, and sold it at higher price. Video after the break.

UPDATE: More info and photos.

iPhone 4S Selling At Crazy Prices in Hong Kong and China

Well, we are sick of seeing this in Hong Kong. Previously, the iPhone 4 and iPad 2 were also sold to local Apple fanboys and and wealthy Chinese people at crazy prices in the gray market, since these people wanted to get the latest Apple gadget at the soonest. Just like always, vendors in the bustling gadget market in Hong Kong’s Sin Tat Plaza (先達廣場), known colloquially as the ‘Mobile Phone Mall’, are promising to bring the latest Apple product, iPhone 4S, to early adopters. Since the iPhone 4S will be available for sale in US, Germany, Australia, Canada, France, Japan and UK first, a couple of weeks ahead of the rest of the world, the Chinese dealers were keen to scoop up as many as they could and quickly ship them overseas to make a killing. They have seven choices to import the iPhone 4S from. However, they must get unlocked versions to work with local providers that use the GSM network. So, all the iPhone 4S they are now selling are mainly imported from Australia.

A first batch of stock arrived at one of the gray market vendors’ shop

Mr.Lo (man in the pic), is the ‘master’ of the gray market

Mr.Lo and his co-worker are busy sorting out boxes of iPhone 4S

Mr. Lo (the guy in the pic above), is the ‘master’ of the gray market in Hong Kong who distributed hundreds to thousands of iPhone 4s and iPads to China’s gray market last year, has already received 100-200 orders before the iPhone 4S launch, and he has prepared couriers in Australia and Britain to hop on planes to Hong Kong after securing about hundreds of iPhone 4S. He will then get the device to eager consumers by October 15th. And he did it.

iPhone 4S is everywhere in the gray market

A dealer is counting the money notes while customer checks the iPhones

What’s the selling price? Well, it’s insane. See below for the price tags.

It is really difficult to understand why people want to secure an early iPhone 4S for hefty premiums. Mr. Lo even told us that customers have put down HKD$1,000 (about $128) deposit for each iPhone 4S before the launch, and if there are some customers who could not accept the price they are offering now, the deposit will be refunded and the device will be reserved for late-comers. Interestingly, about 80 percent of his customers are from mainland China, the other 20 percent includes customers from Hong Kong, Vietnam, India and Thailand. He has also imported a lot of 16GB models, since most of his customers are purchasing this model. He has two special customers, one paid HKD$860,000 (about $110,568) for 82 iPhone 4S, and the other one purchased 53 units of iPhone 4S.

A guy purchased 53 units of iPhone 4S from Mr. Lo. He is said to buying the phones as gifts

Another vendor, Hua, said he has also received hundreds of orders for the 16GB model. Just like Mr. Lo, he also had couriers in Australia ready to fly suitcases stuffed with iPhone 4S across the Pacific, and selling them for mark-ups. When he was asked why customers are willing to spend so much money for it, he said:

“The mainland people just love to show off their wealth, and some of them will bring the phones back to mainland and sell them for mark-ups.”

Mr. Lo added,

“The phone may be sold for 14,000 – 15,000 yuan ($2194 – $2351) in mainland China. The Chinese market is massive. Even though we provide hundreds to thousands of units for them, the amount is still not enough for them to sell in the country.”

Chinese Scalpers Purchasing Hundreds of iPhone 4S from Apple stores

Yes, we know there’s gray market in mainland China too. iPhone 4S is also selling at crazy prices in Shenzhen, Beijing and Shanghai. And just like the vendors from Hong Kong’s gray market, the mainland vendors will prepare couriers to line up early in the morning outside Apple stores to buy iPhone 4S. Photos below clearly show the Asian customers…

The ones circled in red, are all Asian customers

Some of these people could be the scalpers we have seen at the Beijing and Shanghai Apple stores

Apple employees cheering up an Asian customer who has been waiting on the long queue

Make the payment. Take your iPhones. And unpack them for checking. This is what the scalpers do

100 units of iPhone 4S purchased from Apple store by China scalpers

100 units are definitely not enough for mainland China. So, vendors will call their couriers to try their best to get more stocks from any Apple stores in the country. However, this may be difficult since Apple’s online store is showing delays of up one to two weeks for the phone and everywhere is sold out. A reader even told us what he saw when he was lining up for the 4S at an Apple store in San Francisco,

“I noticed a large number of Asian senior citizens in groups of 3 to 5. I am pretty sure most if not all were Chinese. I mentioned to my wife as we were walking by, that these do not seem the kind of people who you would expect to be using iPhones. They were sitting in circles in lawn chairs close to the front of the line at the Apple store. There must have been at least 10 or 20. None further back in the line, they were all at the front of the line.”

Thousands Line Up for Cheaper iPhone 4 Outside Hong Kong Apple Store

While you may see long lines for 4S outside Apple stores located in the seven countries, we are seeing lots of folks over here lining up for cheaper iPhone 4… See video below.

Yeah, Apple released the new 4S, and they are also clearing out current iPhone 4 inventory with reduced prices. Surprisingly, the people here are lining up in droves to buy the cheaper iPhone 4 in Hong Kong. A large gathering was seen outside the IFC Apple store that sold more Macs on its opening day than any other Apple store in the world. So, why are these people queuing up for cheaper iPhone 4? And seriously, there’s thousands of them? Apparently, it’s related to the gray market.

These people have been queuing outside the Apple store overnight

Police arrived when people are arguing about something at the front of the line

Here’s the reason. The gray market iPhone dealers are buying sealed 16GB iPhones for HK$ 5,200 (about $668) and this drove many scalpers and the ones who just wish to make some easy money to wait out in the hot summer night for their chance to scoop up some to resell. The Apple store is offering a 16GB iPhone 4 for just HK$ 4,688 (about $602), and it’s available in five-per-customer packages. So, you line up overnight, get five iPhones, and resell them to the gray market, you will earn HK$ 2,560 ($329). Brilliant.

Every customer purchased five units

Some of them sold the phones to middlemen outside the Apple store for $660 each

A person who has been waiting on the long queue fainted

We’re guessing a mixture of mainland Chinese are in the line too, since the new reduced price of the iPhone 4 in China costs more than the Hong Kong price tag, concerning the exchange rate. As the Renminbi gradually rises in value against the US dollar, the Hong Kong dollar, which is pegged to its American namesake, will inevitably decrease in value against the Yuan, enabling Chinese mainland people to buy more goods in Hong Kong for the same amount of money. The iPhone 4 16GB model costs RMB 4,548 ($712) in China, and that equals to HK$ 5,544. However, if you get the 16GB model in Hong Kong, it will only cost you HK$ 4,688 ($602), that’s $100 cheaper!!!

Both 16GB and 32GB models of iPhone 4 are out of stock at Hong Kong Apple online store

Both 16GB and 32GB models of iPhone 4 are out of stock at China Apple online store

We know the grey market dealers are always making a tidy profit from ‘rich men’ on the Chinese mainland, so these dealers could offer a good price for the people who want to resell the iPhones, and they will mark up the price when they sell the phones to the Chinese mainland consumers. According to Mr. Lo,

“If the Hong Kong gray market needs 100 iPhones, this means the China gray market need 1000 iPhones. This is how the scalping business works.”

As for the iPhone 4S, the gray market iPhone dealers, including Mr. Lo, are buying sealed 16GB iPhones for HK$ 8,000 – 9,000 ($1,028 – $1,157). Today, we are seeing the locals purchasing the 4S from the seven countries, and bringing the phones back to Hong Kong to resell to the gray market dealers. So, this means you could earn $250 -$300 for each unit. However, some mainland people who love to show off their wealth are not interested on iPhone 4S, since it looks similar to the iPhone 4, so the gray market dealers may face difficulties to make huge profits from them. For those people who thinks 4S means “For Steve”, they would definitely buy it, and the dealers will be targeting these customers.

Wrap-up

We are wondering why Hong Kong and China are not in the list of countries that will get the iPhone 4S very first. Maybe Apple could not cope with the massive demand from these two countries? So does this mean the 4S will only be available in Hong Kong and China until Apple have enough iPhone 4S to stock stores in the the rest of the world? Well, whatever they’re thinking, we think Apple is actually helping the gray market to grow by not distributing the iPhone 4S to the Hong Kong and China market first.

Source: Apple Daily (1), (2), (3)