By Chris Chang, posted Aug 2, 2010 at 3:30 PM, 7,588 views,

Hong Kong iPhone 4 Users Earning Big Profits From Gray Market

The gray market is incredible, especially in China and Hong Kong. We know the China’s gray market iPhone 4 costs up to 12,000RMB ($1770 USD), and customers can get the UK unlocked models with this hefty price. However, there’s a MASSIVE change since the iPhone 4 launched in Hong Kong a few days ago. People who got their iPhone 4 by signing up a 2-year contract through local carriers are selling the iPhone 4s to the gray market, with nearly two times the original price stated on Apple Store…

First, you have to know that there’s a contract-free purchase for an iPhone 4 at Hong Kong. People can visit the Hong Kong Apple online store to purchase the iPhone 4 (order limit: 2 per customer), with no contracts at all, and that will be HK$ 4988 (about $640 USD) for a 16GB and HK$ 5888 ($758 USD) for a 32 GB model. However, one needs to have a valid Hong Kong shipping address and credit card to go through the payment of the iPhone 4 at the store. So, to say it simple, those fellows from mainland China could not purchase the contract-free iPhone 4 by themselves, unless they have a valid shipping address at HK. And the iPhone 4 takes up to 3 weeks to be shipped.

Other than the HK Apple online store, people could visit the local carriers to purchase the iPhone 4. There’s a total of 5 carriers providing affordable price plans with 2-year contract for customers, and this also requires a valid local address to complete the subscription. So, new customers will get an iPhone 4 and a phone number (with 2-year contract) after completing the subscription. Customers need to take note that prepayment is required and that will cost HK$ 4000-5000 (about $580 USD), depending on which type of price plan you would be signing up for. And here’s the main story, customers who have subscribed and got their iPhone 4s from the local carriers are selling the phones to the HK gray market, HK$7800-8500 (about $1050 USD) for 16GB and HK$9000-9500 (about $1200 USD) for 32GB.

The reason why the customers are doing this is that they could earn the 2-year contract fee right away. Let’s calculate like this:

For an iPhone 4 16GB, a customer needs to give a prepayment of HK$4480 first, then he can get his iPhone 4 from the local carrier. After purchasing the iPhone 4 with just $4480 from the carrier, he will sell the 16GB iPhone 4 to the HK gray market, for a price of HK$8000. So, the profit between the $4480 and $8000 would cover up his monthly fee (up to 2 years) which was just subscribed with an iPhone 4. Then, he will buy another iPhone 4 from the Apple online store.

I have tried this method today and it really works! During the process, I had a conversation with the HK gray market vendor to know more about the whole thing, and he said:

“Lots of customers are doing this recently. The price we’re offering to them is always unstable, due to the demand from the ‘main distributor’. If we have enough 16GBs, the price we’re buying will drop by a few hundreds. After we have collected these HK licensed iPhone 4s, we will sell them to the mainland China. Since there’s a very huge demand over there, we can sell up to $14000 RMB ($1800 USD). The vendors from Shenzhen’s iPhone gray market will come over to HK to pick up the iPhone 4s we have collected, mostly in tens to hundreds. We will deal in HK dollars and they often bring us cash. These vendors have their own ways to bring such a big amount of iPhone 4s back to Shenzhen, and then they will distribute some to the gray markets of Shanghai and Beijing.”

When I asked him who would be so silly to buy these HK licensed iPhone 4 at such an insane price, and he said:

“The mainland Chinese fellows are rich. Even though there’s US or UK models for them to choose for, they would still prefer the ones from Hong Kong. Although the price is expensive, there are still some vendors getting the phones from us to entertain those crazy Apple fanboys who would love to own the phone at the first minute. They would not mind about the price, all they wanted is to tell their friends that this iPhone 4 was purchased from Hong Kong, it’s HK licensed!“

Well, I’m almost speechless when I heard this… Yeah, I sold my iPhone 4 32GB model to this vendor in Mong Kok Sin Tak Centre, the biggest gray market in HK, for the price of HK$ 9500 (about $1220 USD). And I followed what’s everyone doing, move on to the HK Apple online store to order a contract-free iPhone 4, and I got about HK$ 4000 (about $515 USD) profit to cover up my monthly fees (HK$300 per month) since I could keep the newly-registered phone number for my new iPhone.

For the time being, this crazy deal of iPhone 4 in HK gray market will only last for 1-2 weeks, since lots of vendors would get their stocks from the HK Apple online store too, so there’s no need to collect and buy the iPhone 4s from the local customers. So, can anyone tell me who are the ones buying these HK licensed iPhone 4 at such a crazy price?

Source: Ming Pao and 21st CENTURY NEWS GROUP