Original URL: http://www.theregister.co.uk/2012/09/21/hong_kong_grey_market_apple_china/

Most Hong Kong iPhone 5s to be smuggled into China

Analyst reveals massive grey market racket

By Phil Muncaster

Posted in Networks, 21st September 2012 06:42 GMT

A whopping 70 per cent of shiny new iPhones and iPads bought in Hong Kong this year will be smuggled into China and sold on the grey market to feed the insatiable demand for all things Apple, according to analyst firm Forrester.

Beijing-based analyst Bryan Wang told The Reg that the illegal trade in the fruity tech is down to two main reasons:

“Firstly, the launch of Apple products is always one quarter later in China than Hong Kong, so consumers can only get the products from grey market and the supply is mostly from Hong Kong,” he said. ”Second, the price in Hong Kong is approximately 15-20 per cent lower than in China.”

The Reg visited Shenzhen earlier this week and found the city’s tech stores awash with Apple products.

It wasn’t possible to confirm their provenance, but many traders were taking pre-orders for iPhone 5s for delivery next week, despite a launch date for the device in China not yet being announced.

Counterfeit iPhone shop, Shenzhen, China

Counterfeit iPhone shop, Shenzen, China

The revelation that up to 70 per cent of Apple kit sold in Hong Kong will be smuggled across the border is the more surprising given that Apple has, since the last iPad launch, instituted a Reserve & Pickup system at its Hong Kong store.

Designed to foil the scalpers who pour across the border to snap up sacks full of devices to take back and sell at a profit, the system requires users to register their details with a Hong Kong ID whereupon a lottery system is used to decide who gets the chance to buy their device the following day.

However, as local site MIC Gadget reported in an exposé of the grey market this week, there are many Hong Kong locals who would like to make a bit of extra money – around HK$1,500 – HK$2,000 (£125-£170) for the iPhone 5 – by selling to a dodgy trader.

Hong Kong is something of a hub for the grey market anyway, so shipments are also flying in from Europe and the US, where they will be dispatched across the border.

It’s not just iGoods that are being bought and sold in this way to make a few entrepreneurial types rather rich, however. Here in Hong Kong there has been a clampdown of late on so-called ‘parallel traders’ buying cheaply on one side of the border and selling for a profit on the other.

More than 130 mainland Chinese were arrested this week on suspicion of violating immigration laws, The Standard reported.

The land border with China is a tempting route on which to smuggle goods given the Hong Kong MTR and Shenzhen Metro services run all the way up to the border check-point. ®