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Technology

China’s gray market hot for iPhones, even amid push for local handsets

Chinese authorities display illegal iPhone 6 phones in Shenzhen on Sept 23.
(ChinaFotoPress / Getty Images)

It might not be easy for mainland Chinese to buy a new iPhone 6, but that’s not stopping plenty of people from dropping big bucks on one.

Apple has not received regulatory approval from mainland Chinese authorities to sell its latest handsets in the country, driving a frenzy for new iPhones on the gray market.

Scalpers located as far-flung as New York and Sydney have been trying to cash in by reselling the phones.

The new iPhones have been smuggled into mainland China in paper containers for cream pies and toothpaste, coffee and tea boxes; one man was even caught carrying eight devices in his underwear. A Wall Street Journal reporter noticed vendors with big suitcases outside an Apple store in Hong Kong, with a particular interest in the gold iPhone 6 Plus to take back and resell in China.  

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In an interview with French news agency AFP, reseller Gary Yiu said iPhones could be resold for $2,580 in the mainland immediately after they were released. (The Apple phones are legally on sale in Hong Kong, a semi-autonomous Chinese territory on the country’s southern coast.)

The supply has been so high, though, that scalpers’ profit margins have been squeezed. The massive influx of grey market iPhones has caused the prices to plummet, according to vendors interviewed by the South China Morning Post, a Hong Kong newspaper. That being said, the devices are still going for about $300 more on the mainland than their retail price in Hong Kong (about $720).

Some mainland-based influencers, meanwhile, are trying to tamp down demand. 

In an editorial, the nationalistic Beijing newspaper Global Times said it was “shameful” for mainland Chinese to go gaga for the newest iPhone at inflated prices. “For now, if you see someone with an iPhone 6, cast your eyes on them contemptuously,” said the newspaper.

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The publication’s finger-wagging dovetails with government efforts to promote Chinese branded cellphones.

China, with a population of more than 1.3 billion, boasts over 630 million smartphone users, and domestic brands already control over half of that market, though they may have gotten there with a little help.

In July, state-run CCTV labeled the iPhone a security threat, though Apple disputed those claims.

Chinese home-grown cellphone developers are more than happy to pick up any slack created by such doubts.

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Cellphone maker Xiaomi, for instance, grabbed the biggest market share in the second quarter of this year, selling nearly 15 million smartphones, according to a report by technology research company Canalys.  

Chinese brand Coolpad released a set of 4G phones with encryption approved by the government last month. “Our main customers are corporate leaders and government officials,” a spokesman for Coolpad told the Global Times. 

And Chinese cellphones sometimes come with the highest of endorsements. When President Xi Jinping visited Tajikistan on a state visit recently, he didn’t give out porcelain or silk, as customary. He gifted his hosts a Chinese-made ZTE phone.

Silbert is a special correspondent.

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