Apples not the only fruit

By Liu Tian Source:Global Times Published: 2015-10-13 18:48:01

Less incentive for Chinese mainlanders to buy smuggled iPhones

Shenzhen customs authorities have discovered and seized a number of iPhone 6S and 6S Plus smartphones that Chinese mainland tourists have attempted to bring home with them from Hong Kong undeclared. However, it appears that smuggling of the new Apple products by tourists is far less than in previous years, despite the device being cheaper in Hong Kong and the favorable exchange rate. The major reason for the fall in smuggling rates is that the iPhone 6S and 6S Plus mark the first Apple release that has counted the Chinese mainland among its first batch of new release territories, meaning the iPhone 6S and 6S Plus are readily available to mainland consumers. Meanwhile, the fanaticism for Apple products seen in previous years has waned, as the devices offer relatively few new features, while the number of competing devices from the Chinese mainland has blossomed.

Customers wait in line outside an Apple store during the launch of the iPhone 6S and iPhone 6S Plus in Shanghai on September 25. Photo: CFP

The recent National Day holidays was particularly notable in that it coincided with the worldwide launch of Apple's new iPhone 6S and 6S Plus.

During the weeklong break, some consumers from the Chinese mainland went to Hong Kong, eager to take advantage of the favorable exchange rate and the city's reputation for providing competitively priced electronics.

However, while previous launches have seen hordes of tourists and grey market traders attempting to smuggle the latest Apple devices back to take advantage of the mainland's ravenous appetite for anything coming out of Cupertino, this time things were more subdued.

Contraband seized

On the first day of the public holidays, customs authorities at Shenzhen's Luohu Port, which accounts for more than 30 percent of the Chinese mainland's inbound and outbound passengers, apprehended a male tourist who tried to smuggle two of the devices in a snack box.

Then on October 7, the last day of the holidays, Luohu Port authorities detained a man who was found to have 30 phones tied around his waist.

From the launch date of the iPhone 6S and 6S Plus on September 25 until October 7, Luohu Port authorities seized a total 87 undeclared iPhone 6S and 6S Plus smartphones. Of these, 58 were seized during the National Day holidays.

However, the market demand is not as hot as last year's launch of the previous models, the iPhone 6 and 6 Plus, a man surnamed Qi, who resells iPhones on e-commerce platform, told the Global Times Tuesday.

One major reason for this tail-off in smuggling is that the Chinese mainland was for the first time included in the initial batch of countries and regions for an Apple product launch. In previous years, the launch of products on the Chinese mainland has lagged behind other regions, including Hong Kong, spurring smuggling.

Money to be made

In 2014, smuggled iPhone 6 models were fetching up to 10,000 yuan ($1,582). They could be bought in Hong Kong for under HK$5,600 ($722).

Experts say the change in Apple's launch policy was due to the company focusing on the huge potential of the Chinese mainland market.

However, smuggling is still an issue, mainly because of the enduring price difference between Hong Kong and the Chinese mainland, according to Cheng Jian, editor-in-chief of Beijing-based IT information service provider

In addition, a 10 percent tax is levied on every iPhone 6S or 6S Plus declared to customs crossing from Hong Kong to the mainland, according to Shenzhen customs authorities.

Meanwhile, the exchange rate is in the yuan's favor, meaning that there is still a profit to be made on buying phones in Hong Kong and reselling them on the mainland.

In Hong Kong, a 16 GB iPhone 6S retails for HK$5,588; the 64 GB model retails for HK$6,388; and the 128 GB model retails for HK$7,188.

If converted to renminbi at the current exchange rate, the prices are 4,563 yuan, 5,216 yuan and 5,869 yuan respectively.

The respective prices on the Chinese mainland are 5,288 yuan, 6,088 yuan and 6,888 yuan.

The price differences, exchange rate and tax therefore mean smuggling the devices can still be a profitable enterprise.

Convenient channels

But with the iPhone 6S and 6S Plus readily available in mainland stores and online, consumers eager to get their hands on the latest Apple products have less incentive than in previous years to turn to the grey market, unless they are going for a particularly coveted model.

The new iPhone 6S and 6S Plus come in four colors - gray, silver, gold and rose gold. The latter is proving particularly popular on the mainland.

"If you want to buy the rose gold model, you have to turn to online booking due to the scarcity of supply in physical stores," Yang Changming, a sales person at the Apple store on Nanjing Road East in Shanghai, told the Global Times Monday.

Fall in fanaticism

Experts say that the fanatical demand for new Apple devices seen in previous years has waned in the mainland market, thanks to the more adequate supply lines, the little change in function compared to the previous models and the absence of the aura brought to the product by Steve Jobs, who was hugely popular in the country.

Cheng of said domestic competitors are also putting pressure on iPhone 6S and 6S Plus sales, with local players such as Xiaomi and Huawei developing quality devices that cater to local consumer patterns.

"The excellent manufacturing technology, good user experience and performance-to-cost ratio will help domestic mobile phone manufacturers play a more important role in the local market, and even the global market," Cheng said. "This will inevitably put more pressure on Apple."

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