Shenzhen mobile phone market: going deeper inside Huaqiangbei
The premises in question is the Yuanwang Digital Mall, which is bang in the middle of Huaqiangbei's high street. In fact, this is right between the two Meizu stores we visited in January. While the name may sound snazzy to some, Yuanwang's certainly nothing like the ordinary malls that you may have in mind. For starters, you're greeted by a relatively dinky front entrance sandwiched between several small shops, thus giving outsiders the illusion that there's not much going on inside. If you gaze from afar, you could easily mistake the mall as some sort of old office building -- the only indication that says otherwise is the large blue sign above the entrance, so watch out for it when you're in town.
According to Yuanwang's official website, the mall houses some 30,000 square meters of retail space between three floors, catering over 100,000 visitors daily while retaining over 60 percent of China's cellphone bulk buyers. That's a pretty bold claim there, but having seen its competitors on the same street, we're convinced that Yuanwang is at least the largest and busiest cellphone mall in the area.
To be frank, our first few visits to this then-mysterious place were slightly intimidating. Upon stepping through the entrance, the first thing we saw were a pair of escalators right in front of us, and above it was a large red banner that went along the lines of "sales of counterfeit goods are prohibited" -- the kind of slogans that are commonly displayed around Huaqiangbei. Like most other electronics malls in the area, Yuanwang's front hall was filled up with little booths selling both genuine and shanzhai phones; nothing extraordinary here, but we quickly learned that this was only the tip of the iceberg. As we walked further in, we ended up in a smaller hall that specialised in phone components: LCDs, batteries, buttons, housings, etc. Dotted along the outskirts were mostly accessories sellers, and likewise along the corridor on the other side but with the addition of several repair workshops. From our observation, it appeared that these repairmen took orders from neighboring shops plus individual customers, so there was plenty of business for them. What amazed us was how these guys could work on these delicate electronics in such a noisy and open environment, as you can see in the photo below. Oh, and there's no need for them to head out for refreshments -- every now and then you'd bump into a lady offering snacks plus drinks, and some even take orders for hot meal delivery.
Things get a bit wilder on the first floor -- this is essentially the heart of Yuanwang where most of the trading activities take place, involving hundreds of tiny booths that sell finished products in the larger halls. Over the last few weeks we visited the mall during different periods of the day, and there was never a moment without the grating noise of parcel tape being ripped, nor was the floor litter-free. The air was also notably worse than the floor below -- part of the country's 356 million smokers are to be blamed here, and no one's stopping them from taking a puff inside the crowded building. It was apparent that the few ventilation ducts weren't sufficient for the spacious halls, but if you're lucky, the booths may switch on their little clip-on fans. Not that this made us feel any better, mind you -- the combination of bad air and windowless environment kept us from thinking straight, so first-time visitors should definitely go in pairs just to be safe.
Once we got used to the wild scene, we started noticing many familiar devices displayed on the counters. Just to name a few: an astonishing number of iPhone 4s and iPads, many HTC Android phones (especially white Desire S at one point), a good mix of both featurephones and smartphones from Nokia (Symbian^3 still has a strong presence in China), some Motorola Androids here and there, and some of the latest Sony Ericsson Androids. As mentioned earlier, most of the buyers here pick these devices up in bulk for distribution elsewhere -- mainly in other parts of China judging by their dialects, though we also spotted the odd foreigners (or "laowai," as the Chinese call them) along with their interpreters handing over cash to the sellers.
So where do these gadgets actually come from? Well, ask any of these sellers and they're likely to give you two or three prices for some devices, depending on where they originate. For instance, one booth offered two versions of the Sony Ericsson Xperia Play: one from Hong Kong, and one from other countries. For the former, it's likely that the gadgets were hand-carried across the Hong Kong-Shenzhen border checkpoints, but this requires a bit of work. According to a recent investigation by TVB's News Magazine, the runners or scalpers work in groups to smuggle in the devices and boxes separately, in order to dodge the 10 percent import duty enforced by the Chinese border control. Once the lucky folks reach mainland China, they regroup, repackage the devices, and then pass them on to their dealers in order to collect their dirty money.
Speaking of which: each runner gets up to HK$100 (US$13) per iPhone or iPad, for example; but we're not entirely sure how the final profit is split between the original scalper and the shops at Huaqiangbei -- all we know is that currently these Apple devices are sold for between HK$300 (US$40) and HK$700 (US$90) higher than their retail prices. Obviously, this gets more complicated with imports from overseas (usually Europe). These aren't exactly huge numbers, but some runners have gone as far as strapping multiple devices under their clothing and inside their sandals to, uh, maximize their profit per run -- have a look at the M.I.C. Gadget link below and you'll see what we mean.
Naturally, not all devices there were brand new. We caught some shops repackaging what were presumably refurbished phones, as well as sticking new labels onto parts and accessories. We're normally cool with buying refurbished goods to save a few pennies, but here in Huaqiangbei, you need to know the game in order to avoid being scammed. That said, it's not that hard once you've explored the site a few times -- these guys just do it in front of you. Hell, we even watched a woman carefully applying fake AT&T-stamped labels onto fake iPhone 3GS boxes, while chatting with us about the then-missing white iPhone 4.
But here's what really worried us: some of the booths were peeling old labels off used phone batteries to put on new ones, while the others were slapping shiny "QC approved" stickers onto "SanDisk" microSD cards. Frankly speaking, both sightings immediately killed our gadget lust on the spot. On one hand, it's rather hilarious that all of this happened right in front of our eyes; but looking from the other side, it makes you wonder who could guarantee the reliability of these random parts, how many of these end up on eBay, and whether the phones were pick-pocketed in the first place.
Enough with the downer; let's move on to the brighter, quieter top floor. Unlike the two levels below, here we have just a collection of closed booths -- a mixture of mainly shanzhai phone distributors and a few repair shops. To be honest, the vast range of phones offered here weren't as exciting as we had anticipated -- most were just tacky handsets with resistive touchscreens, but hey, apparently there's still a market for them somewhere on this planet. For what it's worth, we've noticed recently that some of these dirt cheap devices are starting to appeal to the older generation in Hong Kong, and we guess they sell even better in other parts of Asia and the Middle East. Not that we spotted any foreign buyers here, mind you; though audacious traders could be dealing remotely. Well, you can count us out here: having seen some of the nasty work in this building, we'd much rather inspect the goods before handing over our hard-earned cash.