Apple is eyeing the Chinese market for expansion, but it has a troubling problem with grey market devices that it needs to overcome first. According to a report from a Beijing research firm, over one million iPads were sold in China during Q2 2011, but almost half of these sales came from the grey market.
Analysts claim Apple's delayed rollout and low inventory of products in China has contributed to this problem. The 3G iPad 2, for example, went on sale in China this September, a full six months after the device went on sale in the US. Chinese consumers that wanted an iPad 2 right away turned to local vendors and paid a little bit more to get their tablet early. When Apple stores finally got these highly desirable products, they sold out quickly and customers once again turned elsewhere for their purchasing needs.
And the value of the US dollar helps to make these transactions lucrative for the sellers involved. A 3G iPad 2 with 64 GB of storage will cost US$829 in the US, while the same device can be sold for 6,288 Yuan ($900) in China. A profit of $70 per device is not huge, but if you sell hundreds in a day, this $80 bonus adds up quickly.