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Hong Kong's iPhone grey market cashes in on the 6s

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Whenever a new iPhone launches in Hong Kong, local folks would seize the opportunity to make a quick profit from the grey market. They would get their brand new phones from either Apple or local carriers, and then sell them off to specialists who would later offer bulk orders to mainland Chinese buyers. The quicker they act, the more cash they get. The iPhone 6s and 6s Plus are no exception. This morning, I was the first customer to pick up my 128GB rose gold 6s Plus from a carrier store (the shop assistants even took a photo to mark the occasion), but I quickly sold it for HK$10,000 or about US$1,290 at the Sincere Podium mobile phone mall just around the corner. That's roughly a US$250 profit based on the device's local price, which isn't bad at all.

In general, such iPhone opportunists prefer getting their devices directly from Apple, as they can then walk out of the Apple stores with the packaging still shrink-wrapped. On the contrary, getting an iPhone from carriers would require in-store activation, which would give grey market specialists an excuse to lower their offer; not to mention that you'd also have to buy a cellular plan to go with the device. Had I been able to up my 6s Plus from Apple instead, I would have gotten an extra US$65 for the intact shrink-wrap. I did try placing an order on Apple's website two weeks ago, but as usual, it was near impossible to load due to heavy traffic. Clearly, many want in on the easy money.

Inside the shop that bought my brand new iPhone 6s Plus.

Hong Kong's active iPhone grey market is largely fueled by the fact that mainland China imposes an import tax on foreign consumer goods, whereas Hong Kong doesn't. In the case of the iPhone, China's prices cost about 15 to 17 percent more than their Hong Kong counterparts, which is why smugglers do their best to dodge the so-called "Apple tax" at the Hong Kong-Shenzhen border. Of course, some eventually get caught because of their hilariously poor attempts. The more professional smugglers hide their goods inside vans, trucks and even boats, but even they get caught once in a while.

On launch day, the iPhone grey market trade-in prices may fluctuate by the minute, depending on the demand from mainland China and the number of units already received. Those specialists would use WeChat or make quick phone calls to check with whoever is in charge of their operation. After a quick observation in Mongkok and around the Apple Store in Kowloon Tong this morning, it's clear that the new rose gold color is definitely a hit, though the trade-in prices are still much lower than what the iPhone 6 saw at launch last year.

Business is good for this street vendor in Mongkok.

According to ePrice, the first round of iPhone 6 Plus managed to rake in a profit of between a whopping US$1,110 to US$1,290 per unit in the grey market, which is a stark contrast to the measly US$250 I made with the 6s Plus today. The smaller 6s took a hit as well, making just US$90 instead of US$340 with the iPhone 6 last year; and that's if you were even lucky enough to sell yours before the specialists stopped accepting the 6s. In Mongkok, crowds formed around some of the street vendors, mostly because they were waiting for the specialists to start accepting the 6s or the 16GB 6s Plus again.

The lower demand this time round comes as no surprise. Unlike last year, this time both Hong Kong and mainland China are on the list of first wave launch markets. And judging by the availability status on the earlier pre-order pages, Apple has allocated plenty of stock to mainland China, so it's just a matter of whether the folks over there mind paying the slight premium. If it was Apple's intention to cull the iPhone grey market, then it's safe to say that it won this round.

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