iPhone's China debut expected to take bite out of gray market

Apple's move to include China in the initial rollout of the new phones should cut down on business for scalpers, says The Wall Street Journal.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read
Apple's iPhone 5S.
Apple's iPhone 5S. Apple

At least one group in China is likely upset over the early launch of Apple's new iPhones -- gray market scalpers.

For the first time ever, Apple has added China to the list of countries scheduled to get custody of the new iPhones on the first round. That means China and Hong Kong, along with the US, the UK, Australia, Canada, France, Germany, Japan, Puerto Rico, and Singapore, will start selling the iPhone 5S and 5C this Friday.

Apple also opened up a reservation system in China and Hong Kong this year to let people snag an iPhone 5S or 5C ahead of their launch date. Customers can visit their local Apple store on Friday to pay for and pick up the reserved iPhone. Reservations for the iPhone 5S in Beijing and Hong Kong sold out at most locations not too long after going live, Chinese news site Sina Tech said on Tuesday.

Apple's decision to include China in the initial rollout was likely based on a few factors, but the gray market has to be one of them. Apple's sales in the country have been plagued by scalpers buying up large quantities of new devices and then selling them at a huge profit to eager customers.

Now, those halcyon days for the gray market may be ending.

"The good old days have gone," Wai Cheuk, owner of a handset store in Hong Kong, told the Wall Street Journal. "The demand for a gray market iPhone 5S is expected to drop significantly as Chinese carriers have accepted preorders for the new iPhone on their official online store at launch."

Many commenters on Hong Kong forum Uwants.com said they'd rather wait to get an iPhone themselves rather than pay the gray market premium, the Journal noted.

The new iPhones will be offered by Chinese carriers China Telecom and China Unicom. Apple has yet to reveal an agreement with the country's largest carrier, China Mobile. But a recent report suggests a deal may have been reached.

Without a subsidy from the carriers, Chinese consumers will have to pay in total 4,488 yuan ($733) for an entry-level iPhone 5C and 5,288 yuan ($864) for a 5S, the Journal said. Prices in Hong Kong are more user-friendly thanks to lower taxes -- the Phone 5C starts at HK$4,688 ($604), while the 5S will cost HK$5,588 ($721).