Smuggled IPads Poised to Flood China From Hong Kong

July 23 (Bloomberg) -- For Wang Pingdao, each day Apple Inc. waits to introduce its latest gadgets in China means extra profit from selling imported iPhones and iPads in Beijing.
“The iPad is selling pretty well now,” said Wang, a salesman at the Xing Kongjian Digital Market store in Beijing, who has been getting the devices from the U.S.
Wang’s business may be about to boom. As Apple begins selling the iPad in Hong Kong today and the iPhone 4 next week, the former British colony will be an important source of supplies of Apple products feeding the so-called gray market in China, said Flora Wu, a handset analyst at BDA China Ltd.

An Apple ipad at a computer mall in Hong Kong

Dealers such as Wang account for almost half of the iPhones sold in China, according to BDA, underscoring how the world’s most valuable technology company has lagged behind Nokia Oyj and Lenovo Group Ltd. in marketing its products in the world’s third- largest economy. Wang plans to sell the low-end version of the iPad for 4,300 yuan ($634) each after buying them in Hong Kong for HK$3,888 ($500).
“It’s something they need to address at some point and now is probably the time,” said Bertram Lai, head of research at CIMB-GK Securities in Hong Kong. “They need to get it sorted out.”
Gray market iPhone sales in China exceeded 400,000 during the first half of the year, compared with the 500,000 sold by China Unicom (Hong Kong) Ltd., the only carrier authorized to offer the device in the country, BDA’s Wu said. Chinese dealers also buy from the U.S. and Europe, she said.
Difficult to Track
Apple, which is expanding iPad sales to Hong Kong, Austria, Belgium, Ireland, Luxembourg, Mexico, the Netherlands, New Zealand and Singapore today, hasn’t set a date for the debut of the tablet computer or the iPhone 4 in China, spokeswoman Jill Tan said. Gray market sales of Apple products in China are difficult to track, she said.
Hong Kong operates as a semi-autonomous region of China, with its own laws and government, under the “one country, two systems” formula agreed when the U.K. returned the city to Chinese rule in 1997.
Globally, Apple may ship 12.9 million iPads this year, according to estimates by ISuppli Corp. this week. The research firm raised its projections by more than 80 percent after the product sold out in U.S. stores.
Gray market demand may be pushing up sales in Hong Kong. IPhone shipments jumped almost 10-fold during the first three months of the year, according to IDC. Kathy Sin, a Hong Kong- based analyst at the research firm, said she “can’t rule out” sales were boosted by demand from China.
Slow in China
“Apple isn’t focusing very heavily on China and the company is still building its sales channels and partnerships, so it’s been slow to launch the latest products,” said Sandy Shen, an analyst at Gartner Inc. in Shanghai.
By comparison, Nokia’s retail network in China comprises more than 100,000 stores, while Lenovo has more than 10,000 in the country, according to spokespeople at the companies.
Delays boost the fortunes of vendors such as Zhang Changlong, who sells some iPhones at Zongda Electron Catena in Dinghao Electronic Mall in Beijing for as much as 13,000 yuan.
IPhones from Hong Kong stores are more popular in China than those originating from the U.S. because the ones from the neighboring city are unlocked and able to use any phone carrier’s service, said Pan Yayun, a salesman at the Chuangyeweilong Store in Beijing. Hong Kong models, which can fetch an extra 1,000 yuan each, are also easier to update and more user-friendly for mainland consumers, he said.
Second Store
Apple this month opened its second store in China to expand its retail network. The outlet in Shanghai will be followed by “many” more for the country, the company said on July 8. The first store opened in Beijing in July 2008.
Gray market sales don’t necessarily dry up when Apple enters China because the unauthorized versions can still be cheaper, Gartner’s Shen said. For instance, China Unicom offers the iPhone 3GS for 6,999 yuan each, or about 28 percent more than those sold in Hong Kong, and triple the price of the ones available through a contract with AT&T Inc. in the U.S.
The price difference between iPhones in China and Hong Kong is partly due to import duties, Unicom President Lu Yimin said in March.
Smugglers dodging taxes of 50,000 yuan or more do so at the risk of being charged with a criminal offence and up to life imprisonment if the amounts exceed 500,000 yuan, said He Fang, a Shanghai-based lawyer at Rouse & Co. International.
Authorities haven’t seriously tackled the smuggling of Apple’s products into China because volumes are still small, Gartner’s Shen said. Apple’s Tan declined to say if the company is taking any action to prevent such activities.
“Since the iPhone 4 first appeared a month ago, I have sold more than 20 locked models and 30 unlocked ones,” said Jianwei Yang, who sells iPhones at booth 2008C in Hailong Electric Mall in Beijing. “Over 90 percent of buyers are from government authorities or companies that buy them in groups.”

Just noticed that in the US jailbreaking iPhones to download third party apps from non -apple stores is legal.  It was thought that it might be a copyright infringement. It still voids warranty under iPhone.

Its true that in the US jailbreaking an iphone is now legal.
Also legal: Apple not honoring warranties on, or supporting, jailbroken phones.

As we're on the subject of the iPad, just bought the 64G 3G version in Singapore today. Paid the equivalent of HK$7,900 for this at the Sim Lim Center. Is this too expensive?

Am typing this message on the iPad now and the keyboard is great.

[ Last edited by  geoduck at 2-8-2010 01:45 ]

The 64GB 3G version in HK sells for HK$6,488 so yeah, you paid a slight premium for the device. At the height of the craze when only grey imports were available, the same version was selling for over HK$10K!!!

Yup...my friend bought his gray market ipad 16GB no 3G for 8000k USD

SG price is SGD 1,228, around HKD 7,011 (HK price is 6,488, as AP pointed out) around 12% premium. however, because you got it at Sim Lim, I'm not sure if you qualify for the GST refund at the airport. If you buy it from an authorized Apple retailer, you will qualify for a GST refund. if you dont qualify for the refund, then you paid about a 20% premium.


make sure to check if there's warranty, the unit might have been bought a week or two ago from the store and so your warranty wont be full 1 year anymore. Sim Lim is the equivalent of the Golden Computer Center in SSP.

are you sure this is not a typo?? 800USD I can understand, 8,000 USD is unbelievable, and 8M USD (8000k USD) is impossible!

Thought I had paid too much

This is the net price as I get back SGD82 GST refund at the airport. Did not intend to buy the iPad but playing around with it in the shop, the iPad surfed the net even faster than my desktop and MacBook Pro so could not resist. Reason for the premium is that there's still a long wait in Singapore, upto 4.weeks and HK 12 days. So far, played with the iPad for 6 hours and I give it the thumbs up

[ Last edited by  geoduck at 2-8-2010 08:24 ]

so that's after GST refund? man, that is expensive.

yeah long wait. a lot of the people who lined up in HKG at the launch were actually gonna resell it in China. wait in HKG is longer than 12 days, i ordered mine online July 29 and it is scheduled for delivery on Aug 19. 21 days (3 weeks).

I don't think the premium is too demanding as my friend bought one in the US and it's about US$1,000  as well when you add on the sales tax of 10%. DaBest, you shall enjoy this. There are a lot of free books which you can download from the iTunes.

Do you see yourself using te iPad over your laptop p a regular basis or just using it for recreation.

Think this is only for recreation and the iPad cannot replace a notebook computer. Great for surfing and checking email but do believe this is the way of the future and perhaps in a few years it would replace the notebook. For now, it is just a giant iPhone that can't make calls unless you're on SKYPE over WIFI. Heard rumors from the MacCast podcast that a Taiwanese group is already producing a bigger tablet for the new iPad.

Guys, read somewhere that the jailbreaking is now legalised. could I get some sort of confirmation?? Not that it would deter me(or not).

it is. just go to Google and search for iphone jailbreak and i'm sure you'll get a lot of hits. there's also a thread here in the chat section that talks about it. please spend some time to read first

Jailbreak makes it sound illegal. Now that it is legal there should be a new word to describe it. Any ideas.

It's all on your perspective.  In HK, anything Jail is associated with being bad and that's how you see it.  However look at it this way, Apple was essentially holding your phone captive.  Something that you paid to possess, but also have to pay in order to upgrade to make more efficient.  Jailbreak is essentially that, you are freeing your phone from the grips of apple.

Apple's PDF reader poses major security risk on iPhone, iPad, iPod - government
        Security flaws in PDF reader
        •        No patch exists
        •        iPhone, iPad, iPod vulnerable
APPLE'S iPhone, iPad, and iPod Touch have serious security problems, a German government agency claims.
In an official warning overnight, the Federal Office for Information Security said Apple's iOS operating system has "two critical weak points for which no patch exists".
Opening a manipulated website or a PDF file could allow criminals to spy on passwords, planners, photos, text messages, emails and even listen in to phone conversations, the agency said.
"This allows potential attackers access to the complete system, including administrator rights," it added, urging users not to open PDF files on their mobile devices and only use trustworthy websites until Apple publishes a software update.
A spokesman for Apple in Germany, Georg Albrecht, told The Associated Press that the company is looking into the matter.
"We know these reports and are investigating them," he said, refusing to elaborate.
Although no attacks have been observed yet they were likely to appear soon, the German agency said.
"It has to be expected that hackers will soon use the weak spots for attacks," it said, noting that the devices' popularity could lead to attacks within the corporate world - possibly facilitating industrial espionage.
The security loophole became obvious after reports about a successful hacking of Apple's iOS operating system emerged on Monday, a spokeswoman for the agency, Katrin Alberts, said.
"Since then, information used in this hack is publicly available and can be used to infect an iOS device simply by opening a specially crafted PDF file," she said.
The application targeted in such an attack, Ms Alberts noted, is not Adobe's Acrobat reader which allows users to view PDF files, but Apple's internal application for opening those files on its iOS devices.
"We decided to communicate this proactively because a potential attacker may gain access to the entire device," Ms Alberts said.
The federal agency, based in Bonn, said it was in contact with Apple on the issue.
The warning relates to iPhones using iOS versions 3.1.2-4.0.1., iPads using iOS 3.2-3.2.1 and iPods Touch using iOS 3.1.2.-4.0.
The agency said it was possible but not clear whether older iOS or iPhone OS versions could also be affected.
With their mobile devices, users should not only stay clear of PDF files they get by email, but also of those found via search engines, as they could be infected, Ms Alberts said.
In the worst case, attackers could get hold of passwords, banking and other personal data.
A user's contacts could also be used for sending spam emails, she said.
Link here:
http://www.news.com.au/technolog ... sd1vk-1225901440248

That is pretty nasty.  PDF are so common if you want to use your phone at all for business you will ope a PDF.  If this a true then don't open PDF unless you know exactly where it comes from.

Have had the iPad for nearly a week and it sometimes fails to connects to the internet through WiFi. I did some research on the internet and this is a bug in the Ipad OS. The Ipad connects to my office and my other routers located elsewhere but fails to connect at home. It just cannot read the IP address though my MacBook Pro and iPhone and Blackberry can access the WiFi at home. Apple has yet to come up with a fix for this and this is a prevalent problem with about 60% of the Ipads that have already been sold.