“You’ll never hear it from Apple, but ever since the first iPhone was launched, there has been a thriving, extremely lucrative black market in China and Hong Kong for the latest iPhones,” John Paul Fowler writes for The Motley Fool. “Oddly enough, the players in this back-alley world range from well-heeled and opportunistic Westerners to the poorest Chinese locals looking to get their first real taste of American entrepreneurship with a Chinese twist. It’s a world where black-market iPhone prices are updated daily in a manner eerily reminiscent of Wall Street in the 1920s. It’s a world where consumers pay twice the retail price right after an iPhone debuts. With profit margins so high, it’s not hard to understand why this back-alley business has flourished for so long but this world is about to come to a violent halt with the latest iPhone 5.”
Now, some will say they’ve been to China numerous times or maybe even lived there for years and never heard or saw anything of this nature,” Fowler writes. “Well, unless you live and operate among the locals in the backstreets of places like Chongqing, China (a rapidly growing megacity of more than 30 million people) you won’t see this black market (Most visitors’ exposure to China is limited to highly Westernized cities such as Shanghai and Beijing.) As for those who would assume that Apple would attempt to stop this thriving black market that just isn’t the case.”
Fowler writes, “With the iPhone 5’s latest technology the iPhone cowboys’ days are numbered. Apple now has the ability to negotiate a far better distribution network with Chinese telecoms, penetrate China as a whole, and operate with a worldwide product launch schedule that will finally prevent iPhone black-market arbitrage… A documentary that focused on Miami during the 1970-80s, spawned the popular term ‘cocaine cowboys,’ which referred to those who transported illegal drugs. Today, there are the ‘iPhone cowboys’ who smuggle iPhones into Mainland China and Hong Kong. These are self-proclaimed entrepreneurs and/or ‘mules’ (people hired to transport illicit products) alike who often smuggle anywhere from 10 to as many as 50 brand-new iPhones per trip (perhaps even more) right after a product launch.”
Much more in the full article here.