Christopher Sebela

writer, wronger, rearranger

They show up in the early-morning hours: Chinese men and women, waiting silently and somewhat nervously outside of Apple stores in New York. On some days the lines they form can be a block long.

These are not typical Apple fans. Instead they are participants in a complex and curious trade driven by China’s demand for Apple’s fashionable gadgets — products that are made in China in the first place and exported, only to make the long trip back.

Participants in New York and Shanghai say the process works like this: People wait in line at an Apple store to buy the newest iPhone for $600, paying a premium to skip the AT&T contract. They then sell the phones to middlemen, usually at electronics stores in Chinatown, for about $750.

The phones are shipped off to China, where the iPhone 4 is not yet on sale, and are distributed to local shops and e-commerce sites, where they sell for as much as $1,000. 

But on Saturday, when the iPhone goes on sale in China, it will have ripple effects abroad. This is already pushing down prices of smuggled phones.

Professor Wei said the legitimate sales would cut into the smugglers’ profits but would not wipe them out. He said every aspect of the pricing and availability of the iPhone in China had been calculated to make it a highly sought product.

“Apple knows exactly how much these products are selling for on the black market in China, and the company will price its products accordingly,” Professor Wei said. “Limiting the sale of the iPhone until now in China is likely part of a bigger corporate strategy to make it a luxury product that people will pay higher prices for.”

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