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Tech

Meeting Hong Kong's Obnoxious iPhone Scalpers

They're buying up every handset and selling them directly outside the Apple store.

by Michael Grothaus
Oct 27 2014, 6:00am

iPhone scalpers outside the Apple store in Hong Kong's Causeway Bay district. Photos by Michael Grothaus and Jose Farinha

There's a street in Hong Kong that's so packed with people it’s hard to move. Not the areas overtaken by pro-democracy protesters—which are, admittedly, also very busy (though still vaguely navigable)—but Kai Chiu Road, the street just outside the Apple store in the Causeway Bay district.

Here, the walkways are rammed with people camping out from early morning until late at night. But unlike the protesters a 20-minute walk away—who, this weekend, canceled a referendum on what the next step in their campaign should be—they're not here to demand free and open elections. Instead, they're here to make a quick buck flogging brand-new iPhones. In fact, Kai Chiu Road is so full of iPhone scalpers I'd go so far as to say it's the ground zero of Asia's Apple gray market.

When I arrive I spot a mix of Chinese capitalists, some Apple employees in denial, and a number of locals scalping to keep their families fed. “I got a 128 gold six plus for you,” says one of the scalpers within seconds of my arrival. I try to squeeze by him. “Just ten thousand dollars [$1,300].”

“Ten thousand is a rip off,” I say, pointing to the Apple Store not even five feet away: “I can buy it there for eight.”

The scalper just laughs. “Apple is out. We buy them all.”

The woman next to him, another scalper with less inventory, waves her hand in front of me as I pass the first scalper by. She’s got seven iPhones packed into a small plastic crate. She doesn’t speak English, but she knows the price her neighbor quoted me and shows me a calculator that reads “9700."

I smile politely and walk past, spending the next several minutes strolling around Kai Chiu Road in front of the flagship Apple store, watching thousands of dollars being exchanged between scalpers and buyers. Most of the buyers are affluent mainland Chinese tourists in town for some shopping who can’t wait to get the iPhone. In Hong Kong, the new handsets were released on September 21, almost a month before they hit the shops in mainland China—and even then they would be nearly impossible to get for another few weeks.

As I take my own iPhone out to photograph the only single-product street market I’ve ever seen, I wonder how much the whole thing bugs the bosses in the Apple store just a few feet away.

I get my answer pretty quickly.

Until now the black-shirted Apple security guards—likely from a third-party firm—have been passively watching the scalpers from their positions behind the store’s glass facade. But the moment I take my phone out and start photographing what’s in front of me, the guards leave the store and approach me on the street. They stop and stand in front of me to block my photos, as if I’m the one doing something wrong.

I spend a few awkward seconds facing off against the human shield that is the five security guards, before placing my phone back in my pocket and walking into the store, their eyes on me the entire time.

An iPhone scalper standing outside the Apple store

Inside, an Apple employee greets me, and I point through the glass walls to all the iPhone scalpers on the street. “So, that’s a crazy marketplace going on out there,” I say.

“What do you mean?” he replies, staring out the glass walls with me.

“Well, all the people selling iPhones from suitcases,” I say. “There are hundreds of them.”

“We can’t confirm what people sell out of the suitcases,” he says, in plain view of luggage overflowing with iPhones. Suddenly I feel like I’m talking to the Beijing official who, earlier that week, had denied that the number of protesters in Hong Kong were anything more than “a handful."

I have more luck with a second employee, who admits that while Apple is angry about the scalpers and wishes it could do something, “There’s nothing we can do about it—not even remove them from the street—because it's a free market.”

He explains that, for the last several years, Apple has tried to counter the scalpers by instigating an “iReserve” system, which requires Hong Kong customers to reserve their iPhones online before they come into the store to buy them. Each customer must provide both a Hong Kong phone number and government-issued ID, which are entered into a database, allowing them to buy only two phones each.

“The reason so many scalpers have suitcases full of hundreds of iPhones,” the less defensive Apple employee says, “is because they pay their friends, or even hire migrant workers, to register to buy two iPhones.”

Hearing our conversation, another customer interjects, saying Apple needs to do more about the “opportunists” on the street. (We have contacted Apple about this complaint and are awaiting comment.) He says it’s not right that the scalpers are allowed to abuse the iReserve system, while he’s had to wait. Then he asks how long until the gold iPhones are in stock again.

It’s getting late and I want to make it back to the main protest area in time to see the rumored address by Joshua Wong, the 18-year-old student activist who’s credited with starting the Hong Kong protests. Walking past Kai Chiu's endless scalpers, I notice a small yellow ribbon pinned to a woman’s shirt collar. She’s near the end of the street and has only one iPhone to sell, a silver 16GB iPhone 6.

The yellow ribbon is a widely recognized symbol of supporters of the pro-democracy movement. I ask her what she’s doing here; doesn’t she know Joshua Wong is supposed to be addressing the protesters tonight?

She seems apprehensive, then smiles at me.

“I know,” she says.

So I ask her why she’s here trying to sell the lowest-end iPhone model—one that no one really wants—instead of going to hear Wong. Is it the end of a long day of scalping? Is this the last phone she has left to flip?

She explains that not all the scalpers here are simple capitalists. Some, like her, have saved money all year to buy a single iPhone that—if you time it right—can get you double the money you paid for it. That doubling of your money could be worth almost a month’s salary to some in Hong Kong, a city that’s struggling with not only autonomous democracy but a massive inequality gap, where almost 20 percent of the population live below the poverty line.

The 16GB iPhone is the only model she could afford, and I can’t help worrying—with all the other scalpers offering their various higher-end handsets—that she won’t end up making the profit she’s hoping for.

“It’s a gamble,” she says, “but, for now, I need to feed my family.”

Then she peers down the street at all the scalpers with their dozens of iPhones. “My heart is with the protesters, though. I would much rather be with them than here.”

Her frown turns to a smile. “But if I can’t sell it in a few days, at least I kept my receipt.”

Follow Michael Grothaus and Jose Farinha on Twitter. 

Tagged:
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Jose Farinha
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