In Shanghai, there are thousands of factory workers that spend their days assembling Apple iPhones. But sadly, all of the iPhones created in China are exported to Western nations for sale, so even the workers who assemble them in factories can’t own one. Or at least they couldn’t, until recently…
A new study shows that Apple iPhones are being bootlegged back into China nearly as quickly as the factories can export them out. Apple first began to suspect that something funny was going on when an analysis of their iPhone sales showed that approximately 3.7 million units had been sold, but only 2.3 million have actually been registered on Apple’s partner cellular networks (all of which are based in the Europe or North America).
While the disparity in the numbers initially confused Apple executives, at this point it seems clear that a great many iPhones are being bought, unlocked and bootlegged back into China (where Apple currently has no partner networks, making the phones untraceable once they are used within the Chinese mobile system.
While there are certainly professional bootleggers at work re-importing the iPhone to China and other Asian countries, it is also likely that many of the phones find their way back into Asia by “amateur” bootleggers in a type of ad hoc distribution network. In other words, Chinese nationals visiting Europe or North America are likely picking up a
few extra iPhones for their friends while they’re abroad.
Once the phones are returned to China, they are “cracked” so that they will work on local Chinese cellular networks, and fitted with customized local software. Currently, the price of an unlocked “bootleg” iPhone in China is around $500, compared to approximately $400 in the US.
As China becomes more and more of a industrial powerhouse, a new breed of young urban professionals is emerging in the country with plenty of expendable income. These young professionals tend to define themselves by the latest and greatest Western gadgets and electronics, and the popularity of the iPhone is a particularly high-end example of this trend.
When purchasing an iPhone in North America, the user signs a purchase agreement with Apple that prohibits unlocking the phones software for use on other networks. However, using the iPhone in China does not appear to violate any statutes of Chinese law.
And if $500 seems a bit too steep, Chinese consumers can also opt for a so-called iClone, a knock off of the iPhone which currently sells for about $125 on the street. Most Chinese, though, opt for the cachet and prestige of owning the real thing. Until Apple signs a deal with a Chinese cellular network to “officially” introduce the iPhone to
China, they’ll just have to keep on “re-importing.”
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Sad but interesting reality. Re-importing the item manufactured by self. Sometimes stringent laws promote lawlessness!
Comment by John — February 26, 2008 @ 2:17 pm