Tough times in the U.S.-China iPad smuggling game

(Reuters) – Early on the morning of March 16, Wong Tat joined a line of about 100 people waiting for the launch of the new iPad in a chilly rain outside an Apple store on the outskirts of San Francisco.

When the doors opened, he was among the first to buy his quota of two iPads — the maximum Apple Inc allows per person. Then, sporting a bright red cap for easy identification, Wong began to direct a stream of people toting their new tablets to a silver
Mercedes SUV in the parking lot.

After about two dozen of the neatly boxed iPads had been put in the trunk, the SUV sped to a nearby run-down hair salon and massage parlor. There, the haul of the tablets costing about $12,000 was transferred to red, white and blue wholesale bags, which
Wong then spirited out the back door into another car.

"They are headed for China," said Amy, a 30-something hair stylist at the salon who had joined in the pre-dawn operation outside the Apple store. She would not divulge her last name.

The iPads had embarked on the first leg of a journey that would ironically return them to the country where they were assembled in the first place. They may have been stuffed into suitcases and taken by passengers on a flight to China, or possibly flown
by courier to the duty-free territory of Hong Kong and smuggled in students’ backpacks across the border into mainland China.

Demand for Apple products, coupled with severe constraints on local supply, has created a thriving black market. A 16-gigabyte iPad bought in San Francisco for $499 — about $540 including tax — can be sold for more than $1,000 in Shanghai the next day.
Apple sold more than 3 million of the devices — which now come 4G-ready with a sharper "retina" display — in its first weekend.

"You can pretty much determine when the first iPad arrives in China by monitoring the first flight out from the U.S. on launch day," said an Apple employee who was not authorized to speak on behalf of the company.

Companies that make iPad accessories, such as cases and speakers, also hire people to wait in line on launch day, a source involved in that business said.

Accessory makers do not get an early peek at Apple products, so they have to scramble as soon as new iPads and iPhones hit the streets to reconfigure assembly lines and craft accessories that fit, he said, speaking on the condition of anonymity.

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Posted by Awais Khan on Mar 26 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry