Dual release of iPhone 5S in US, China puts scalpers out of business

September 22, 2013 Leave a comment

Dual release of iPhone 5S in US, China puts scalpers out of business

Staff Reporter

2013-09-21

The number of scalpers seeking to make money from Apple’s latest iPhone 5S has decreased significantly as most buyers are targeting the gold version of the smartphone. The fact that the smartphone was released in China and the United States simultaneously has also reduced scalpers’ leverage in raising prices, according to Chinese web portal Tencent. The iPhone 5S and 5C were released on Friday in the US, Australia, Canada, China, Hong Kong, France, Germany, Japan, Singapore and Britain, nine days after Apple unveiled its latest models to the world.Around 2,000 buyers were lined up at Apple stores in Munich while more than 800 people queued for the smartphone at the Apple stores in Ginza, Tokyo. Apple’s flagship store on Fifth Avenue in New York saw crowds of 1,400 buyers. The long queues were absent however in China where Apple’s flagship stores have adopted a pre-order system after the glass doors of its Beijing store were shattered amid clamor for the iPhone 4S.

Apple’s pre-order website can only be accessed after receiving a pre-order code via text message. The measure has raised scalpers’ costs significantly and prevented them from buying in bulk as before.

Chinese students lined up at Apple stores in San Francisco said that as the smartphone is available in both the US and China, there is little point in trying to buy one in the US to resell in China at a mark-up.

Scalpers have also found the smartphone difficult to sell unless it is the sought-after gold model that marks the owner out as possessing the latest Apple device. A scalper operating near an Apple store in Beijing’s Sanlitun area was offering standard white and black models at prices 200 yuan (US$32) more than their official retail price but pricing the more exclusive gold models 1,000 yuan (US$160) higher. A buyer of a pre-ordered gold edition sold the handset to a scalper for 1,500 yuan (US$245) more than he paid right after leaving the store.

The gold edition has not been as popular in Hong Kong as in mainland China but mainland buyers have pre-ordered almost all the gold iPhone 5S available in the special administrative region.

A staff member at Apple’s flagship store in San Francisco said the gold handsets available are in much shorter supply than the other models. The store only has 15 gold models but this was still more than any other store in the area.

The iPhone 5C, touted as a “budget” model, has seen fewer takers in China due to its higher-than-anticipated asking price. Liu Xingliang, CEO of Chinese social networking app Shanju, thinks this is a clever strategy on the part of Apple, however, since customers originally set on buying the iPhone 5C might consider splashing out on the top-of-the-range iPhone 5S since it is only a couple hundred yuan more expensive.

Industrial insiders said this strategy ensures good sales for the 5S and Apple may reduce the price of the 5C at a later time.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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