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A global black market awaits the launch of the new iPhone

Krystal Hu

When the iPhone 6 came out in 2014, Yanfei Wang was the first one among his friends to get his hands on the phone, even before it was officially sold in China. The college student bought two phones from resellers when he traveled to Hong Kong by paying almost double the official retail price of 5288 HKD ($676).

On Sept. 12, Apple (AAPL) is expected to announce its 10th anniversary iPhone, attracting the eyes of iPhone resellers around the world who see business opportunities in people like Wang. While the new iPhone will be available to people in the US soon after the launch event, others around the world may be forced to wait months to get their hands on the device. This difference in release dates and supply have created a global black market.

The latest iteration of the iPhone is expected to see some major updates, so the temptation for people overseas to get one early could be greater than ever.

iPhones can be worth a lot more money before their official release date. Source: Max Pixel
iPhones can be worth a lot more money before their official release date. Source: Max Pixel

Get iPhone earlier by paying more

On Taobao, Alibaba’s (BABA) online marketplace in China, iPhone sellers have already begun to receive deposits for pre-ordering “iPhone 8.”

Wayen International, an online store, says it expects the new iPhone will be available around Sept. 20, though Apple hasn’t announced an official release date. The store says customers can secure the iPhone as soon as it comes out by paying a 2000 yuan (USD 300) deposit, and paying the rest of the retail price when the product officially releases.

The electronics store specializes in daigou, meaning it buys products from overseas for customers, a booming industry in China. A salesperson from the store told Yahoo Finance it would bring the new iPhone from Hong Kong and the US once it’s released.

Hong Kong is a preferred sourcing hub for iPhone resellers. The free port on the south territory to mainland China is often among the first regions where consumers can buy the iPhone at a lower price. When the iPhone 6 first launched in 2014 in Hong Kong, it wasn’t officially sold in mainland China until one month later due to regulatory reasons. During the window of time, thousands of iPhones were smuggled across the border, according to the South China Morning Post.

According to CNBC, smugglers put the iPhones in coffee tins and toothpaste boxes to get past customs. Once they made it to Shenzhen, one of the largest electronics market in the world, they could sell iPhone 6 Plus for iPhone for $3,250, versus $849 at US stores.

“Wait until Sept 22nd — we’ll have iPhones available from Hong Kong then,” a store associate at iPhone Wala, a cellphone seller in New Delhi, told Yahoo Finance.

Last year, another emerging market, India, also had to wait two weeks longer for the iPhone to be released. Customs officials seized over a hundred iPhone 7s and 7 Pluses at the local airport. Some of the phones smuggled from Hong Kong can be sold at $1,500 in local electronic stores.

iPhone as a status symbol

Why would somebody be willing to pay double the price to own an iPhone a few weeks early? For one thing, it’s status symbol.

“Apple is considered a rich people’s brand in India. People are eager to get it before his friends or neighbors, so there is a competition in the big cities to show off,” Vidyabhushan Choubeyan, 28 year-old IT worker in Gurugram, India, told Yahoo Finance. He plans to buy the latest iPhone but prepares to wait, as he believes the iPhone price will go up at first due to demands from people who want to show off.

The surging demand will bring some challenges for Apple’s supply chain and push people who just want to get it as soon as possible to resellers. Ordering from the official website sometimes means a wait of a few weeks to fulfill the orders and shipping, which poses an opportunity for resellers.

“You need to wait for a while if you order on Apple’s official website, but we have our own inventory,” a salesperson at Zaixiaogou, an online Chinese electronic store told Yahoo Finance.

Last year, iPhone’s market share in China was 10.4%, according to Counterpoint Research.

Xiaohan Tay, a senior market analyst with IDC, predicts consumers will be willing to pay a premium for the new iPhone if the supply is low.

“When the iPhone 6 was first launched, it was a huge change from the previous iterations of the iPhone,” she told Yahoo Finance in an email. “With it not being sold in China earlier on, it was more special to be able to own one. Consumers were willing to pay a premium to be one of the first.”

More from Krystal Hu:

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The real reason overseas manufacturing is coming to the US

One quote from Jack Ma signals a huge shift in China’s economy