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iPhone Smuggling Housewives Brought to Trial

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iPhone 5 will launch in China soon.

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When Apple released the iPhone 5 on September 21, some of the smartphones made it from Hong Kong to a store in the southern Chinese city of Shenzhen within five hours. There they were sold for between 7,500 yuan and 9,000 yuan. In Hong Kong, the smartphones had a price equal to 4,545 yuan. A salesman who had three iPhone 5s on display that day said, "The stock is so limited that people are treating these iPhone 5s like gems."

Earlier in the week, customs agents in Hong Kong caught smugglers trying to sneak 227 iPhone 5s and 22 iPads across the Shenzhen-Hong Kong border along with other electronic devices in a truck. Using a truck is relatively uncommon, but since border security has tightened, smugglers have resorted to other methods. The number of iPhone 5s equaled roughly 1 million Hong Kong dollars, or $129,000. Including the other devices, the goods had a total value of roughly 4 million Hong Kong dollars.

The grey market for iPads has been just as prevalent. In 2011, a Beijing research firm reported that of the one million iPads sold in the second quarter of 2011, almost half of them came from the grey market.

Apple opened a store in Shenzhen on November 3 to try and alleviate the smuggling problem. Foxconn Technology also assembles the iPhone and iPad in this city.

Some will desire a smuggled iPhone 5s regardless of when Apple officially launches the smartphone in China. The smuggled phones sell well in mainland China because many of the smartphones come unlocked and owners wish to use China Mobile (NYSE:CHL), China's largest wireless provider, as their service provider. Even though Apple hasn't reached an agreement with China Mobile to allow the wireless carrier to sell the iPhone, many unlocked iPhones run on China Mobile's network. Back in 2011, China Mobile had 7.44 million iPhones registered on its network.

During Apple's recent conference call, CEO Tim Cook told investors the iPhone 5 should officially be launched in China by the end of the year. Apple has partnered with China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA). It is still trying to reach a deal with China Mobile.

Twitter: @ChrisWitrak
No positions in stocks mentioned.
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