By Philip Elmer-DeWitt
January 13, 2012

Retail fail: SWAT teams move in after fights break out among rival gangs of scalpers

There may be no graceful way to launch an iPhone in a country of 1.3 billion that has caught what one analyst calls “Apple fever.”

In a frightening parody of the snaking queues that greet the launch of new Apple (AAPL) products in the U.S., thousands of would-be customers massed outside the company’s stores in Beijing and Shanghai, outstripping supply and, at the company’s flagship Sanlitun store, forcing Apple to cancel the launch before it began.

According to eyewitness reports, fights broke out at Sanlitun among rival gangs of 30 to 50 “yellow bull” scalpers — migrant workers bused in by resellers and promised 120 yuan ($19) and a food allowance to stand in line. After waiting as much as 12 hours in temperatures that fell to -9°C, they were understandably angry when all they got for their trouble was their 10-yuan food allowance.

The Chinese blog M.I.C. Gadget reports that when an unidentified man with a bullhorn announced that the sale had been cancelled, the crowd chanted “Open the door!” and “Liars!” and began pelting the store with eggs.

Apple’s four other stores in Beijing and Shanghai did manage to open, but closed almost immediately. “The demand for iPhone 4S has been incredible, and our stores in China have already sold out,” an Apple spokesperson told AllThingsD. For now, the phones are available only online and through Apple’s partner China Unicom (CHU).

“This is a debacle,” Shaun Rein, managing director of China Market Research Group told Bloomberg News. “There isn’t enough product in enough retail points.”

In 2010, Apple said it planned to build 25 stores in China within two years. Today there are only six: One in Hong Kong, two in Beijing and three in Shanghai.

UPDATE: There’s a good video report shot at the doors of Apple’s Sanlitun store by the Wall Street Journal‘s Angela Yeoh and Owen Fletcher here. CNN International’s Stan Grant got even closer to the violence directed at private security guards in this video:

[cnnmoney-video vid=/video/technology/2012/01/13/t-ts-china-apple-store.cnnmoney]

Below: More photos and videos of Friday’s chaotic events.

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