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Why are iPad prices falling in China’s gray market?

Sluggish demand, says one report. An over-abundance of supply, says another.

Dueling stories Monday in Reuters and the
Financial Times
 about the Chinese gray market for Apple (aapl) products agree on one thing: The prices the new iPad can fetch have fallen roughly 30% in the past two weeks.

When the latest iPad -- the one with the much-hyped Retina display --  showed up in Beijing the day after its U.S. launch, Chinese resellers could get as much as $1,100 for a model that retails for less than $500. Today, according to Reuters, prices like $600 or $700 are more common.

What's going on?

The Financial Times offers two explanations in the form of a pair of quotes:

“People are getting a lot more rational about the iPad now,” said Xue Jinpeng, a reseller in Zhongguancun, Beijing’s technology district. “They are a lot more willing to wait until prices come down or even until the official launch.”

Annie Zeng, a secretary at a foreign insurance company in Shanghai and a confessed Apple fan, said she felt the latest iPad offered nothing new for the higher price.

Reuters, in a considerably more ambitious story that follows the path of iPads bought in San Francisco-area Apple Stores, stuffed in suitcases, shipped by courier to Hong Kong and smuggled by backpack onto the mainland, draws a different conclusion.

It points out that unlike the iPad 2, which went on sale in Hong Kong and Shanghai nearly two months after its U.S. launch, the third-generation iPad was available in quantity in Hong Kong and Shanghai Apple Stores a week after U.S. sales began.

"This whole game is over," a Beijing gray marketer complained to Reuters. "There's an overabundance of supply. The market's flooded."

The two reports are not contradictory. But the headlines send a very different signal:

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