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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.

A suitcase of iPads headed for China. Via the Daily Mail

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: