In a crowded multistoreyed marketplace in downtown Shenzhen, a store owner haggles with a cigarette-smoking customer over the price for a bulk sale.
They are not bargaining over fake watches or counterfeit leather bags, but genuine Apple iPads and iPhones – freshly smuggled from Hong Kong, a free port with zero duties for many electronics imports.
“This is real stuff that just arrived. We just got these off someone’s waist strap,” said the storeowner, whose surname is Xu, while the customer ran his fingers through a stash of cash upon closing the deal to buy a dozen iPhone 4s.
Mr. Xu’s store, with its glass display in a hall full of electronics sellers, is a far cry from Apple’s signature spacious, white outlets. But iPhones and iPads are flying off the shelf, thanks to discounts on the official price tag.
With Apple’s gadgets becoming a status symbol among rich Chinese, businessmen like Mr. Xu are meeting insatiable demand by smuggling from Hong Kong, where the currency is weaker than the yuan and tariffs are virtually zero.
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