Why the new iPhones won’t be hot items in Sin Tat Plaza
The margin for resellers is getting thinner as the economic law of diminishing returns kicks in
Speculators on Apple Inc’s products have been excited about the launch of the iPhone 8, hoping for an opportunity for them to make money. Such is the case for the more than 200 tenants in Sin Tat Plaza, Hong Kong’s signature mall for mobile phones, which might in fact sell more iPhones than the official flagship Apple store in International Finance Centre.
Hundreds if not thousands of traders who bought the new phones online lined up in front of the Mong Kok marketplace to resell them to shop owners at premium prices. They are known as “Apple farmers” because every product launch means harvest season for them.
Early would-be purchasers went to Sin Tat because they could not get the latest iPhone online. But there was a rush there because many people knew they could make money by reselling them in mainland China, where iPhones are a trendy gift and desirable products.
The mainland is Apple’s top market, but the prices in the major cities there are at a slight premium to Hong Kong’s, providing a window for profit making.
With that in mind, it is understandable that traders were strongly anticipating the big day when Apple would put the iPhone 8, iPhone 8 Plus and iPhone X on sale.
With almost every launch of a new model over the past decade, Hong Kong newspapers have gushed about how much money people would make trading the new models. Even before a single handset changed hands, it was highly anticipated that traders would make between HK$3,000 and HK$5,000 (US$384 to US$640) per transaction.
But interestingly, the margin is getting thinner as the economic law of diminishing marginal returns kicks in.
It is a simple fact that Apple has been launching new iPhones for 10 years, and each time the new handset was pretty much the same as the old one, except for some enhanced features. The same can be said about Apple’s rivals.
As such, Sin Tat is not the same place that it was before. In its heyday, the average monthly store rental there used to be HK$10,000, but now it is down to HK$4,000, and the number of vacant shops has grown to 40, or about 14% of total, according to Apple Daily.
One of the Sin Tat store owners said the response to new iPhone models seemed to be getting worse year after year despite their getting more expensive.
“The iPhone X model is above HK$10,000, more expensive than a computer. I doubt it will be a hot item in Hong Kong given that China is among the first-tier countries for the new iPhone,” the shop owner said.
Gone are the days when Sin Tat vendors made huge profits for a whole year, such as 2010 with the iPhone 4. Things started to get worse in 2015, when the fervor around the latest iPhone only lasted one month.
Another blow came last year, when Apple began selling the iPhone 6 on the mainland and in Hong Kong at the same time.
That will happen again this Friday, when the iPhone 8 and iPhone 8 Plus will be ready for online subscription in both the mainland and Hong Kong. Shipment will begin on September 22. Online subscription for the iPhone X will start at 3:01pm on October 27, and shipment will begin on November 3.
Margins for iPhone speculators in Sin Tat will definitely be slim.