iPhone’s Underground Chain: The Chinatown Express Route

Sellers: Not worrying about distribution, only worrying about the supply

Since the unlocked and cracked iPhone started selling 3 months ago, The Seller (a seller from GuangZhou whose name will remain unknown) has sold almost 150 sets, on the average that more than 1 set sold per day. At the beginning, a single set of iPhone could be sold over 12000 Yuan (roughly 1715 US dollars). And the buyer had to pay a 4000 down payment, then to pick up the phone the next day. After that, the price of iPhone has fluctuated all over, from 8000 to 4300, then up to 5500. Now it’s been around 5500 for awhile. Even with the stiff price, buyers don’t seem to be discouraged but increased in numbers. The Seller says, “I’ve never seen a single model of cellphone can be sold so quickly even with the price fluctuating like this.”

Besides The Seller’s store selling iPhones, thousands other stores on the same street are all selling it. They do not store any iPhone in the stores though, if a buyer wants to exam the phone or just to take a look, clerks from the stores will call the warehouses and have the phone delivered to the store within minutes.

Because all the user guides and explanation are all in English, many clerks, even store owners, don’t even know how to operate the iPhone. The buyers don’t seem to care much about this because they already know how to use it, from extensive research online, of course. They know more about iPhone than the store owners who actually sell it. Transaction are done within minutes upon the examination of the phone itself. More than 100,00 iPhones were sold for the past 3 months, the number equivalent to the number sold in the US at the beginning when iPhone first came out.

Many buyers just go online to search for iPhones under 5500 Yuan, and many sellers openly indicate that the products are directly shipped from the US. From Washington DC to the city of DaLian and ShenYang. Prices are regular US prices after taxes. And welcomes group purchases.

Channal: The Chinatown Express Delivery

Because there’s no manufactures in China to produce iPhone, all the phones have to be “imported” from overseas, the medium in which it is transported determins how much a seller can profit from selling iPhone.

According to The Seller, he has never worried about buyers, or demand, he’s only worried about the supply chain. He says, “I ask my friends to buy the phones for me in the US, then mail to me. Then I will crack the phones myself. Even though the delivery fee is hefty, but with the price of 8000, even 10,000 per set, I can still get a 3000 Yuan profit at least from selling them.” But with the price fluctuation and Apple restricts the method and number of purchase, The Seller can’t supply his own demand anymore.

Then he turned to the Internet, he found someone who sold unlocked or cracked iPhones. With their help, the supply chain became stable but the basic cost had increased. The proft from selling a single iPhone is no longer 3000 Yuan.

To ensure the supply and profit margin, The Seller started looking for other means. Finally he found out that in the iPhone underground production chain, transportation teams had already been formed, just to deliver the phone from the US to China, then spread them over to different cities in China. This is known as the “Chinatown Express Route” or “Chinatown Express Delivery.” It starts somewhere in Chinatown, from an unknown city, (but I think it’s a city or cities from the coastlines, like New York, Washington DC, Miami, LA, and SF) then through some unknown channals, the iPhones arrive somewhere in China. Sometimes there are over 100 sets of iPhones in a single delievery, and they are all cracked. But with such delivery fee, the cost of a single iPhone is already 20% higher than the retail price in the US, but worry not, with such high demand, it still can be sold for a profit that can make a seller smile.

In the cellphone retail market in GuangZhou, The Chinatown Express Route is not the only way to get iPhones. Many stores have other means to get iPhones into China then into their stores, however, those phones first arrive at a warehouse, then from this central warehouse they are sold to other warehouses, then sold to the stores. Those stores are at the bottom of the chain so the proft of selling a single iPhone is only from 100 to 150 Yuan.

Unlock: The “Chinese R&D Center” Is Superb

When the supply is stable, the magic weapon to support your sales is your tech support. Ever since the sale of his first iPhone, The Seller has been to all kinds of iPhone forums and BBS, learning and studying all the versions and methods of cracking, unlocking. “Without a strong tech support, you are only buying a pretty little ‘brick’.”

Now, The Seller can be an expert on iPhone usage and cracking. For example, he sets only a few values in the phone under a minute, a SIM card is ready to get iPhone online. “Except CDMA cards, the lastest cracked iPhone can use any other SIM cards to get online, and it supports WiFi. The only regret is that it can’t get on WAP, only WWW.”

In fact, there is a huge community which provide tech support for iPhone. Some of them are for their own profit, some are only to have fun, some of them are to establish their names within the community. To call these tech lovers, product forums or even hackers, the largest and the most efficient R&D center, is very suitable. And they are doing a far better job than the engineers at Apple. For example, iCosta, a software which allows users to input Chinese in iPhone, is developed by someone outside of Apple. Until today, Apple engineers still haven’t come up with a way for users to write Chinese on iPhone. Maybe it’s time to hire someone who can speak and write Chinese? haha. Well, I don’t blame Apple for that simply because they don’t need to. For now, iPhones are only sold in the US, Canada and Europe, how many people speak Chinese in those countries and how many use such language on a daily basis? So, it isn’t Apple’s fault.

On www.aplbbs.com, all kinds of unlock method, software guides, usage directions can be found. A completely unlocked and cracked iPhone can be updated within a day of its latest release, some softwares are cracked within only 15 minutes, only 5 minutes slower than the time in Europe and America. According to The Seller, the Chinese R&D Center for iPhone is top notch, many cracked iPhone sold in other countries are all cracked in China.

Apple: Software Upgrades Can Hardly Prevent Cracks

Apple is suffering its own consequences now. According to the deployment plan by Jobs, only starts to sell iPhone in a few countries, then after its all hyped up, then start to push it out in those lucky countries. And to show the gratitude, those service providers have to pay Apple a fee for each iPhone. He doesn’t even have to wait for that day, because there are cracked iPhones all over the world already.

Based on the financial report of the 3rd quarter from Apple, 17% of the 1.39 millions iPhone are purchased by users with alternative purposes. Those phones then appear in underground market all over the world after traveling various channals, like the Chinatown Express Route. Apple has realized its seriousness and announced a number of times that many cracks can and will cause harm to iPhones and can paralize the phone, they may be turned into “bricks” if possible.

At the end of September, 1.1.1 version came out, another attempt to prevent hackers from cracking the phone. Version 1.1.1 was cracked soon after, many sellers actually put “version 1.1.1″ on the phones or signs to attract buyers. Apple is completely powerless when facing the hundreds and thousands cracked iPhones. But look on the bright side, at least you still got your sales up, haha.

From Source 

~ by kunzilla on December 12, 2007.