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Consumer protest and the grey market as iPhone4 release causes 'pandemonium' in Hong Kong

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This October, Apple released the iPhone4 - the latest must-have, with all its advanced features, and half a step to the forthcoming iPhone5. Thousands of people queued up, in some cases for over 80 hours, at their local Apple stores in places around the world - from London to Sydney, Paris, Tokyo and New York. Even Apple co-founder Steve Wozniak was reported to have been the first in line, waiting to buy one in Northern California. I happened to be visiting my hometown, San Francisco, during the release, and, while at the local neighborhood mall, was captivated not just by the long line stretching along the mall corridor, not just by the spirited buzz of the crowd, but by the obedient order of it all. This seemed to be the case in other locales with many news reports featuring photographs of “campers” waiting with patience and baited breath for the opening.

In the heart of Hong Kong Island’s business district, a crowd began to gather days before its release at the Apple store. More than 1,500 shoppers stretched across a connecting flyover to the harbor front cordoned off by police barriers for crowd control. Tensions mounted as a crowd of an estimated 200 shoppers learned from Apple security staff that they were not in the correct line and had to move. The Hong Kong police sent an additional ten officers from their tactical unit to assist the 40 officers already in position to quell the heightening tension as potential customers arriving just before opening were turned away. Many of those rejected from the line had traveled from various parts of mainland China where the product will not be available until December.

It was not simply the disappointment of being turned away that angered some shoppers.....

In what can only be described as distinctively Hong Kong, the anger grew as many of those in line maintained their position to purchase five phones, the maximum number allowed by store policy. These “buyers” are paid to brave the line and buy the phone for a “dealer,” who in turn, resells them for a profit to individuals and shops in Hong Kong and mainland China. One “dealer” paid between HK$2,000-$4,000 to “professional queuers” and was able to obtain over 100 phones to resell (See South China Morning Post, 16 November, 'iPhones and the madness of crowds' and 'Apple bruised by queuing disgrace').

Within 24 hours, Apple announced the iReserve system whereby potential customers could only purchase the iPhone4s through an appointment secured through an on-line system. No more queues. No more bulk purchases. While we might think the iReserve dampened the spirit of grey market entrepreneurs, some shoppers bypassed the wait for an on-line appointment, and instead, turned to resellers on the grey market to buy the latest Apple gadget at a more expensive price.

The grey market – where legitimate goods and services are obtained by legal means, but redistributed through unauthorized and un-official dealers – is consistent with Hong Kong’s broader economic free market. Both in Hong Kong and globally, it is not well understood - perhaps because it sits in that vague layer between the legitimate free market and the black market. Deeper scrutiny of the grey market, however, seems critical at this juncture as it is very likely to assume an increasingly prominent role in global capitalism.

As an indicator, consider the successful global marketing of products like the iPhone4 (e.g. released in many major cities around the world with subsequent buildups in other metropolitan destinations from London to Hong Kong to India and China), and the consumer anticipation in countries waiting for its release, and at the same time, the emergent opportunities for the grey market – another layer of “workers” (e.g., dealers, resellers, professional queuers, runners, etc.) who can legitimately or otherwise, capitalize on new desires. The grey matter of this grey market lies in the legal realm; it is unclear whether, and how, reselling outside the “authorized” market is defined within and across national borders.

The role of the grey market in global capitalism raises other salient questions and, I would argue, points to those inherent contradictions Marx spoke of so long ago. It may be sadly paradoxical to the collective protests about global capitalism emerging around the world. But maybe, as this Hong Kong example suggests, the collective protests are as much about consumption as about resistance. While the Wall Street Occupation has spread throughout Europe and Asia (including, in small numbers, Hong Kong) to challenge the inequities and injustice resulting from global capitalism, consumers are protesting about unequal access to the latest desireable goods.

Perhaps most unsettling is the multitude and layers of players in the global flow of iPhone4s from the Chinese factory workers to the transnational manufacturers and contractors to professional queuers, Apple fans, and even the police and risk management specialists. The sad irony to this grey market is that those who manufacture the products in China work in despairing conditions on low salaries while the grey market entrepreneur, seeking a fast return, makes the largest profit by taking it back across the border into mainland China from whence it was manufactured.

As the iPhone4 rapidly moves across the border before its official launch date and becomes available to the masses, it joins a host of other products ranging from water to milk powder, but that’s another story....

Karen A. Joe Laidler is Professor of Sociology and Director of the Centre for Criminology at the University of Hong Kong and is CrimeTalk's Correspondent and Commissioning Editor for Hong Kong and China.

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