China is experiencing a huge boom in the desire for Apple products, and some independent retailers are taking advantage of this to import tax-free products from neighbouring Hong Kong.

Last month Chinese authorities discovered several organised rings attempting to smuggle a large number of computers into the country, including a significant number of iPads worth over $230 million.

The arrests were made in the southern province of Shenzhen, where it is thought students attending college in Hong Kong are often used as mules to smuggle the products in.

The students pass through immigration with iPads in their bags, or sometimes several iPhones strapped around their waist. When interviewed, one student said that he was not worried about getting caught as he would either claim the items to be for personal use or simply pay the tax.

The student said that he had personally made up to 300-400 yuan per unit.

Apple products are fast becoming the gadget of choice for many businessmen and this is reflected in the 900 million subscribers currently enjoying iPhones. Only one carrier currently offers the smartphone but this is expected to rise when China’s number one telecoms operator (China Unicom) offers the iPhone on contract.

Last week, Apple’s Chief Operating Officer said that Apple was merely “scratching the surface” in China, as smartphones only account for a fraction of the market. China was recently cited as being the driving force behind the growth seen in the figures released last quarter for Apple.

“We believe the success in China, and other emerging economies, has been fueled by iPhone growth,” Piper Jaffray analysts said.

“Apple is succeeding with the iPhone in markets where they have not found great success with the Mac; moreover, we expect the company to extend this success with the iPad as the product line matures.”

At the moment, Apple only has four official stores in China – fake shops selling genuine products recently came to light after a blogger posted pictures of the shops, where some employees believed they were actually working for Apple.

However, two of the five shops discovered have subsequently been ordered to shut down by authorities after it was found that they didn’t have trading licenses.

It would seem that smugglers are simply responding to supply and demand as products continue to fly off the shelves as soon as stock comes in, according to one retailer.

“The official supply in China is not sufficient yet, the brand image of Apple is very good, especially in the media tablet market,” commented Dickie Chang, a market analyst from Hong Kong.

Source Darren Allan