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Customs and Excise Department and the police in Hong Kong put on display Apple's iPhone 6 which were seized in a raid on a ferryboat heading from Hong Kong to the mainland carrying 138 iPhone 6 on Sunday. Government Information Services

The duty rate on an iPhone 6 is 10 percent of its custom value, says Luohu customs offical

From Sept 19 to 21, Shenzhen Customs apprehended 39 cases involving cross-border smuggling of new iPhones at the Luohu checkpoint, and imposed duty on 313 iPhone 6 and had 175 of them returned to Hong Kong.

"A total of 98 cell phones that were believed to be part of smuggling activities had been sent to inspectors to check out for legal liability," a Luohu customs official said.

"About 175 iPhone 6 are kept in our office and owners can pick them up when they go back to Hong Kong," she said.

Mainland residents are allowed to bring personal products worth fewer than 5,000 yuan to the mainland, but cell phones are included in the list of 20 must-pay-duty items, meaning one must pay tax for even one cell phone at any price.

According to Luohu Customs officials, the duty rate on an iPhone 6 is 10 percent of its custom value, a rate which fluctuates with time. "The custom value for iPhone 6 is about 4,000 yuan ($651.4) now, so its duty should be 400 yuan," the customs official said.

The duty for a 128g iPhone 6 Plus is about 600 yuan, 10 percent of its 6,000 yuan custom value. But compared to its almost 300 percent profit, there is enough incentive for smugglers to take the risk.

At the large Huaqiang North Electronic Market in Shenzhen, one of the biggest grey markets for Apple and other electronic products in Guangdong and even the whole nation, the price for a 16g iPhone 6 Plus on Sept 22 varied from 11,000 to 15,000 yuan, while its price at Apple store is only HK$6,388 (5,061 yuan).

The price of iPhone 6 is a little lower - about 7,050 yuan (HK$8,896) - still HK$3,300 higher than its official price HK$5588.

So the 400 to 600 yuan duty seems like a piece of cake, compared to a 60 to 300 percent profit.

"The price of iPhone 6 was down by 2,000 yuan compared to three days ago," one seller said, "so I suggest, if you have one and want to sell it, to do so as soon as possible, while you can still earn about 3,000 yuan."

"But I can't say the same thing for iPhone 6 Plus," he continued, "Its price goes up and down every day. After all, there are less iPhone 6 Plus in our market now."

"We only earn about 150 to 200 yuan on each phone. Those who buy phones from Hong Kong and bring them to Shenzhen earn the most," he said.

Buyers need to pay 100 yuan in advance to make an order and then can see the actual smart phone after waiting for about 20 minutes while the sellers get the product from their warehouse.

The phones have been available in 10 countries and territories - including Hong Kong - from Sept19, but Apple has not yet stated when the mainland, one of its largest markets, could officially meet the product.

Hong Kong residents with an ID card can pre-order two iPhone 6 from Sept 16, and then pick up them on Sept 19 in Apple stores or have them shipped to their Hong Kong address in October.

Many Hong Kongers decided to seize the opportunity of earning a fortune. Massive queues were seen outside local Apple stores and most of them were hoping to grab the opportunities to earn two- to three-fold of the product's official price by selling them to mainlanders.

Shenzhen customs said, "Passengers can bring one or two duty-paid cell phones across the border for personal use, but those (who do so) for profit opportunities are not allowed."

They have found smugglers tie new iPhones to their bodies in order to get across the Luohu border unnoticed.

Hong Kong customs and marine police on Saturday foiled a smuggling case involving a speedboat carrying 138 iPhone 6, along with hard disks and RAMs, from Hong Kong to the Chinese mainland.

grace@chinadailyhk.com

(HK Edition 09/23/2014 page5)