Hongkongers are obsessed with the novelty of electronic devices, changing their smartphones virtually every year to acquire the latest models.
So how do they dispose of their older units? Give them to a younger sibling or sell them to a second-hand shop like Sin Tat Plaza in Mong Kok?
We know that roughly two in every 10 new mobile phones sold in sub-Saharan Africa pass through Chungking Mansions in Tsim Sha Tsui, according to media estimates.
But perhaps not too many people realize that Hong Kong also serves as an entrepôt in the global trade of used smartphones, especially iPhones.
Quoting a senior executive of contract manufacturing giant Foxconn, China Business News reports that 50,000-60,000 used iPhones are recycled through legitimate channels every day in Apple’s major markets.
About 20 percent of these units go to recyclers in the United States, while the rest eventually reach the warehouses of some 30 trading firms in Kowloon.
These phones don’t stay in the territory for long. After a bidding process they are resold to buyers from China and Southeast Asia.
Used iPhones are graded according to their functionality and external appearance, according to consumer electronics portal CNET. Those marked grade A are phones that look almost new with minimal scratches or dents and are in full working condition.
Woon Lee Commercial Building, an office tower on Austin Road in East Tsim Sha Tsui, hosts several trading firms engaged in the trade of used smartphones.
Among the tower’s major tenants is Guang Yi Co. Ltd., one of the largest wholesale distributors of used electronic products. According to its website, the company has an annual turnover exceeding US$200 million.
It operates an extensive buyback network with several carriers including AT&T, Vodafone, T-Mobile and O2 as well as US and European recyclers.
Guang Yi and many other Hong Kong traders have effectively monopolized the business, acting like batch sales agents. Prospective buyers, mainly from Shenzhen, can check consignments and then offer a price. The highest bidder gets the entire batch.
Apple’s recent move to partner Foxconn in offering iPhone and iPad trade-in programs in China gives us a clue as to how lucrative recycling and reselling iPhones can be.
Once the used iPhones are bought by a Shenzhen bidder — or more precisely, scalper — the old devices are given a new “life”.
Old phones find their way to the mainland mainly through smuggling. The destination is Shenzhen’s Huaqiangbei, one of the country’s largest markets for used smartphones and laptops. Because of the volume it handles, the market has become like a de facto supernumerary production base for iPhone.
According to local media reports, used iPhones sourced from Hong Kong undergo “plastic surgery”, which means burnishing their casings and replacing broken parts like a malfunctioning circuit board.
Spare parts come from usually defective components thrown away by official Apple suppliers or compatible units found in knockoff products made in the city.
The standard process is to open the smartphone, clean the logic board and check if there are any parts or connectors that need repair.
Then the old iPhone will be sealed in a package that is almost indistinguishable from the new one, together with accessories such as earphones, cables and a user’s manual. Judging from the outside, one can hardly tell it’s a used phone.
About 10,000 household factories are engaged in this recycling business in the city, according to a Southern Metropolis Daily estimate.
These seemingly brand-new iPhones are then flown to black markets in lower-tier cities or towns in central and western China where there is no officially authorized Apple outlet and are sold at prices cheaper than that of a genuinely new one.
For instance, a new 16 GB iPhone 5S is sold at 4,488 yuan (US$723.50) at official Apple outlets in China but the one “rebuilt” in Huaqiangbei may go for 3,000 yuan.
Vendors are assured of a fat margin of around 1,000 yuan from each phone since a used iPhone 5S would just fetch HK$1,800 from middlemen like Guang Yi.
Many Apple lovers in these places scramble for the unofficially refurbished phones offered at discounted prices, but few of them are aware that these gadgets had a “previous life” and may have traveled half around the world and passed though many resellers before landing in their hands.
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