Apple has been always zealous about its branding. Well, nothing is wrong with that. This is what an established brand does to defend its name and fame. In order to provide a genuine experience and to prevent cheaper “copies” being sold to customers through various channels, Apple has been following a sales restriction strategy to foreign markets. That means, Apple’s latest devices will show up about two to three months later in foreign countries after they are launched in North America. For example, China has been currently the 2nd biggest market of Apple devices following USA. But to prevent brand authenticity, Apple would be doing two things: first, it would launch its devices later in China, second, once launched, it would restrict sales only through a very limited number of resellers. Apple has authorized only two resellers in Hong Kong to sell iphone 5. As a part of resellers’ policy, customers have to produce government issued ID to buy devices from these stores. This is how Apple thinks it would restrict sales and provide genuine experience to only authentic customers.
However, customers are not happy with this sales restriction policy. They want a hassle-free purchase of Apple devices, naturally. As the old adage goes- “when there is a will, there is a way”, so has been the case with aspiring Apple customers. Can you prevent people from buying something when there is a demand in the market? If there is a strong demand in the market vis-à-vis restricted supply, someone else in the market will find this as an opportunity and fill-in the gap in a smarter way. So when you restrict sales amid strong demand, the market system will force the appearance of “grey” market. Is it true that genuine Apple devices are being sold through unauthorized channels in the grey market? Oh yes, unfortunately so. Does it mean that Apple’s effort to distribute only through authorized resellers has backfired? Oh yes, unauthorized sellers have tapped in the opportunity and are currently charging much higher price in the grey market than what would have been charged in the legal market.
Here is a big question. Why Apple is doing this, and letting this happen in the China market? What is the implication of allowing a grey market to exist and doing nothing against it? Please wait for part II to know the answer. Can somebody guess why Apple is doing this?