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Apple stores in Beijing and Shanghai have delayed the release of the iPhone 4S after a scene outside a Beijing store turned ugly early Jan. 13, with angry crowds fighting and throwing eggs at one of the buildings.
Crowds of hundreds, according to the Associated Press, waited outside overnight in 20-degree temperatures, only to be told in the morning-after the flagship store in Beijing didn’t open at 7 a.m. as expected, and the crowd became rowdy-that the store would not open and no one would get the coveted device.
To ensure the safety of customers and employees, the iPhone “will not be available in our retail stores in Beijing and Shanghai for the time being,” Carolyn Wu, an Apple spokesperson in Beijing, said in a widely reported statement.
Chinese consumers have proved to have an insatiable appetite for mobile devices, though the Apple brand holds particular cache, and the country-along with the United States-has become a top earner for Apple, bringing in more than 10 percent of sales in 2011. During Apple’s 2011 fourth fiscal quarter, it opened a new store in Hong Kong, one of the 25 that officials have said they plan to open over the next few years.
“Our Hong Kong store joins our five other China stores as the highest traffic and among our highest revenue stores in the world,” Apple CFO Peter Oppenheimer said during an Oct. 18 earnings call.
CEO Tim Cook added later in the call, “Certainly in my lifetime, I’ve never seen a country with as many people rising into the middle class that aspire to buy products that Apple makes. I think it’s an area of enormous opportunity, and it has quickly become No. 2 on our list of top revenue countries very, very quickly, and we’re obviously placing additional investment.”
The crowds outside the Beijing store, according to reports, weren’t necessarily that middle class, but paid placeholders waiting to buy devices that scalpers planned to resell on the gray market. According to the Los Angeles Times, Apple’s policy of selling a limited number of devices to each customer has encouraged scalpers to “organize large groups to swarm product releases, hoping to resell the products at a cut above retail.”
One scalper interviewed in the report said he had organized 500 buyers to wait overnight for the iPhone 4, bragging that his recruits-students and the unemployed among them-outnumbered a rival’s.
One recruit who’d waited overnight in the sub-freezing weather said that, without a device in hand, the organizers wouldn’t pay the $10 to $20 they’d promised the recruits.
Some of the growing in-line tensions, added the L.A. Times, were caused by fights between the various groups of recruits.
Sales of the iPhone 4S went according to plan, however, at Apple’s other Beijing store, where all 2,000 in-stock units sold out, according to the Wall Street Cheat Sheet. It added that “a similar launch in Shanghai also saw thousands lining up to buy the smartphone, and opened its doors an hour early and sold out almost immediately.”
The situation at the flagship Beijing store appeared to impact Apple’s stock price, which fell 0.5 percent, to $419.35, following the disturbance.