Hong Kong no longer sells world's cheapest iPhone

Apple has raised its unlocked iPhone 5 retail prices--by about 10 percent over the previous generation--in Hong Kong, the duty-free harbor in which the company's products were previously priced lowest in the world.
Written by Cyrus Lee, Contributor

Apple's iPhone 5 in Hong Kong will be priced from HK$5,588 (US$721) contract-free, which is an increase of almost 10 percent compared to the HK$5,088 (US$656) pricetag for iPhone 4S.

According to overseas reports, an unlocked iPhone 5 in the United States will be priced from US$649, which is lower than what will be offered in Hong Kong.

The duty-free Asian city previously offered Apple products priced in line with those in the U.S. but buyers do not need to pay any consumption tax when they purchase goods in the city. This makes the prices of Apple products in Hong Kong the most competitive worldwide.

However, it also makes Hong Kong a destination for smugglers, especially those trying to resell goods to China where Apple products are generally sold at least 20 percent more than in Hong Kong due to various taxes imposed on the goods.

As the Hong Kong dollar is pegged with the US dollar, making exchange rates between the two currencies stable over time, Apple's move to lift the retail price of iPhone 5 in Hong Kong could only be explained as an strategic approach in the region.

The U.S. company will benefit most from the price hike as the move is unlikely to scare off the consumers since the US$721 per set for iPhone 5 is likely to remain competitive compared to most other countries.

On the other hand, if the retail price of iPhone 5 in China remains unchanged starting from 4,999 yuan (US$792) this time, it will still leave room of some US$70 over the pricetag of a same handset sold in Hong Kong. This will still allow the reselling business in China attractive for potential smugglers.

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