Inside Shenzen's Grey-Market iPhone Mall

jfruh writes Despite being largely manufactured in China, iPhones are still too expensive for most Chinese to afford — new ones, anyway. That's why thousands come to a bustling marketplace in Shenzen that specializes in older grey-market iPhones. Many of them are damaged phones that have been refurbished by enterprising merchants. From the story: "Reselling iPhones can be a lucrative business. The Shenzen mall, called Open World Communication City, is based in the Huaqiangbei district, which attracts buyers from around the world who come here to shop for cheap devices and components. But some of the business is shady. Earlier this year, a person who claimed to have worked at the mall posted pictures online showing how dealers can refurbish an iPhone 5 to make it look like an 5s."

Comments

No need to have an Apple card

[Anonymous Coward]

Because they can make you one!

Repair

[pr0nbot]

It was like this in the Tepito market in Mexico City in the 80s... as well as all the refurbished and stolen goods, if you had a broken walkman or whatever, there'd be some guy who could fix it for you. I miss the culture of repair.

Re:Repair

[homey of my owney]

Especially since its been replaced by a culture of despair.

Re:Repair

[Anonymous Coward]

That's your culture actually.

Re:Repair

[Sockatume]

The price of smartphones seem to have revived that culture to an extent here in the UK; phone repair shops started springing up like crazy by 2009 and now even my local cobbler has staff trained to do simple phone jobs. Most of the standalone places do PC and console repair, and customisations too. Admittedly, my handset came back from the cobbler scratched on the inside of the glass and with bits of leather and boot polish stuck in the corners, but you can't argue with a £15 fix over a £150 Apple Store replacement.

And yet, I have to ask around a bunch to find a guy that does professional-grade tool-sharpening. Go figure.

Re:Repair

[j35ter]

I miss the culture of repair.

Alive and well in China!

Re:Repair

[kilodelta]

While in the U.S. I regularly see people using iPhones with screens that are severaly cracked. This is right near MIT's campus for god sake. All you need is a heat gun and some spodging tools and you can replace the screen on them.

Re:Repair

[bluefoxlucid]

Here in the United States, you could go to the peddler's market and have the chip in your Playstation replaced with an upgraded mod chip, with switch to toggle between mod chip and original BIOS.

Re:Repair

[c6gunner]

I miss the culture of repair.

You miss overpaying for goods?

A repair culture exists any time it's significantly cheaper to fix something than to replace it outright. A couple hundred years ago there was a repair culture about everything including socks, because a new pair of socks was a luxury and continually patching old ones was way more economical. We stopped repairing our socks when they became cheap enough to throw away. Do you really want to go back to a time when you had to keep repairing your socks because you couldn't afford new ones?

I don't miss that. Not at all. I much prefer having the choice to either tinker with my gadgets when I have the time, or just buy new ones when I don't.

Re:Repair

[Sockatume]

You don't even need a heat gun if you're happy with replacing the whole screen assembly; it's a bit involved on a 4 or 4S but on everything else the screen is basically the first component you remove when you start taking screws out.

I do see a lot of broken screens in the UK too, mind. Mostly sellotaped up or something ridiculous.

Re:Repair

[AmiMoJo]

There is a balance. Some products are cheap but also fairly easy to repair, which is clearly better than simply discarding them for landfill or even recycling. Non-replaceable batteries are the worst since that's an extremely easy fix that most manufacturers are happy to support. Glued together cases instead of screws or even clips to save a few pennies. It's needless and wouldn't make products significantly more expensive, if at all.

Re:Repair

[mlts]

I don't like having to re-buy goods due to planned obsolesce. Take TVs, for example. I have a Sears TV in storage from the '80s. The manual has circuit schematics, where to get replacements for the channel buttons, how to replace switches, what pots are used where. It was made so someone with basic soldering skills could at least maintain it. A new LED TV just gets chucked and you buy a new one, even though the problem could be a membrane contact that costs a penny.

The economy is getting shittier in general. In the past, we could afford to replace things when something small broke. I had a collegue who bought a new car every 2-3 years, once when the relay controlling the heated seat failed. These days, it is commonplace to see people nursing their old Saturns and Honda Civics to keep them on the roads. That is why headlight polishing kits are so common. In the past, vehicles got replaced before the glass or Lexan dulled (or used sealed beam headlights.)

One reason why companies have chosen to go with products that cannot be repaired is simple -- it gets rid of the used market. In the past, if someone had a broken lawn mower, someone else could give it a carb rebuild and get it perfectly functional. A lot of goods, once broken, can't be recycled, much less salvaged for anything whatsoever, which means no real secondhand market.

This is going to backfire. Will a company make more money in the long run if they sell parts to fix their gizmos, or more gizmos in a good economy, and almost none when the economy goes bad and stays bad? For long term thinking, having repairable items brings in a long tail due to the parts sales.

Re:Repair

[jonwil]

Here in Australia I see many stalls in shopping centers that can do phone repairs (as long as those phone repairs consist of replacing the screen on an iDevice or occasionally popular Android devices like the Galaxy S). But their primary business is selling overpriced cases/covers/screen protectors/etc/etc/etc for iDevices and sometimes Android phones.

Re:Repair

[Anonymous Coward]

the problem could be a membrane contact that costs a penny. ... For long term thinking, having repairable items brings in a long tail due to the parts sales.

Here's your problem - cheap parts aren't going to be worth basing your business model around. And most things are pretty reliable - apart from smashing your new iphone screen, most electronics will work fine for longer than people want to keep using them. You can get a working tube tv from craigslist anytime you want, for just the cost of picking it up.

Re:Repair

[Sockatume]

I've noticed that even Apple's walking that back a bit; the iPhones are getting more repairable so they can actually fix phones in-house instead of sending them off to specialists and handing out warranty refurbs like candy, which has to have been an incredibly expensive process.

The whole point's moot though, the most expensive consumer products are the least repairable ones, and vice versa. The argument advanced doesn't make any sense.

Re:Repair

[mlts]

It is starting to appear in the US as well. I'm seeing "fix your iPhone" places pop up in the small corner stores that the old pager shops, title loans, and other dodgy places tend to inhabit.

Of course, one thing that gets discussed is how many stolen smartphones get taken apart and wind up at places like that. Of course, the motherboard of the phone isn't usable because of activation and IMEI blacklists, but screens, batteries, speakers, and other small parts are always in demand, especially for newer phones that may not have parts available yet.

Re:Repair

[LennyDotCom]

"for example. I have a Sears TV in storage from the '80s." Holly crap how much have you spent on storage fees for a useless antiquated TV?

Re:Repair

[tlhIngan]

I don't like having to re-buy goods due to planned obsolesce. Take TVs, for example. I have a Sears TV in storage from the '80s. The manual has circuit schematics, where to get replacements for the channel buttons, how to replace switches, what pots are used where. It was made so someone with basic soldering skills could at least maintain it. A new LED TV just gets chucked and you buy a new one, even though the problem could be a membrane contact that costs a penny.

First off, your Sears TV is suffering from "Survivor Bias" - it lasted that long for you Who knows how many thousands are sitting in landfills because they're broken? So no, you can't say "things were made better in the past because my XXX works today". Geez, I could say they made computers back then better because I have a 486 that still works today (with original hard drive).

And let's not forget cost - that 486 PC cost nearly $6000 new with a 14" monitor. You can get a new PC these days for $300. Sure I can repair that 486, but that's because it cost a lot when I got it. These days that $300 PC isn't as repairable because if it costs more than $50 to fix and it's older than 2 years, it may be time to just buy a new one. (The old one's residual value would be $20 when it was working, practically speaking).

And your LED TV? Given you can get 40" TVs for practically $200, and to replace that penny contact will involve probably an hour of time with the guy charging $75/hr, well, people would just buy new. Because what if it fails again a couple of months down the road? You going to spend another $75 repairing it (total cost $150). And again?

For a lot of stuff, it just isn't worth it - diagnosing the problem and fixing it costs way too much money. Unless you do it yourself for fun (i.e., your time is free) in which case it's a great way to get good equipment for practically free.

In other words, for a good chunk of things, repair is a hobby. it's cheaper when your time is worthless.

The economy is getting shittier in general. In the past, we could afford to replace things when something small broke. I had a collegue who bought a new car every 2-3 years, once when the relay controlling the heated seat failed. These days, it is commonplace to see people nursing their old Saturns and Honda Civics to keep them on the roads. That is why headlight polishing kits are so common. In the past, vehicles got replaced before the glass or Lexan dulled (or used sealed beam headlights.)

For cars, replacing it 2-3 years usually corresponds with a lease arrangement. And cars are quite repairable - that failed relay can usually be repaired for a few hundred bucks in labor. Or a few hours if you do it yourself.

And there have always been people who nurse their aging cars - to the point where we even call them "beaters". If you're willing to put up with a lot, the modern computer-controlled car can fail in many ways and still keep going while the old mechanicals with carbs and distributors would just be dead. You should get a OBD scanner on those to see the fault code, and you'll find practically everything has failed (if the check engine light is off, it means it's burned out having been on for the past 10 years).

The other reason is economy - those 2-3 year lease/fleet returns are cheap, so you can get a fairly decent car when someone else has eaten the depreciation.

Then there's the group of real fanatics who spend $10,000 to fix their car worth $2000 tops (and less as scrap).

One reason why companies have chosen to go with products that cannot be repaired is simple -- it gets rid of the used market. In the past, if someone had a broken lawn mower, someone else could give it a carb rebuild and get it perfectly functional. A lot of goods, once broken, can't be recycled, much less salvaged for anything whatsoever, which means no real secondhand market.

This is going to backfire. Will a company make mor

Re:Repair

[mlts]

It depends on the technology. Cars, iPhones, and computers tend to change often.

Maybe a better item would be an example of something that really doesn't change much. For example, generators. Take a 3000 watt generator that is used for RV-ing. One can buy a no-name Chinese variant. However, if something breaks, parts are extremely hard to find since the generators have different generations as they change fairly often. A carb that fit well on this month's batch of models would be useless 6-12 months from now. The other option is to pay significantly more for a name brand like Honda or Yamaha, where 10-15 years from now, if one needs a belt, carb, or even an inverter board, there will be a dealer with one in stock, or at worst, it would have to be shipped.

Other than a move to inverter logic and better voltage regulation, generators have not changed much other than minor advances. Here is a case where paying a bit more will pay off in a longer service life. Yes, one can get "disposable" generators, but it is better for the economy and the environment to have something that can be serviced and rebuilt. Plus, parts are a definitely a profit center.

Re:Repair

[Anonymous Coward]

Whoa, the real news here is that there are still "cobblers" in the UK! Here in the USA, we just buy pre-made shoes at Walmart. They don't "wear out" as much as "violently explode", so cobblers are much less common.

Re:Repair

[danlip]

in the US about 3 years ago it was easy to find a guy on craigslist with a mobile iPhone repair service - they drive to you and repair it in the back of their van while you wait. Clearly a low budget single person operation, but I had no reason to believe he was using stolen parts or anything else dodgy. Repaired a broken screen and got several more years of good use out of the phone. I assume such services still exist, plus many small shops offering repairs.

Re:Repair

[dk20]

I'm going to have to ask for a citation on this one.
According to the "special 301 report" only other countries pirate, while life in the US is full of non-pirating law-abiding citizens...

http://www.ustr.gov/sites/defa...

Even Canada is on the list, i guess because our copyright laws are not to the US' liking?
"Canada remains on the Watch List in 2014. "

Re:Repair

[sjames]

The problem is devices that WOULD be significantly cheaper to repair if parts were more easily (and reasonably) available and if the things weren't designed to be harder to repair.

Often the repair hostile design isn't in any way cheaper to manufacture.

Re:Repair

[sjames]

On the other hand, there are plenty of LCD monitors thrown away even though a $25 CFL and 10 minutes could have it up and running if you could get the right CFL.

And don't forget that the time to go get a new whatever isn't free either. Some problems can be fixed in less time than it takes to buy a new one if it's reasonably made to be repaired.

Re:Repair

[cptdondo]

As someone in manufacturing, you're wrong. Repairable things cost far more to manufacture. I have to have accurate drawings and records of manufacturing processes for parts, I have to have specs for all the little bits and pieces, and I have to have manufacturers who hold that standard.

If I'm not concerned about repairs, I just contract out based on function, bolt the thing together, and run it out the door.

Fridges are a great example. I can buy a cheap dorm fridge for $100, or I can buy same-sized Isotherm with a Danfoss compressor for around $1000. The danfoss compressor comes with all the diagrams you need, it's rechargeable, everything in that fridge is replaceable at a cost.

The dorm fridge - you can't even be sure that the compressor is in the same place from one box to the next.

However, when I'm stuck in port somewhere in Bogata, I can get parts for the Danfoss. I know I can. 10 years from now I know I will be able to get parts.

Re:Repair

[sjames]

So you're claiming it is somehow cheaper to produce 10,000 desk fans with 3 phillips head screws and one security head crew epoyed in than it is to produce the same run of fans with 4 phillips screws?

You claim the parts are interchangable on the assembly line but somehow not on the repair bench?

Or are you claiming somehow that it's cheaper to have employees assemble random piles of parts in bespoke fashion than it is to have them putting the same parts in the same place every time?

Re:Repair

[c6gunner]

The problem is devices that WOULD be significantly cheaper to repair if parts were more easily (and reasonably) available and if the things weren't designed to be harder to repair.

I keep hearing this complaint - that there are devices out there which are "designed to be harder to repair" - but, at least in my experience, that's incredibly rare. More often devices are designed to be difficult to open due to concerns about warranty claims on modified items, and even THAT is pretty rare. Every electronic gizmo which I currently own can be opened with relative ease. Most of them I would be able to perform SOME repairs on, as long as it doesn't involve having to replace chips or capacitors.

There are some things that bug me - such as my Nexus 5 not having a (easily) replaceable battery. However, while I may not be happy about them, they're all design choices which the manufacturer made for reasons that have nothing to do with repairability. And, for the most part, they're things that don't really effect me (eg. it is highly unlikely that I will keep my Nexus 5 long enough to actually need a battery replacement).

Re:Repair

[sjames]

I keep seeing things with several regular screws and one a funky type (security torx and such), If they want to make it tamper evident, put a dot of acrylic on the screw,

Then there's clips that will snap together to make a tight fit exactly once. And of course the stupid plastic rivets.

I have no idea what devices you are seeing.

Is that close Shenzhen?

[Anonymous Coward]

Did the summary writer even read the article?

Part of the defamed "e-waste" culture

[retroworks]

Have been to these markets in Shenzhen and Foshan, and to similar marketplaces in Cairo and Lima and Jakarta. In Chinese there is a word "shenzhai" I think which means to "hack" or copy, but it doesn't have the nefarious English connotations. It's more like a musician jamming someone else's guitar riff, it's seen as a talent worthy of applause. Slate had a great article in 2012, "The Chinese Steve Jobs is Probably a Pirate". I'm now working with 3 researchers at universities to document what we call the "Tinkerer Blessing", which is the opposite of the "Resource Curse"... correlating that emerging markets with a lack of natural resources develop better through technology repair and "grey market" activity. Simon Lin of Acer, Terry Gou of Foxconn, both started in video display refurbishment, by the way. http://www.slate.com/articles/...

Re:Part of the defamed "e-waste" culture

[Charliemopps]

I order a lot of stuff from Shenzhen via Alibaba.
I've never had a problem, and what I order seems to be of high quality and all the vendors I've dealt with have been reasonable and even accepted returns. Long story short, they're as good as any US vendor I've dealt with.

Re:Part of the defamed "e-waste" culture

[mlts]

AFIAK, it is more like "tribute", like an Elvis tribute band.

The ironic thing is that tinkerers are the people that started the computer industry. If it were not for MIT's model railroad club and hobbyists from the two Jobs to Linus and Jolitz making basic operating systems, the world would look completely different. (Most likely we would be using Compuserve like forums with TV set top boxes for "internet" access, paying by the kilobyte, more if we actually stepped up to a 2400 bps modem.)

Because of this disposable mentality, the aspect of tinkering has all but vanished from the American psyche. The "cool" teenager who manages to modify the carb to shave a few milliseconds from his 0-60 score has been replaced by someone using Instagram to take a photo of their food before uploading to FB. Maybe the tinkering mentality might come back.

All and all, the tinkering mentality is what made the US what it was. If/when China gets the free-thinking, inventive mentality that has been a hallmark of the West, there is no stopping them, whatsoever. It also is a shame that it is lost, because the questioning, tinkering mentality separates people from drones.

Re:Part of the defamed "e-waste" culture

[Anonymous Coward]

In Chinese there is a word "shenzhai" I think which means to "hack" or copy, but it doesn't have the nefarious English connotations.

Way wrong. The full term is "Shan Zhai Shuo Ji", Shan being the Chinese word for mountain. It emphasizes a mobile phone made up by poor, uneducated, low-class people that live up in the mountains. The closest American translation would be "Redneck Phone." Nothing to do with copying. They are shit, people know they are shit, but they have their market.

Re:Part of the defamed "e-waste" culture

[HornWumpus]

You need to get out more. Tinkerers still tinker. You couldn't stop us with explosive tamper resistant enclosures. Yes I'm old, but I know lots of kids who also wrench their cars. Go to an autocross event or a drag race.

These days you upload a new fuel map to your ECU. But it's not fundamentally different from changing jets on a carb.

Better ending that mending

[Anonymous Coward]

Aldous Huxley was right after all :-(

Re: Shanzhai Part of the defamed "e-waste" culture

[retroworks]

http://en.wikipedia.org/wiki/S... Shanzhai not shenzhai

I love Asian tech districts

[Andover Chick]

Food and tech districts are definitely something east Asians to right. I remember hanging round the tech district in Tokyo several years ago, everything from phones to electronic toilets were on sale. Loved it.

Indicators

[MrKaos]

It is things like this that truely prove humanity is disappearing up it's own asshole.

Re:Thank god for Apple...

[Sockatume]

Apple's been using Gorilla Glass in the iPhone since day one; arguably they're the reason why it's commercialised at all, given that it was still a lab project when they started investigating Corning as a supplier. They're such a big customer that Corning's shares fell when the implausible rumours of sapphire-covered iPhones started appearing.

Canada too!

[MagickalMyst]

> Many of them are damaged phones that have been refurbished by enterprising merchants. Here in Canada, at least one telecom provider also swaps damaged phones with "refurbished" phones as part of their warranty program. I know this because I used to work for them. Customers are under the impression that they are getting a new replacement device from the company. Unfortunately they don't tell the customer that they are getting someone else's old phone which has been "refurbished" - and some of the replacement devices are actually in worse condition than the original broken phone.

For example, one customer opened the box and found the replacement phone "in about 20 pieces". Another received a replacement phone with someone else's personal data still on it. This is common.

I won't mention their name, but many Canadians jokingly refer to them as "Robbers".

Re:Canada too!

[dk20]

Good old "Robbers"

A company which charges far more then the cost of postage to have a paper bill sent, but flip side send an endless stream of unsolicited bulk mail.
No matter how hard you ask to be removed from their junk mail it keeps coming but to "protect the environment" you have to pay for your bill. Alternatively, you can have your bill sent via email where it can get lost in their electronic spam.

Not just old stuff

[AmiMoJo]

My girlfriend was telling me that and iPhone 6 in China can sell in a place like that for 5x the purchase price or more, because it hasn't been launched there yet. I did notice quite a few Chinese speakers at the shops today, as many as the Japanese in some cases.

Story link doesn't work

[gauauu]

The link to the actual article in the summary doesn't work. Does anybody have the right link?

Once again, proving just how much work is done by the "editors" around here.

Re:Story link doesn't work

[gauauu]

The link to the actual article in the summary doesn't work. Does anybody have the right link?

Once again, proving just how much work is done by the "editors" around here.

Huh. It started working again. Nevermind.

Re:Thank god for Apple...

[mlts]

They are still using, AFIAK, with the latest gen iPhones, as they mentioned "ion strengthened" glass, which is what Corning's product is.

I think the iWatch will be the first product with the sapphire glass research, since it is better with smaller screens. Plus, there is a difference between scratch resistance and shatter resistance. A watch can use a lot more scratch resistance than shatter resistance, so a harder, more brittle glass like sapphire glass would be more useful as opposed to something a bit less hard, but more resilient (less shatter prone) that would be needed on phones and tablets.

Not survivor

[DrYak]

Take TVs, for example. I have a Sears TV in storage from the '80s. The manual has circuit schematics, where to get replacements for the channel buttons, how to replace switches, what pots are used where. It was made so someone with basic soldering skills could at least maintain it. A new LED TV just gets chucked and you buy a new one, even though the problem could be a membrane contact that costs a penny.

First off, your Sears TV is suffering from "Survivor Bias" - it lasted that long for you Who knows how many thousands are sitting in landfills because they're broken? So no, you can't say "things were made better in the past because my XXX works today".

Read again, he's not saying that his Sears TV is better *because it still works*. It's not survivor bias.
He's saying:
- back then, a TV was expected to be repaired and came with all the necessary information to do a repair.
- nowadays, things are made much more difficult for any one wanting to repair: good luck finding the schematics of any modern LED TV.

Apple marketing

[Anonymous Coward]

"dealers can refurbish an iPhone 5 to make it look like an 5s". Isn't that what Apple did?

Many phones, few tools.

[Anonymous Coward]

"And yet, I have to ask around a bunch to find a guy that does professional-grade tool-sharpening. Go figure."

If you are talking machinist tools, that's a skill which has mostly been replaced by cheap insert tooling and inexpensive fixed tooling. Sending off toolis to be sharpened is now standard in the US though most shops keep a tool and cutter grinder for when they need one done immediately.

Comment removed

[account_deleted]

Comment removed based on user account deletion

wow

[issicus]

amazing ... who cares... not me.

There's also the "Goophone i6" made in China :)

[lord_rob the only on]

See review