From HK to Shenzhen: How Used iPhones Find New Life in Huaqiangbei

With the release of iPone’s latest models every year, how do Apple fans obsessed with the novelty of new electronic devices dispose their older handsets? Trade in for the latest model or sell as second hand? Where do the used iPhones finally end up?

Few people would associate the destination of used phones with Hong Kong as its position as entrepot in the global trade of used phones is seldom covered by media. According to Apple’s manufacturing partner Foxconn, everyday 50,000-60,000 used iPhones are recycled in legitimate channels in Apple’s major markets. About 20% of these recycled iPhones go to the United States while the rest end up in about 30 trading companies in Hong Kong.

These used iPhones don’t stay long in the warehouses in HK. After being graded based on function and appearance, these iPhones will be put on auction and resell to bidder with the highest price, usually most of the buyers come from mainland China.

Guang Yi Co.Ltd, one of the biggest wholesale second-hand iphone distributors in Woon Lee Commercial Building in Tsim Sha Tsui, has an annual turnover of more than US$200 million as written on their website. It has partnerships with some US and European recyclers as well as some networks like Vodafone, AT & T, T-Mobile and O2.

Hongkong iPhone traders like Guang Yi and many others have completely dominated the used phone industry as batch sales agents. Potential buyers, mostly from Shenzhen, can inspect the goods and bid a price. The bidder with the highest price get the entire batch.

Once the used iphones are bought by mainland dealers and transported into Shenzhen, they would be given a new life. To avoid taxes, usually most of the old phones are smuggled into Huaqiangbei, the largest electronic market in China, where they’re rested, refurbished and given a new life.

Second hand iPhones coming from Hong Kong would undergo a series of “plastic surgery”, screens and cases with scratches or cracks, broken parts like battery with charging problems will be replaced with either good conditioned spare parts from other defective original iPhones or compatible knockoffs produced in China.

After being tested, refurbished to ensure it functions as new, the “new” iPhone will be sealed and packed together with earphones, charger, cable and a user’s manual as indistinguishable from the brand new counterpart. For green hands, it’s challenging to tell whether it’s a refurbished phone or not.

According to Southern Metropolis Daily, around 10,000 dealers are involved in refurbished iPhone business in Shenzhen.

These refurbished iphones with new life then are traded in stalls and shops in Huaiangbei, flowing all over the world, to black markets in less developed cities in China where there aren’t any authorized Apple store or sell online on taobao as well as Chinese yellow pages like Xianyu, Baixing, 58, etc.

The refurbished iPhones are usually sold at a fraction of what a new one costs. For example, a refurbished iPhone 7 might cost as low as CNY ￥3,000(US $441), a big saving while compared to the genuine one.

While putting on new life these refurbished iPhones can generate a much lucrative margin of around CNY ￥1,000(US $147) per piece. Many Apple fans who couldn’t afford the exorbitant price tags of brand new ones now also have another option buying wholesale refurbished iPhones from China at discounted prices.