Supply Chain Matters has posted previous commentaries regarding Apple’s current supply chain challenges in competitive pricing and distribution of the company’s iPhones within China’s huge consumer market.
There was an interesting twist to this challenge as last week came reports that Chinese authorities discovered a narrow underground concrete tunnel built by smugglers to shuttle products from Hong Kong to Shenzhen.
According to a published report appearing in the Wall Street Journal (paid subscription or free metered view), this rather small sized tunnel was equipped with lights , vents and a rail track to ferry goods between the two locations. Hong Kong is designated a special economic region with tariffs that differ from mainland China. Thus consumer goods are cheaper, especially high-end consumer electronics. Authorities suspect that the discovered tunnel was smuggling smartphones, electronic tablets and other consumer electronics into Shenzhen.
Thus, when it comes to expensive iPhones, smugglers will find creative and monetarily attractive ways to distribute these devices within China. Pricing strategies indeed have consequences.