2,600% markup skirts no-iPad rule in Taiwan

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Friday, October 8, 2010 (SF Chronicle)
2,600% markup skirts no-iPad rule in Taiwan
Tim Culpan, Bloomberg Businessweek

Online shoppers can get an Apple iPad for free in Taiwan: They just have
to pay around $1,000 for the case.
A Yahoo Auctions page run by a seller named Tsang offers an iPad case for
$1,072 - about 2,600 percent more than Apple charges for the same case on
its U.S. website. Still it's her best-selling item because the 3G version
of the iPad with 64 gigabytes of memory is included, said Tsang, who would
only give her surname to avoid identification by the authorities.
Selling iPads in Taiwan is illegal, so gray-market retailers are giving
them away when accessories are purchased at marked up prices. The
country's National Communications Commission, which issues licenses for
all wireless devices, has yet to approve the tablet.
It's legal to bring iPads into the country if they were bought elsewhere.
Tsang and more than a dozen auction-site sellers are exploiting that
loophole, betting as long as they charge for the case and not the device
itself, they're not breaking the law.
They're wrong, though the NCC has no plans to prosecute the retailers,
said Tseng Shian-kang, a public-relations official at the commission.
Yahoo hasn't done anything illegal, Tseng said.
"We follow government regulations and patrol the site," said Sophia Cheng,
a spokeswoman for Yahoo in Taiwan.
Consumers bought 7.9 million iPads worldwide through the end of September,
according to a Sept. 28 report by William Fearnley Jr. an analyst at
Janney Montgomery Scott LLC. Tim Cook, Apple's chief operating officer,
said in July the Cupertino company is selling the devices "as fast as we
can make them."
Apple declined to comment for this story.
Rather than exacerbate supply problems by offering the iPad in all
countries at once, Apple has been rolling the device out in phases. The
tablet became available in Singapore and China last quarter. The company
plans to sell it in Taiwan.
"Apple submitted their application in August and we're still processing
it," the NCC's Tseng said.
None of the sellers contacted by Bloomberg Businessweek would give their
full names or specify where they get their iPads. Yahoo Auctions seller
Richard, who is offering a free 16-gigabyte iPad to purchasers of a $704
camera connection kit that sells for less than one-twentieth of that price
in the United States, says his supply came as gifts from friends overseas.
"Reporters, don't ask me about the iPad," reads the caption in large, bold
type on the Yahoo Auctions profile of a seller named Chen, who is offering
a 64-gigabyte Wi-Fi-only iPad free with every $1,038 case purchased. "I am
not selling iPads, I am selling iPad cases. And my cases are more
high-class."
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