Why Russians with wads of cash flock to Apple stores in this Asian hub

Hong Kong (CNN) — When the new iPhone 16 went on sale, locals couldn’t help but notice some less familiar faces flocking to Hong Kong’s Apple stores: Russians holding piles of cash.

As new shoppers walked out of stores with the latest models, eager Russian buyers closed in to seal the deal, offering to buy the new gizmos off them for as much as 12% more than retail prices.

“We want to buy as many as possible,” one Russian buyer, Nick Alexenkov, told CNN outside the Apple store in Tsim Sha Tsui, a busy shopping district in Hong Kong.

Moscow’s invasion of Ukraine is the primary reason why iPhones have become so expensive and hard to find in Russia. So Russians are often keen to snap up the handsets overseas.

Apple has “paused” product sales and services in Russia since March 2022 after Russian President Vladimir Putin sent troops and tanks into Ukraine, kicking off Europe’s largest land conflict since World War II.

Western countries also placed sanctions on technology exports to Moscow and multiple international brands pulled out of Russia in response to the invasion.

As a result, iPhones in the country are hard to come by and often cost up to 70% more due to import hurdles, even as Moscow passed a scheme in late 2022 to essentially allow so-called gray or parallel imports, enabling the sale of iPhones without the brand owner’s permission.

The iPhone 16, which went on sale on September 20 in many parts of the world, is available in at least two major chains in Russia: Mobile network operator MTS and M.Video-Eldorado, a leading electronics retailer, which said it secured stocks from “all over,” Reuters reported.

Major players aside, individual traders with an entrepreneurial spirit also see room to cash in on the trend.

Alexenkov, the iPhone purchaser in Hong Kong, said he expected to turn a profit of up to 25% for each phone despite offering to pay 12% above the retail price to acquire those phones in Hong Kong. The city charges no sales tax, making it particularly appealing to parallel traders.

The 30-year-old went all-out for the 1-terabyte Pro Max model, forking out around $2,000 for each phone, $250 more than its official price in the city.

“(That model) is very popular in Russia, except the desert color,” he said.

Alexenkov said he is likely to turn a profit even if he resells them at a lower price than the major retailers back home. M.Video is selling the 1-terabyte model for 249,999 rubles ($2,710), almost 1.7 times the retail price in the US.

But he could make even more. On Avito, the Russian classified-ad website which also provides a platform for buying and selling, listings of various iPhone 16 models that sellers managed to get hold of were more expensive than at retailers. A listing of the 1-terabyte model was going for as much as 254,000 rubles ($2,742).

Back in Hong Kong, outside the glitzy IFC Mall in the Central district where Apple set up its first retail store in the city in 2011, four other Russian men were seen trying to buy newly purchased iPhones off Apple’s latest customers.

Three of the Russian buyers spoke little English, but that posed no barriers to business. One of them brought along his son, who spoke perfect English and acted as the translator.

They did not reveal their names to CNN but said they flew in from Moscow.

A man from Hong Kong, who tried to sell two 1-terabyte Pro Maxes, complained that, at $2,027 each, the Russian buyers weren’t offering enough. They immediately came up with a more robust offer at $2,040. A deal was struck.

Asked if the Russian buyers worried their investment may fail, the buyer’s son told CNN: “There are rich people (in Russia) and they want the new colors.”

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