Apple's Massive New Hong Kong Store with 30-Foot Tall Glass Windows Leads Next Weekend's Grand Openings

BuckusToothnail said:

What are you talking about???

http://store.apple.com/hk/browse/home/shop_iphone/family/iphone5

iPhone 5 16GB - HK$5,588

According to TODAY'S conversion rate on XE, is USD$729.03.

http://www.xe.com/ucc/convert/?Amount=5588&From=HKD&To=USD

The announced price in the US is USD$649. How is the Hong Kong price NOT more expensive than in the US???

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This is true. We used to have it much cheaper where the price in Hong Kong would approximately match the US pre-tax price. This has since changed, probably in an effort to curb scalping.

As a Hong Kong resident who gets contract prices on the iPhone, we DO have it cheaper there. For example, Smartone's US$50/month unlimited 2 year contract grants us the 16GB, 32GB, and 64GB iPhone 5 for $50, $150, and $240 USD respectively. If I recall, most US carriers are $200, $300, and $400.

Also, I should add some clarity to the exchange rate for Hong Kong. Outside of Hong Kong, you are at the mercy of the markets and your bank. In the country of Hong Kong, the Hong Kong Monetary Authority enforces a linked exchange rate system pegging the HK-USD exchange rate at 7.8 HKD to 1USD. Why did they do this? See Black Saturday. Most of the exchange rates I see around town are near 7.78. As the rate fluctuates between 7.75 and 7.85, the HMKA buys and sells money to keep it near 7.8.

What does this mean? Only about a US$10 advantage for the iPhone. Still cheaper in the US unless you're paying sales tax exceeding 10%.

Cheers!

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BuckusToothnail said:

It makes SENSE that Apple is making such a HUGE push opening so many stores in ONE CITY given that Hong Kong offers Apple its HIGHEST PROFIT MARGINS in the world.

Why? Hong Kong Island is ONLY 26 miles away from the Foxconn plant in Shenzhen that assembles and packages Apple products.

So instead of shipping their products, say, 7,000 miles from Shenzhen, China to the western border of the US, with the shipping cost BUILT INTO the retail prices of their products, Apple just needs to send their products in a TRUCK for less than the hour commute between Shenzhen and Hong Kong.

AND ironically Apple products are MORE EXPENSIVE in Hong Kong than in the US, even further BOOSTING Apple's profit margin beyond just keeping what it saves on shipping.

And given that there is NO SALES TAX in Hong Kong, Apple doesn't have to ADJUST its retail prices in Hong Kong to accommodate sales taxes like it does in mainland China, so its profit margins are higher in Hong Kong than ANY OTHER major Chinese city.

And given Hong Kong shares a border with Shenzhen, there's less costs for Apple shipping to Hong Kong than to even mainland Chinese cities Shanghai or Beijing.

So for all the people complaining that Apple is screwing them with their high prices for Chinese made goods, just take note of the fact that Apple is SCREWING THE CHINESE even more!

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One more factor that contributes to the high profit margins that BuckusToothnail is talking about is that Hong Kong is a free port. The government charges no tariffs on the importation of goods to the country.

XboxMySocks said:

Now open an Apple store in my city

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The store might be in your country and your city, but apple will be dodging taxes that would normally go towards improving your country and city, via another country and city.

Of course they are far from the only multinational following this practice but that doesn't make them exempt from criticism, nor the fact that they make keeewwwl iStuff.

Next time some of us *wonder* how come half the world is steeped in famine and disease, 1/4 is barely getting buy, and the "developed" 1/4 is mostly in a deep financial depression, we might want to have a look at all this capital of multinational companies flying around the world via loopholes....

They should really see about putting at least ONE in each of the US states before putting more in Hong Kong, though I am not complaining one bit.

We got one here in Alaska.

I am from Hong Kong and I am living just a street away from this ^^

Have been seeing this in construction for quite some time, finally it's ready

Now, that is some glass you DON'T want to break.... It would give you more than 7 years bad luck...

BuckusToothnail said:

Wow, you are truly EMBARRASSING yourself even MORE.

Read the post above you or perhaps follow the thread a little more closely as your stolen "argument" (from "haruhiko") has already been DEBUNKED.

Plus who do you think you're FOOLING? You're trying to CHANGE your argument so to not look like such a fool and yet you actually are looking MORE like a fool by doing so.

This is EXACTLY what you wrote which I replied to:



Yes, I did EXACTLY that, showing you LINKS from the Apple WEBSITES (HK and US) which showed you were WRONG.

And not only did you NOT mention Hong Kong having no "sales tax" in your post (which is something I BROUGHT UP in my original post), but sales taxes are NOT listed on Apple's website either, which directly CONTRADICTS your "revised" argument.

Nice job buddy!

AND please tell me, in WHICH US state are the state AND local SALES TAXES COMBINED at least 12.3%?

Because that's the MINIMUM they would NEED to be for the unlocked iPhone 5 in the US being priced at USD$649 to be even the SAME price as it would be in Hong Kong, which is the equivalent of USD$729.03, much less be MORE EXPENSIVE like YOU CLAIM.

I tell you which US state has combined state and local sales taxes at 12.3% or higher - NO US STATE!

The HIGHEST applicable sales taxes in the US for the iPhone 5 would be in Illnois, which combined MAX state and local sales taxes would be 11.5%. Even with these sales taxes, buying the iPhone in the US would STILL be LESS EXPENSIVE than purchasing it in Hong Kong.

Now if one bought their iPhone 5 in New Hampshire, which has ZERO sales taxes for BOTH state AND local, then the iPhone 5 would cost USD$80 LESS than it would in Hong Kong!

Good one buddy!

So not ONLY did you try to CHANGE your "argument", but the "argument" you changed to is STILL WRONG!!!

And despite all this, it STILL doesn't address the original point I was making, which is about Apple's PROFIT MARGIN in Hong Kong versus other countries including the US. Sales taxes DON'T FACTOR in Apple's profit margins because they go to their respective governments where the products were purchased, NOT Apple.

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Calm down bro. You forgot to factor in real estate premium and HK salary. I don't think genius work for $28 an hour.

I don't see any other brand being able to support such a massive store in a prime HK spot than Apple. And they will make a killing, not sure how much profit they reap after rent though.

Tons of $$ and disposable income in the middle-upper class in HK, ppl are crazy rich there.

Price of land in HK is also amongst the top in the world.

Causeway bay overtook New York's fifth avenue as the world's most expensive retail location so having this massive store is also gonna cost Apple crazy rent.

I still remember the Nokia store they used to have on Causeway Bay

huntermaclean said:

This is true. We used to have it much cheaper where the price in Hong Kong would approximately match the US pre-tax price. This has since changed, probably in an effort to curb scalping.

As a Hong Kong resident who gets contract prices on the iPhone, we DO have it cheaper there. For example, Smartone's US$50/month unlimited 2 year contract grants us the 16GB, 32GB, and 64GB iPhone 5 for $50, $150, and $240 USD respectively. If I recall, most US carriers are $200, $300, and $400.

Also, I should add some clarity to the exchange rate for Hong Kong. Outside of Hong Kong, you are at the mercy of the markets and your bank. In the country of Hong Kong, the Hong Kong Monetary Authority enforces a linked exchange rate system pegging the HK-USD exchange rate at 7.8 HKD to 1USD. Why did they do this? See Black Saturday. Most of the exchange rates I see around town are near 7.78. As the rate fluctuates between 7.75 and 7.85, the HMKA buys and sells money to keep it near 7.8.

What does this mean? Only about a US$10 advantage for the iPhone. Still cheaper in the US unless you're paying sales tax exceeding 10%.

Cheers!

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One more factor that contributes to the high profit margins that BuckusToothnail is talking about is that Hong Kong is a free port. The government charges no tariffs on the importation of goods to the country.

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Very true about Hong Kong being a free port and therefore making Apple's profit margin even HIGHER there.

As for it being cheaper in Hong Kong to buy the iPhone 5 with carrier subsidies, that could be true, but unrelated to the point I was addressing it being APPLE's profit margin on its products. It's not Apple that's offering the subsidies, it's the carriers.

But buying an iPhone 5 without contract in Hong Kong is around USD$80 more than in the US, not USD$10, and the sales tax would need to be 12.3% to make up that difference. As I mentioned in a previous post, there is NO US state with combined state and local sales taxes that add up to 12.3%.

What's truly ironic about all these defensive Apple apologist posts, however, is that I just stated the FACTS, which is Apple has a higher profit margin in Hong Kong due to the costs saved on shipping as well as the higher prices they charge (i.e. US$80 more for iPhone 5 than in the U.S.). You made a good point as well mentioning Hong Kong being a free port so there are no additional duties that Apple needs to pay to "import" into the city, unlike in most countries around the world.

Somehow these FACTS got turned by the Apple apologists has "attacks" on Apple, who jumped on the defensive. Unfortunately they exposed themselves as true SHEEP rather than true freethinking Apple fans that understand the "1984" Ridley Scott commercial and all its applications.

Some went so far as to claim, "I don't know why should I care *as a consumer* for how much Apple is earning from me or how much is going to the government or a random worker in Foxconn or to Samsung or to Corning." Wow. Simply wow.

It's one thing to show loyalty to Apple products and the company that makes them, it's another thing ENTIRELY to basically say, "I don't care if I get ripped off, I'll pay whatever Apple asks of me, it's MY MONEY!!!!" And then to add in the line about not caring how much the "random worker in Foxconn" is getting paid, i.e. "I don't care if slave labor is making my products", is really consumer ignorance and cheerleading for corporate irresponsibility at its fullest and nastiest.

C'mon people, part of the Apple ethic is being able to THINK for ourselves, and to REJECT evil. "Don't be evil" isn't something Google created, it's ALWAYS been part of the Apple mantra. Maybe I'm talking to the wrong generation here. MY GENERATION was around when Apple BEGAN, this new IPHONE GENERATION doesn't seem to have ANY clue about what Apple really stands for.

If according to this Bloomberg article, http://www.bloomberg.com/news/2012-...w-york-as-most-expensive-retail-location.html

"Average annual rents at Causeway Bay on Hong Kong Island rose 35 percent to $2,630 a square foot at the end of June from a year ago".

From a straight conversion est 20,000 sq ft x HKD 2,630/sq ft = HKD 52.6mil/month rent or USD 6.7mil/month.

Assuming Apple's best selling product 16GB iPhone (HKD 5,588), they would have to sell 9,413 iPhones a month (around 314 a day) to cover just the rent.

Assuming Apple's best selling Mac (13" Macbook Air HKD 9,188), they would have to sell 5,725 MBAs a month (around 191 per day) to cover just the rent.

Of course, we don't know much about the lease terms and the Landlord of Hysan Mall may have given them a "special" long term lease as the Apple brand itself will boost mall traffic considerably and other luxury brands to lease up space there.

Can't wait to visit the store this weekend...if I can even get close to it.

TheJae said:

Calm down bro. You forgot to factor in real estate premium and HK salary. I don't think genius work for $28 an hour.

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Hong Kong's minimum wage is actually HK$30 per hour, or USD$3.87.

http://www.xe.com/ucc/convert/?Amount=30&From=HKD&To=USD

That's just over HALF of what the federal minimum wage in the US is, which is USD$7.25.

Property prices ARE very high in Hong Kong, but keep in mind the customer TRAFFIC in those stores are FAR HIGHER than anywhere else as well, which justifies the high rental prices.

So while the Apple Store's rental costs per square foot in Hong Kong may be, say, five times more than it would be on Main Street, USA, the foot traffic it gets would be 10+ times, given Hong Kong is one of the densest cities by population in the world.

Also, in Hong Kong there is a practice with property companies to give advantageous and sometimes FREE rentals to certain brands which are considered "prestige stores". The thinking behind this is that these "prestige stores" will draw in so many customers that it will benefit the shopping center as a whole.

One such "prestige store" is Louis Vuitton, which is known to pay very little and sometimes ZERO in rent for its flagship stores in Hong Kong (though it does pay more "normal" rents for the other brands under LVMH).

Often these stores become "kingmakers" in terms of which shopping center is considered "better" and therefore more popular with the public. This allows the property company to charge HIGHER rents to its other tenants, due to the increased foot traffic and sales brought on from the "prestige store".

Apple is certainly one of these brands. For many years there wasn't even an Apple store in Hong Kong, with customers either buying from re-sellers or increasingly from Apple's Hong Kong website. Only LAST YEAR did Apple open its first store in Hong Kong, and was a considered a huge COUP for the property companies that owned te shopping center with the first Hong Kong Apple Store.

"Attracting a tenant such as Apple, the world’s second- largest company by market value, may be a victory for Sun Hung Kai Properties Ltd. (16) and Henderson Land Development Co., who developed the IFC commercial complex that includes the 88-story IFC 2 office tower, as they benefit from the influx of visitors from mainland China. Rent prices for shops in Hong Kong’s Central business district may climb almost 50 percent over the next three years, according to Jones Lang LaSalle Inc."

http://www.bloomberg.com/news/2011-...kong-s-international-finance-center-mall.html

imacdaddy said:

If according to this Bloomberg article, http://www.bloomberg.com/news/2012-...w-york-as-most-expensive-retail-location.html

"Average annual rents at Causeway Bay on Hong Kong Island rose 35 percent to $2,630 a square foot at the end of June from a year ago".

From a straight conversion est 20,000 sq ft x HKD 2,630/sq ft = HKD 52.6mil/month rent or USD 6.7mil/month.

Assuming Apple's best selling product 16GB iPhone (HKD 5,588), they would have to sell 9,413 iPhones a month (around 314 a day) to cover just the rent.

Assuming Apple's best selling Mac (13" Macbook Air HKD 9,188), they would have to sell 5,725 MBAs a month (around 191 per day) to cover just the rent.

Of course, we don't know much about the lease terms and the Landlord of Hysan Mall may have given them a "special" long term lease as the Apple brand itself will boost mall traffic considerably and other luxury brands to lease up space there.

Can't wait to visit the store this weekend...if I can even get close to it.

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The "$2,630 a square foot" cost you cited is for ANNUAL rents, but in your "calculation" you made it out to be for MONTHLY rents. So you inflated the ACTUAL figure by TWELVE TIMES! Wow.

I hope for your sake you get your parents or boyfriend to negotiate your next apartment rental.

Still, your "calculation" work is far off-base when you consider that AVERAGE store in Causeway Bay is around 200 square feet. When dealing with SMALLER retail unit sizes, costs per square feet are ALWAYS increased.

Apple's Causeway Bay store is 20,000 square feet, or around a HUNDRED TIMES the size of the average store in the area. To think they are paying the SAME premium cost per square-foot as a smaller store is simply being IGNORANT of how the property market works in Hong Kong.

Besides the fact that the Apple Store is considered a "prestige store" and would justify Apple receiving a more than advantageous "discount" from the property company. For more on how that works read my previous post above.

BuckusToothnail said:

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i've never seen anyone get so upset and type so much over so little. do you have apple's actual profit numbers specified by country? there may be other factors you're missing. or you're right but the market allows them. and?

stay watchdog. i'm sure they're listening.

Eric E. Schmidt said:

i've never seen anyone get so upset and type so much over so little. do you have apple's actual profit numbers specified by country? there may be other factors you're missing. or you're right but the market allows them. and?

stay watchdog. i'm sure they're listening.

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If you could actually use proper grammar I might be able to decipher what you're babbling about enough to give you a proper reply.

Only thing I got from your "post" is something about "apple's actual profit numbers specified by country". If you were "replying" to my previous post, then you're absolutely WRONG since I was referring to Apple's "profit MARGINS" in Hong Kong for their products, which is a COMPLETELY different thing that their overall or net profits per territory.

But thanks for playing, NEXT!

so, do you have their actual profit margin numbers for the locations you compare? i still can't see why you find the price differences that bad, regardless. sorry. and there's no need to be disparaging.

DoFoT9 said:

errr, have you any idea how hostile it is between China and Hong Kong?.....

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Only because of ignorant people... It's sad really.

I'll revisit this thread next year when we find that the US made Mac Pro costs $1 more in the US than in HK.

All Hong Kong Apple Reseller Will Die

It is very nice Apple opening 3 stores in Hong Kong but not so nice they killing all Apple Stores like New Vision, DK and all the rest. A company who forgetting who helping them get to the top will one day begging them come back. I thinking they will soon selling Samsung and one day the wind blowing other way and Apple will suffer. Apple cannot going through life thinking only about themselves because one day they will be the only one think about Apple.

BuckusToothnail said:

Hong Kong's minimum wage is actually HK$30 per hour, or USD$3.87.

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No, you're wrong, I live in Hong Kong and it's $28 per hour. It caused a huge controversy last year setting up that law for the minimum wage.

And yea, I'm sure you don't get $28/hour working for Apple, and I don't think Apple has any problems paying for the rent for the Apple Store. I heard (as reported), they paid a 10-year contract for the one in Central and it costed them quite a large amount of money.

I live in Causeway Bay Hong Kong (just near Times Square and across the street from this new Apple Store), and tonight just witnessed the tearing down of the covering tape for the media event tomorrow morning!

BuckusToothnail said:

Yes, I hate Apple so much I've had numerous MacBooks, 2 iPads, every iPhone that's come out, numerous iPods, and various Apple and Mac desktops throughout the years since the Apple 2+ including the Lisa and the ORIGINAL Macintosh.

If I mentioned Lemonade Stand, you'd have NO CLUE what I was talking about, would you? What was YOUR first Apple product, the iPod mini?

But oh, if anyone says anything FACTUAL about Apple, they must HATE Apple right?

WRONG! It's called "thinking for yourself". You should try that sometime.

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Sounds like you might have some issues.

Here's today's view of the HK CauseWay Bay store opens this Saturday at 9am!

Looks like George st (Sydney) store....

Is there anything special during an Apple Store opening? I happen to be in Hong Kong for 3 weeks and can easily get to Causeway Bay if there's anything cool going on during an Apple Store opening. The thing is, is there anything special during the opening/opening day of an Apple Store opening?

billysea said:

I live in Causeway Bay Hong Kong (just near Times Square and across the street from this new Apple Store), and tonight just witnessed the tearing down of the covering tape for the media event tomorrow morning!

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Nice pics man!! I live very close to TS too - Foo Ming st!

BiscottiGelato said:

Is there anything special during an Apple Store opening? I happen to be in Hong Kong for 3 weeks and can easily get to Causeway Bay if there's anything cool going on during an Apple Store opening. The thing is, is there anything special during the opening/opening day of an Apple Store opening?

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If you mean special; hundreds of Mac noobs to have absolutely no friggen clue about Macs or how to use them, and just want to follow like sheep and make it miserable, then yes! It's special I won't be going on opening day at this stage... Far too busy, then don't even have special discounts!

party said:

No, you're wrong, I live in Hong Kong and it's $28 per hour. It caused a huge controversy last year setting up that law for the minimum wage.

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WRONG! Just because you "live" somewhere doesn't make you an "authority". All it means in this case is you are CLUELESS what's going on even in your own town.

http://en.wikipedia.org/wiki/Minimum_wage_in_Hong_Kong
http://www.scmp.com/news/hong-kong/article/1103745/hk2-minimum-wage-hike-approved

party said:

And yea, I'm sure you don't get $28/hour working for Apple,

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Another weak straw man argument. Whoever claimed Apple Store employees in Hong Kong were making minimum wage?

Let me EXPLAIN to you why I responded to another poster's mention of Hong Kong's minimum wage as it obviously FLEW right past your head.

His point in trying to counter the FACT that Apple achieves its HIGHEST profit margins in the world in Hong Kong with his assertion of "HK salary", insinuating that it's somehow higher and therefore justifies why Apple not only doesn't REDUCE the prices in Hong Kong due to the savings in shipping, but actually charges MORE in the city (i.e. USD$80 more for iPhone 5 compared to the US).

That was the ENTIRE reason why I compared the minimum wage in Hong Kong versus the US, in which it is almost DOUBLE.

What you ALSO FAIL to realize is that Apple Stores, while not paying their retail employees minimum wage, USES that minimum wage figure to determine what they DO pay their staff. Usually it averages out to be around 150% of what the minimum wage is in that country/state/city, etc.

So in the US, the average hourly wage for Apple Store employees is around USD$12. In Hong Kong it's closer to USD$6. So NO, "HK salary" has NOTHING to do with why Apple charges more in Hong Kong. If anything, it should be ARGUED that "HK salary" should mean Apple should charge LESS.

party said:

and I don't think Apple has any problems paying for the rent for the Apple Store. I heard (as reported), they paid a 10-year contract for the one in Central and it costed them quite a large amount of money.

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You must be really IGNORANT if you believe whether Apple "has any problems paying for the rent" has ANY effect on whether or not they won't negotiate the most ADVANTAGEOUS rent as they can. That's just pure childish lunacy and a TOTAL naivety of how the world works. Thanks for the laugh though!

party said:

I heard (as reported), they paid a 10-year contract for the one in Central and it costed them quite a large amount of money.

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You "heard", okay, that ENDS all debate then! Thanks for the strongly sourced and backed-up "claim". I'm glad everything's settled now we know that all along you knew everything because you "heard" about it. Whew! I was thinking what a waste of time it is to have actually SOURCES and REFERENCES to back up any wild claim. Thanks for that, you're so smart!