The power of "soft power"

Near-riot prompts Apple to halt iPhone 4S release in China: The device has sold out at the company's five China stores. When one store refused to open, a mob responded by throwing eggs. The company says the phones won't be available in China "for the time being" - Jonathan Kaiman and John Lee, Los Angeles Times

1:52 AM PST, January 13, 2012

Reporting from Beijing


Apple Inc. halted the release of its iPhone 4S at retail stores in Beijing and Shanghai on Friday after a riot almost started outside one of its stores in the Chinese capital.

An angry mob of people who had waited overnight pelted the store with eggs and assaulted a mall manager after employees refused to open as scheduled.

Carolyn Wu, an Apple spokeswoman in Beijing, said the company's five authorized stores in China had sold out of the iPhone 4S and the Beijing store was prevented from opening because of the large crowd.

"To ensure the safety of our customers and employees, [the] iPhone will not be available in our retail stores in Beijing and Shanghai for the time being," Wu said.

The phone is still available online through its service provider, China Unicom, which is offering the device for free provided users commit to multiyear contracts. But the crowds that lined up at Apple stores were not interested in cell phone plans, and were willing to pay $790 to $1070 for the device alone.

People started converging Thursday outside the Apple store in one of Beijing's most popular high-end malls. Some brought sleeping bags. Tension grew overnight and through the early morning as prospective buyers sought positions near the front door. Fights broke out between bands of migrant workers who had been hired by scalpers to purchase the phones for later sale on the gray market.

"Ninety percent of the people here are scalpers," said a man surnamed Jin, who said friends recruited him to stand in line.

The incident underscores the popularity of the Apple brand in China, which has one of the world's fastest growing markets for mobile phones and personal computers.

The Cupertino-based company said in October that sales in China rose to $13 billion from $3 billion for the fiscal year ended Sept. 24. Plans are afoot to make the iPhone's digital assistant, Siri, fluent in Chinese.

Apple's five official stores in China -- three in Shanghai and two in Beijing -- generate more revenue on average than any other Apple stores in the world, the company said last year.

Many upwardly mobile urbanites wouldn't be caught dead without an iPhone. In June, a 17-year-old high school student reportedly sold a kidney to buy an iPad 2. And in September, a 16-year-old girl was killed in a fight with her mother over the right to buy an Apple computer.

The scene Friday was not the first time an Apple release had caused a public disturbance. The same Beijing store had its glass door shattered in May after a scuffle between a scalper and an employee during an iPad 2 and white iPhone 4 launch.

Bill Bishop, a Beijing-based technology consultant, said the mobs were a result of Apple delaying products and limiting supplies to create a frenzy of demand.

"It's a conscious marketing strategy by Apple, and it's going to cause a problem because things are ridiculously out of control," he said. "Nobody can be happy with Apple today in Beijing."

Because the store limits customers' purchases, scalpers organize large groups to swarm product releases, hoping to resell the products at a cut above retail.

Buyers were reportedly recruited to queue at the Shanghai store Friday as well, promised a free breakfast and $15.

Even when a major release is not impending, flocks of men hawking iPhones and iPads have become a regular sight outside China's authorized Apple retailers. Scalpers made up much of the crowd Friday in Beijing. The eclectic group ranged from seniors from the countryside seeking their fortunes in the capital to high-school dropouts looking to make some quick cash. Some said that they had organized on Internet forums designed for temporary job seekers.

One member of the crowd, a film extra from Beijing, said he was offered about $20 to wait overnight for the phone. He said scalpers picked up hundreds like him in buses outside film studios where extras commonly work.

"After Apple said they were not selling the iPhones today, no organizers paid their temporary workers," said the man, who declined to give his name.

One man wearing a puffy red jacket said he had organized 500 buyers to wait overnight for the release. That was more than a rival group, he said.

"They have a lot of people, but we have more," said the man, who also declined to give his name. "They will be overwhelmed."

Just before the store was set to open, a guard announced through a megaphone that the coveted phone would not be sold. A brief moment of disbelieving silence was then broken by loud expletives and shouts of "Apple lied to us!" and "Open the door!"

Soon afterward, a man arrived with a bag of eggs, which he began handing out to the crowd. A space cleared, and moments later, gooey yolk dripped down the store's glass facade.

When the mall's property manager tried to intervene, a gang of men chased after him.

"I'm not an Apple employee, I'm a mall manager!" he shouted while trying to block punches and kicks.

By 9 a.m., police had managed to disperse the crowd and clear the square. Police could not be reached for comment.

A 60-year-old woman who gave only her surname, Chen, said the melee ruined her plans to give her son the latest iPhone for his birthday.

"There are so many people, and it's so cold, and now they say they won't sell us the phone," she said. "This is just so, so wrong."

Kaiman and Lee are special correspondents Times Staff Writer David Pierson in the Times' Beijing bureau contributed to this report.

Copyright © 2012, Los Angeles Times