From Jonathan Kaiman, John Lee and Andrea Chang, Los Angeles Times
January 14, 2012:
Reporting from Beijing and Los Angeles— Apple Inc. halted sales of the iPhone 4S at its retail stores in mainland China after a massive crowd waiting outside its Beijing flagship turned unruly, pelting the windows with eggs, hitting a mall employee and refusing police orders to leave.
It was the first day of sales in China for Apple's latest smartphone, and throngs of hopeful shoppers — many of them migrant workers who had been hired by scalpers to purchase the phones for later sale on the gray market — had waited overnight in freezing temperatures.
The size of the crowd, estimated to be about 2,000 people, alarmed police officials, who asked Apple not to open the store as planned Friday morning out of safety concerns.
"To ensure the safety of our customers and employees, iPhone will not be available in our retail stores in Beijing and Shanghai for the time being," Apple said in a statement.
The incident underscored the immense popularity of the Apple brand in China, which has one of the world's fastest-growing markets for mobile phones and personal computers. Less than a year ago, fights broke out and a glass door was shattered at the same Beijing store when the iPad 2 was released.
Apple's four other official stores in mainland China — one other in Beijing and three in Shanghai — did open as scheduled and quickly sold out of all iPhone 4S models, the company said. The phone is still available through the Apple website, service provider China Unicom and other authorized resellers.
People started converging Thursday outside the Apple store in one of Beijing's most popular high-end malls in the city's Sanlitun district. Some brought sleeping bags and said they were willing to pay $790 to $1,070 for the device. Tensions grew overnight and through the early morning as prospective buyers angled for positions near the front door and fights broke out between bands of migrant workers.
"Ninety percent of the people here are scalpers," said a man surnamed Jin, who said friends recruited him to stand in line.
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.
Last week, when Apple announced that it would be releasing the iPhone 4S in China, Chief Executive Tim Cook said that "customer response to our products in China has been off the charts."
The Cupertino, Calif., company said in October that sales in China rose to $13 billion, from $3 billion, for the fiscal year ended Sept. 24. Apple's five official stores in China generate more revenue on average than any other Apple stores in the world, the company said last year.
For many upwardly mobile urbanites, Apple is a must-have device. 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.
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 stores limit customers' purchases, scalpers organize large groups to swarm product releases, hoping to resell the products at a cut above retail. 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.
Buyers were reportedly recruited to line up at a Shanghai store Friday as well, with promises of a free breakfast and $15.
One member of the Beijing crowd Friday, a film extra, 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.
Another 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."
He never got his chance. By 9 a.m., two hours after the store was supposed to open, police had managed to disperse the crowd and clear the square, in some cases lifting shoppers by their arms and legs and carrying them away from the store.
A 60-year-old woman who gave only her surname, Chen, said Friday's 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,