Apple and Amazon are the 2 leading online stores selling the recently released iPad tablet. Weighing only 1.5 pounds and with a 9.7 inch screen, iPads from those retail websites can only be shipped to U.S. residents. According to Apple CEO Steve Jobs, that restriction will be lifted this summer.
By July 2010, Apple Canada stores and Amazon Canada will also stock iPads anyways.
Today, dozens of manufacturing and trading companies list purportedly new and original iPads on Chinese trading website Alibaba. Prices range from $100 to $440 (all dollar amounts are in US currency). Alibaba-listed products are available wholesale to buyers from around the world, in quantities as low as one iPad.
Some iPad tablets for sale on Alibaba appear to be copycat imitations or weasel-worded sales pitches for iPad-like netbook substitutes.
Online iPad Prices
Retail prices for an iPad purchased from the official Apple Store or Amazon range from $499 for a 16-gigabyte model to $829 for the top 64-gigabyte tablet.
Mainland China’s Shenzhen Weixunte Technology sells a 16-gigabyte iPad MID for $380. That price is feasible, given that consulting firm iSuppli estimates that computer parts for the iPad are worth $220.
At first glance, buyers who choose to pay the $380 price tag for the lower-end iPad from China appear to save 31% on the $499 Apple store price.
Realistically, importers have to carefully consider additional charges for cargo insurance, shipping, customs duties and taxes.
iPad Shipping and Insurance Costs
Shipping charges to send an iPad from China to New York via UPS parcel delivery run from about $46 for a 7-day shipment to $112 for a 3-day delivery. Dimensions for an iPad are 9.56 inches long, 7.47 inches wide with a wafer-like depth of 0.5 inch.
Users who cannot wait to have the iPad tablet in their hands may choose to shell out $112 for faster delivery. This applies to technology enthusiasts who want to read their favourite e-books, browse the web, watch the coolest television shows and movies on the iPad's high definition monitor. For the purposes of this analysis, the more frugal $46 shipping charge was applied.
Then there is shipping insurance. Based on the $380 invoiced value of the Chinese-made iPad, the insurance cost is an estimated $16 for an all-risk policy for fragile goods. That $16 is a wise investment to protect against damage in the 7,400 mile journey from China to New York.
After shipping charges and insurance are added, the cost of the iPad has become $442 ($380 plus $46 shipping and $16 for cargo insurance) even before the iPad arrives at the port of destination.
iPad Tariff Duties and Taxes
The 10-digit harmonized system (HS) code for iPads is:
- 8471.30.01.00 in the U.S.
- 8471.30.00.00 in Canada.
Both countries use the World Customs Organization tariff item description of “portable automatic data processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display”. The iPad falls under this tariff classification, as do computer netbooks and notebooks.
Under this tariff classification, imported iPads are duty free.
iPads are subject to federal, state and provincial taxes. For example, importers in Canada pay 5% on a shipment’s value for duty in goods and services tax (GST). Value for duty excludes the shipping and insurance charges. In this case, Canadian importers have to pay 5% on the iPad’s $380 value for duty. This amounts to an extra $19 in charges.
In Ontario, 8% provincial sales tax (PST) is also collected unless the shipment is for a registered commercial importer. A casual importer from Ontario is charged $30.40 in PST. Of course, the percentage of local sales tax can vary depending on the province or state in which the importer lives.
Total Cost of Imported iPad
Adding in the sample $19 for GST and $30.40 for PST results in a final bill of $491.40 for the iPad from mainland China. This excludes any foreign exchange expenses that may be incurred paying the Chinese supplier.
Of course, sales taxes still apply whether consumers pay the $499 list price for their iPads at the local Apple store or online at the retail Apple or Amazon websites.
Both shipping and insurance costs are higher for shipments from China as opposed to iPad deliveries in the U.S. or Canada. In fact, Amazon may offer a competitive savings since that online retailer sometimes waives shipping charges as an incentive for hot tech product sales.
Service Concerns with iPads Imported from China
Then there are the potential service headaches if the new iPad requires repairs. When consumers buy an iPad from Apple or Amazon websites, they do have recourse to repair tablets that do not work. When the supplier is in distant China, those options can be severely limited even if the iPad is obviously made from inferior-quality computer parts. In the U.S. or Canada, the consumer would have an actionable complaint.
So while importers could save a few dollars by importing authentic or wannabe iPads from faraway lands where labor costs are much cheaper, the best advice is buyer beware. Service hassles can be exhausting and are hard to put a price on.
Consumer in Canada should wait until Apple’s official July 2010 international launch date before spending on an iPad. Who knows, by then prices may even have dropped or there may be excellent online deals for used iPads from verified sellers in the U.S.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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