Does The Same Phone Cost The Same All Around The World?
Have you ever wanted to buy something while travelling overseas to bring it back to Singapore to resell them to earn the difference (even if it isn’t much)? I know I do.
I was in Melbourne, Australia last year when Nintendo Switch was released, it was selling about $80 cheaper than it was in Singapore. Wanted to make that quick buck but in the end, I couldn’t bear to part with A$300++, that’s a lot of money for me!
But it got me thinking, why is it cheaper in Australia than it is in Singapore for that same product? And why doesn’t the law of one price that I’ve learned in Economics class doesn’t hold?
Law of One Price – What is the Law of One Price?
In short, (in economic theory) a product will have the same price tag after converting them to the same currency. The Law of One Price is another way of interpreting the concept of purchasing power parity (PPP).
Purchasing Power Parity? Law of One Price? Does it all suddenly sound like you are reading off Introduction to Economics slides from your lecture?
All these are in economic theory, the real question is: in this day and age where the internet is prevalent, is the internet quick enough to not allow us to take advantage of this arbitrage?
Does the Law of One Price Really Hold?
Every year, the Economist has been tracking McDonald’s Big Mac burger prices in different countries to test purchasing power parity called the Big Mac Index. The way Big Mac is priced in a particular country has quite a say about the country’s wealth.
Let’s do our own rendition of the Big Mac Index using something that most of us hold dear to our hands – our iPhones.
iPhone X Index by Seedly
With that, this is the iPhone X Index by Seedly – we will use the prices available for the latest iPhone X on Apple Online Store.
iPhone X Prices In Countries Around Singapore
Country Price of iPhone X Price of iPhone X
in their own currency in Singapore Dollars*
US U$ 999.00 1,356.69
Japan ￥112,800 1,393.80
Hong Kong HK$ 8,588 1,485.78
Australia A$ 1,579.00 1,580.92
Singapore S$ 1,648.00 1,648.00
Malaysia RM 4,857.00 1,649.09
Thailand ฿ 40,500.00 1,677.37
China RMB 8,316 1,744.61
Denmark 8,899 kr. 1,895.34
*Prices of iPhone X is converted to SGD using Google as at 28 June 2018. If Tax is added upon checkout, it may not be reflected above.
To illustrate PPP better, the current exchange rate is USD/SGD 1.36 (1 USD = 1.36 SGD).
- In US: Price of iPhone X (including tax) = around USD 1,085.
- Converting USD into SGD
- In Singapore: Price of iPhone X = around SGD 1,473.48.
(Assuming purchasing power parity holds)
Sadly, it isn’t.
The price of iPhone X in Singapore is S$1,648.
- S$174.52 more expensive than in the US
- S$96.61 cheaper than in China
You Can Earn the Difference
This means that it is possible to buy an iPhone X in the US and sell here in Singapore and make the difference of S$174.52.
But how often do we get to travel or have friends that travel to and fro the US to get an iPhone X? And how easy is it to get a buyer that would buy the iPhone X that you are selling?
There are a lot of variables that would come into play when trying to earn this small arbitrage, like courier charges!
With that, I hope you get your opportunity to earn an extra income from the price difference in different countries! If you would like to read on any tips and tricks on personal finance, do check out our blog!
If you have any questions, feel free to ask our Community, no obligations, we just want to help!
I’ll see you in the next one!