If the Chinese can open entire chain of counterfeit Apple Stores, it’s no big deal for them to make fake iPhones and Apple Watch. Yes, that’s true. A few years ago, a blogger discovered over a dozen counterfeit Apple Stores in various parts of the country, which embarrassed even the top Chinese government officials. And now Beijing Police have busted a massive iPhone counterfeiting operation.
Historically, the Chinese market has been relatively isolated from international investors, but much is changing there now, making China virtually impossible for the diversified investor to ignore. Earlier this year, CNBC pointed to signs that Chinese regulators may start easing up on their scrutiny of companies after months of clamping down on tech firms. That Read More
Beijing Police arrest nine people
The public security bureau in Beijing said in a social media posting (via Reuters) on Sunday that they had shut down a factory in May that produced more than 41,000 fake iPhones. The factory also produced about 66,000 smartphone circuit boards. The combined value of these goods was 120 million yuan ($19.7 million). Surprisingly, some of the fake iPhones produced in this factory even reached the United States.
Officials have arrested nine suspects in the operation. The counterfeiting ring was led by a married couple: a 43-year old man surnamed Yu and his 40-year old wife surnamed Xie. They had set up a factory in Beijing in 2011, geared towards electronics repair.
In January, the counterfeiting ring set up six assembly lines and hired hundreds of workers. They would buy large quantities of discarded motherboards from outside China, and purchase casing from the city of Shenzhen. Then they would repackage these components into fake iPhones for export to other countries. During the raid in May, Beijing Police also confiscated 1,400 fake smartphones of different brands.
Apple focused on China
Besides smartphones, the counterfeiting ring produced over a million imitation smartphone accessories. Chinese authorities came into action after the U.S. authorities seized some of the knock-off iPhones and tipped Beijing off. It’s still unclear how many Apple phones produced by this group were shipped to different countries.
China remains one of the biggest markets for Apple. The iPhone maker said at its earnings call last week that its quarterly revenue from China almost doubled to $13.23 billion. China is positioned to become Apple’s “largest market in the future.”