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Chinese police break up sophisticated fake iPhone ring

post #1 of 11
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Police in Shanghai, China have arrested five suspects accused of participating in a complex iPhone counterfeiting outfit that used genuine parts to make and sell convincing fakes of Apple's bestselling smartphone.

As noted by Reuters, the Shanghai Daily reported on Thursday that the accused were members of a well-organized gang that brought in components from Guangdong and assembled the devices in Shanghai. 200 counterfeit iPhones were confiscated during the operation, the report noted.

The cost of making the fake iPhones is said to be roughly 2,000 yuan ($313) per unit, a high cost because the counterfeiters use some genuine parts. The fakes were sold in grey markets and online for more than 4000 yuan, only "a few hundred yuan cheaper" than the price for an official iPhone from the Apple Store.

"High-end" counterfeit iPhones such as these are nearly as expensive to make as the real thing. When the iPhone 4 was released last year, one research group claimed the device had a bill of materials of $188. Although Apple has dismissed the estimates as inaccurate, the company's costs for building an iPhone are not likely to exceed $313, given the high margins that it enjoys for the product.

Police noted that the fakes had the same functions as Apple's genuine iPhones, but with a shorter battery life. "It's really hard for customers to distinguish the fake ones from the genuine ones," said officers who had met with Apple's engineers.

Counterfeit Apple products are readily available in China, despite escalated efforts by the company to address the issue. Last month, Wikileaks released diplomatic cables that documented an Apple security team member as saying he was "afraid" of the amount of fake apple products coming out of China.

Apple has also had to work to combat counterfeit products making their way into the U.S. The company recently settled a suit against two stores in New York that were allegedly selling counterfeit accesories. Earlier this year, L.A. port authorities seized millions of dollars in counterfeit iPhones and iPods arriving from Asia.

Source: L.A. Times

In July, an elaborately-designed knockoff Apple Store, replete with a winding staircase and blue t-shirts with Apple logos, was discovered in Kunming, China and drew international attention. Chinese officials subsequently conducted an investigation of Apple resellers in the city, closing several because of permit issues.

Credit: BirdAbroad

Apple is gearing up to release its next-generation smartphone at a media event on Oct. 4. The so-called iPhone 5 is expected to be "fairly different" from last year's model, with an 8-megapixel camera and an A5 processor.
post #2 of 11
I guess the gang didn't payoff some high ranking Chinese Communist Party members enough so.. they got fu_ked.
post #3 of 11
Aint nothin like the real thing baby.
An Apple man since 1977
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An Apple man since 1977
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post #4 of 11
Does these thing sold jailbroken, in genuine boxes or bare?
post #5 of 11


Quote:
"It's really hard for customers to distinguish the fake ones from the genuine ones," said officers who had met with Apple's engineers.
post #6 of 11
Gang: I guess it's back to dealing drugs and purse-snatching guys!
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post #7 of 11
Quote:
Originally Posted by iCupertinoMDN View Post

I guess the gang didn't payoff some high ranking Chinese Communist Party members enough so.. they got fu_ked.

No, they were the lambs they paraded in front of the news and Apple.

It is like going after the street venders in NYC selling knock of Gucci purses and stuff and saying look we are stopping the counterfeit trade.
post #8 of 11
Now someone needs to raid Samsung and confiscate their fake iPhones.

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Please update the AppleInsider app to function in landscape mode.

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post #9 of 11
Quote:
Originally Posted by Maestro64 View Post

No, they were the lambs they paraded in front of the news and Apple.

It is like going after the street venders in NYC selling knock of Gucci purses and stuff and saying look we are stopping the counterfeit trade.

Agreed.

Something's not quite right about seizing 200 fake iPhones (& other Apple merch. it looks like from the photo) and yet only FIVE suspects were arrested. Five people does not make a gang. Where're the rest of them? If the knock-offs were that good, there's gotta be more man-power behind it than that.

This is probably just the Chinese government making a show to appease the U.S. and Apple. I call shenanigans.
post #10 of 11
I was under the impression that the Chinese authorities encouraged intellectual property theft from American companies. hm..


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post #11 of 11
Quote:
Originally Posted by DustinX View Post

I was under the impression that the Chinese authorities encouraged intellectual property theft from American companies. hm..

I don't think IP theft is actively encouraged in China as much as it's not usually actively discouraged.
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PPC4EVER
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