Original URL: http://www.theregister.co.uk/2011/09/29/chinese_police_bust_faux_iphone/

Chinese fuzz bust faux iPhone racket

Shanghai gang shanghaied

By Iain Thomson

Posted in Security, 29th September 2011 23:30 GMT

Police in Shanghai have arrested five suspects in a phony iPhone case that is thought to have netted over three quarters of a million dollars.

According to the Shanghai Daily, police raided an underground workshop in July in the city’s Zhabei district, not far from the Shanghai Multimedia Valley technology zone, and found that the gang was assembling iPhones using some of the components used in authorized handsets. When shown the finished product, Apple engineers said that the "it's really hard for customers to distinguish the fake ones from the genuine ones."

The raid netted 200 of the faux iPhones, together with around 5,000 components, which would either be assembled onsite or farmed out to freelance assemblers who worked from home. The finished products were sold online and via illegal market stalls by the gang, which was headed by a local man named Dong.

The phony iPhones actually worked properly, the report notes, albeit with a reduced battery life. Because they used proper components, they cost around 2,000 yuan to make, and they were sold for around 4,000 yuan, slightly less than the cost of a proper iPhone.

"The cell phones sell well with more than 30 ... sold in one day," officers said.

Demand for Apple products among China's emerging middle class is huge, so much so that analysts have speculated that Cupertino will release a cut-down version for the Middle Kingdom. Earlier this year there was also concern that Chinese entrepreneurs were running entirely fake Apple stores, although it seems these may simply have been resellers. ®