How Chinese Counterfeiters Ripped Off The iPod (AAPL)

August 30, 2011

fake apple store china

Image: itnnews via YouTube

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The latest trove of documents from Wikileaks includes a 2008 cable sent from the U.S. embassy in China describing Apple’s efforts to crack down on Chinese counterfeiters.

According to the cable, which was first uncovered by CNN, Apple had no security group in China until 2008, when it hired a team from Pfizer who had helped crack down on fake Viagra.

Here’s what that team learned:

  • Nearly 100% of Apple products in Chinese street markets were fakes.
  • The fakes were not created by “third shift” scams, in which factories pump out unofficial knock-offs after fulfilling their contract — Apple had fairly sophisticated controls in place to prevent this. Instead, it looks like operators were just making their own fake Apple products from scratch. 
  • Some fake Apple products used real manufacturing molds, which meant products that looked identical to the real thing on the outside, but were substandard inside. Like a 80GB iPod that actually had a cheap 1GB hard drive.
  • The counterfeiters shipped a lot of products outside China, particularly to India. Most of those shipments went through Hong Kong.

The cable ends by describing how Apple was going to launch some investigations and raids in cooperation with the Chinese government in 2009, but CNN notes that one raid on a factory was cancelled because China was worried it would hurt jobs, and a raid on an electronics mall was scrapped because it might scare shoppers.

The counterfeit problem has since progressed — not only are there still fake Apple products in China, there are also a bunch of fake Apple stores. The government recently closed a couple of them down.

See also: This Fake Apple Store In China Is Uncanny.


Article source: SAI


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