China's fake Apple stores thrive as new iPhone is launched

The new iPhone 6S launches today (Sept 25).

But even before people got their hands on the latest model, more than 30 stores carrying Apple’s iconic white logos are already peddling pre-orders for the gadget that has become a status symbol among many better-off Chinese.

Many of the stores on a bustling street in China’s southern boomtown of Shenzhen look just like Apple’s signature outlets — right down to the sales staff kitted out in blue T-shirts bearing the company’s white logo and the sample iPads and iWatches displayed on sleek wooden tables.

But the world’s second-largest smartphone vendor only has one official store in Shenzhen and five authorised dealers in the area.

Most of the stores in the roughly 1km shopping corridor are unauthorised “fakes” - although they are selling genuine Apple products – and their numbers have mushroomed ahead of today's release of the iPhone 6S and iPhone 6S Plus.

The rapid increase in copycat Apple stores underscores the popularity of the brand in China, where it doubled its revenue in the third quarter from a year earlier to more than US$13 billion (S$18.5 billion).

Apple logos are seen in stores in Shenzhen on Sept 21. PHOTO: REUTERS

“There are many Apple fans in China,” said a clerk surnamed Zhao at one of the unauthorised dealers that opened just two weeks ago.

“There are many silly people in China who are willing to pay extra money just to get a new iPhone ahead of everyone else.”

Shenzhen’s unauthorised Apple stores are taking advantage, banking on quick-hit gains from re-selling devices bought via authorised sales channels for as much as double the official price to consumers unwilling to wait weeks for stock to arrive.

Smuggled across the border

Several workers at the fake stores said they were buying iPhone models in overseas markets such as the United States and Hong Kong, from where they would be smuggled across the border into the mainland.

Apple declined to comment on the proliferation of unauthorised stores in China but said it recommended customers to go to its website and buy products from one of the thousands of authorised dealers across the country.

Some analysts said the presence of fake Apple stores could be a good thing for the company as they promote brand awareness in a country that had just 22 Apple stores in the third quarter, with plans to raise that number to 40 by the middle of 2016.

But the widespread unauthorised reselling of even genuine goods can make it harder for companies such as Apple to manage their brands and risks disrupting longer term plans.

Cautious after raid

But a recent raid on fake Apple stores has made some cautious.

Some shops have blocked signs that read “authorised Apple seller” with promotional banners and covered Apple logos on staff uniforms with stickers, although several vendors said business had not been affected.

Others in the industry said the fake Apple store had become so popular that it was just a matter of time before some shops would be forced to close as the market becomes saturated.

Ms Yang Fei, owner of a shop that helps unauthorised dealers set up specialised mobile phone stores, said it might be time for Apple dealers to think about switching to other brands.

She said: “Look at all the shops out there on the street. It would be tough to do the Apple business this year.

“It might be better if you do Huawei.”

Source: Reuters