China's fake Apple stores thrive ahead of iPhone 6S launch

On a bustling street in China's southern boomtown of Shenzhen, more than 30 stores carrying Apple Inc's iconic white logos peddle pre-orders for the new iPhone, a gadget that has become a status symbol among many better-off Chinese.

Many of the stores 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.

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But the world's second-largest smartphone vendor only has one official store in Shenzhen and five authorized dealers in the area. Most of the stores in the roughly one-kilometre shopping corridor are unauthorized "fakes" although they are selling genuine Apple products and their numbers have mushroomed ahead of Friday'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 $13 billion US, and suggests the U.S. tech giant is on course to shrug off weakening consumer spending in its second biggest market.

"There are many Apple fans in China," said a clerk surnamed Zhao at one of the unauthorized 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."

Smuggled in

Apple routinely grapples with iPhone supply constraints, particularly in years that involve a smartphone re-design.

The latest iteration of the iPhone, featuring larger screens and longer battery life, will only be available on the launch date in China to customers who have reserved online, and the company has said pre-order demand has outstripped supply.

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

The fake stores are also taking pre-orders, but say they will have the new phones from Friday.

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

Good for brand awareness

Apple declined to comment on the proliferation of unauthorized stores in China.

But 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.

The fake Apple store model is proving so lucrative it has even spawned a cottage industry servicing such businesses.

Just a stone's throw from the street of copycat stores, tucked away in a giant tech mall, two shops offer the logos, uniforms, display shelves and shopping bags needed to make an unauthorized outlet feel like a genuine Apple store.

A recent raid by authorities on fake Apple stores has, however, made some cautious. Some shops have blocked signs that read "authorized Apple seller" with promotional banners and covered Apple logos on staff uniforms with stickers, although several vendors said business had not been affected.

Knockoff devices

It's not just fake Apple stores that are proliferating there's also counterfeit iPhone handsets.

None of the shops inside the Shenzhen technology mall openly display a fake iPhone 6s at their counters. But at one mobile phone stall, the sellers went to their inventory to fetch two knockoffs when Reuters reporters requested them earlier this week. The trip to fetch them took about half an hour.

Priced at 580 yuan ($121 Cdn), a tenth of the price of a real phone at 6088 yuan ($1,271), the gold phone appears authentic, complete with the letter S engraved on the back.

The sellers said it runs on the Android system even though its display appears similar to iOS.

But it is slow for a new phone and the photos it takes appear fuzzy.

The sellers also described their sales as mediocre, having sold fewer than 100 units since they arrived less than a week ago.