Charges of fakery hardly dent 'Apple' store's sales

Updated: 2011-07-23 08:00

By Guo Anfei and Tuo Yannan (China Daily)

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 Charges of fakery hardly dent 'Apple' store's sales

Employees at a fake Apple store use an iPad tablet in Kunming, Yunnan province, on Friday. Wong Campion / Reuters

KUNMING - Even after being exposed as a fake, an "Apple" store in this city has lost little of its former hustle and bustle.

But that will not be the case for long.

Zhan Jiang, director of the Kunming Industrial and Commercial Administration in Southwest China's Yunnan province, told China Daily that his agency has begun investigating retail shops and resellers that are supposedly affiliated with the US electronics giant Apple Inc after receiving complaints about fraudulent retail outlets. He said authorities will fine and shut down any fake Apple stores that are found.

A US blogger going by the name BirdAbroad made the first discovery of a fake Apple store in downtown Kunming. Her post about it on the Internet attracted nearly 1 million hits during the past three days.

"A beautiful rip-off - a brilliant one - the best rip-off store we had ever seen," she said.

The manager of the store, a man surnamed Zhao, denied that he was overseeing an "illegitimate" retail outlet. He said business at the store has remained good even after the news of its fraudulent nature spread, although customers are now calling regularly to inquire about the quality of products they had bought there.

"All the products in the store are genuine and come with a one-year warranty and a receipt," he said. "And they are sold for the same prices as they are in authorized stores."

At the fake store, all transactions are carried out just as they would be if they had occurred in a place actually authorized by Apple. Local industrial and commercial authorities meanwhile agree with the blogger's assertion that the store is a near-perfect clone.

Many customers were evidently fooled.

A man, who requested anonymity, said he spent 3,688 yuan ($572) on an iPad2. Now that he believes the store is fraudulent, he is demanding a refund.

"The store, though, turned down my request and said they will compensate me 10 times over if it is found out to be a fake," the Apple fan said.

Amy Bessette, a spokeswoman for Apple, based in Cupertino, California, said the company is declining to comment about the fake stores in China. She instead pointed to a page on Apple's Chinese website listing authorized resellers of the company's products.

A search through all of the authorized stores listed on Apple's website for China produced no mention of the three establishments in downtown Kunming.

The company has labeled China as a "key market", and analysts said now might be the time for Steve Jobs, Apple chairman and CEO, to consider opening more stores and adopting new strategies in the second-largest economy in the world.

"In the past, the US and European markets were Apple's priorities," said Lu Libin, an analyst with the domestic information technology research company Analysys International. "The Chinese market received Apple's newest products later than other countries."

There are now only four authorized Apple stores in Beijing and Shanghai. The United States, in contrast, contains 236.

Although Apple's presence is small in China, the country has shown the company some reasons to be optimistic about its market for electronic products.

According to Apple's most recent earnings report, the company's sales revenue in China rose sixfold in the second quarter above what it had been in the same period a year ago, hitting $3.8 billion. In the past three quarters, the company's total revenue from the country reached $8.8 billion, Tim Cook, Apple chief operating officer, said in an earnings call on Tuesday.

Sales of the iPhone in the second quarter have gone particularly well in the Asia-Pacific region, bringing the company four times as much money as they had a year ago. Emerging markets, including those in China, Brazil, Mexico and the Middle East, contributed much to the rise in iPhone sales this quarter, according to Credit Suisse Securities (USA) LLC.

"In the long run, Apple is likely to increase its market share since it is gaining sales momentum by investing more resources into China, which it had not been doing previously," said Kitty Fok, vice-president of the research company IDC Asia/Pacific.

Zhao Yinan contributed to this story.

China Daily

(China Daily 07/23/2011 page4)