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22 More Fake Apple Stores Raise IP Questions for China... and Apple

Posted by Abe Sauer on August 15, 2011 03:10 PM

The China fake Apple Stores story just keeps getting more bizarre, and in the process is becoming a perfect case study in intellectual property and consumer and state sentiment about counterfeits.

Since we last visited the fake Apple Store in Kunming, at least 22 other such stores have been revealed to exist in and around that municipality, bringing its total, including the three already closed, to 25. In a twist that will surprise nobody in China, regulators aren't even demanding that the stores close. And Apple might secretly not care as much as its public statements claim.

State news agency Xinhua reports that after The Administration for Industry and Commerce identified "an additional 22 unauthorized Apple stores... the 22 stores have been ordered to stop using Apple's logo."

A demand to stop using a logo is a long way from a demand to stop IP theft. As one China-based blog points out, in the face of the order, one "Apple Store" simply peeled the white Apple logo off the storefront and slapped up a "Smart Store" logo. There, compliance!

The "Smart Store" strategy is in line with Kunming's fake Ikea store, which uses every detail of the Ikea brand but goes by the name "Eleventh Furniture." It's noteworthy that the store's name “十一家具" is pronounced "Shiyi Jiayi," while Ikea's official name in China is pronounced "Yijia." But hey, no use of the logo! Compliance with no logo use policy achieved.

(Ironically, the photos of the changed-over "Smart Store" Apple Store knockoff come from China-based tech blog called "MIC [Made in China] Gadget," a name whose resemblance well-known tech blog Engadget is probably just coincidental.)

Overlooked is just what all those Apple Stores say about the growth of consumer power in China. Remember, while the Apple Stores themselves were fake, many of them sold genuine Apple products. Expensive ones. This was a point the Kunming business bureau spokesperson went to lengths to stress to Reuters: "China has taken great steps to enforce intellectual property rights and the stores weren't selling fake products." Fake Apple products, from iPads to iPhones, are common in China's wild world of "Shanzhai."

Significantly, Kunming is not one of the hot-burning coastal economies. It's a city of just six million, in the far-flung land-locked south of Yunnan Province, yet it's supporting 25 stores retailing genuine Apple products. Many of these real Apple products may even be part of the vibrant Apple smuggling market, recently revealed to include giant zip-lines from Hong Kong to Shenzhen.

When at the height of his powers, Bill Gates visited China in the 1990s, he denounced the proliferation of pirated Microsoft software, available at nearly any tech store and even on the street. But rumor had it, Gates secretly saw a silver lining and noted privately that all those counterfeit programs were creating a nation of Microsoft-adherents, who, once IP controls were more stringent, would end up buying the real programs they had become comfortable with. One has to wonder if Apple's China operation sees a similar silver lining?

Notably, Apple sure did wait a long time to file so many official complaints. Indeed, it's hundreds-of-percents year-over-year sales rates in China are not just coming from the brand's four official stores in Beijing and Shanghai.

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