Thursday, January 12, 2012

"Fake" Apple Stores in China

Apple Store in Shanghai
A "real" Apple Store in Shanghai

Last July, an American living in China wrote on her blog, BirdAbroad, about a store in Kunming, Yunnan province that in many ways looked liked a genuine Apple Store despite the fact that it was not. While some people found the story so incredible that they pondered if it was a hoax, for some in China it came as no great surprise. "Fake" can be rather common in China. In fact, just in Kunming alone police later found 22 stores "unlawfully using Apple's brand and logo". But as noted by Josh Chin on The Wall Street Journal's "China Real Time Report", the store highlighted on BirdAbroad was a jewel specimen showing the lengths some would go.

I've come across a number of "Apple stores" in a variety of other cities in China. None of the stores were on the scale of the one in Kunming, but they help paint a broader picture of the environment in China for a brand such as Apple. In that spirit, I'll share some of what I've seen in 3 of the cities I've most recently visited. For a number of the examples I'll share, I discovered them purely by chance as I walked around exploring the cities. Others where found when I deliberately visited certain shopping districts, though not because I knew I'd find stores selling Apple products there. Especially given that I wasn't deliberately seeking out such stores, I suspect that what I'm sharing is just the tip of the iceberg for these cities. To be clear, for some of the examples I can't be absolutely sure anything improper is occurring. But based on what I know and the example of the store in Kunming, there is certainly much that should at least raise some eyebrows.

Before sharing any examples of questionable sales of Apple's products or uses of its trademarks, I want to clarify one issue that I've seen cause some confusion. In addition to its official Apple Stores in China, Apple also allows select businesses to be official Apple resellers. Some of these stores only sell Apple (and Apple-related) products. Even in Shanghai where three large Apple Stores currently operate there are also numerous authorized Apple resellers where one can purchase Apple products. Here is a photo of an authorized Apple Reseller at a large shopping mall in Guangzhou, Guangdong province that is similar to many others I have seen:

Sunion Premium Reseller Apple store in Guangzhou

Sunion is a common Apple reseller in China. I'm sure this store is legitimate not only because of the "Premium Reseller" sign prominently displayed (which of course could be faked) but also because this specific store appears on Apple's list of authorized resellers in China. While official resellers often have some of the look and feel of an Apple Store, as referenced by Loretta Chao and Sue Feng (also on The Wall Street Journal's "China Real Time Report") there are guidelines they must follow. I'm not absolutely sure if this is part of the rules, but it's worth pointing out that the above store's name does not include "Apple" in it. Also, the employees wore shirts with "Sunion" written on them - not "Apple" or an Apple logo as was found in the now famous store in Kunming.

So, as far as I could tell all looked good there, as in many other authorized stores in China.

However, in the very same mall as the store above I saw a number of other stores also selling Apple products. None of them currently appear on Apple's list of authorized resellers. For example, there was this store with "iPhone 4" displayed where a store name is typically located:

store with prominent sign above entrance with words iPhone 4
An "iPhone 4" store

To provide some context, this section of the mall had numerous stores with their apparent "real" name posted in the same relative location above their main entrance. This store's business card did not indicate "iPhone 4" and instead provided a nondescript Chinese name for the business. The store sold a variety of Apple products such as iPhones and iPads. In addition to the Apple-like feel of the store, I also noticed PC monitors which did not appear to be Apple products with stickers of Apple's logo on them. You can see a hint of one in the photo.

Also of relevance is the logo in the red sign on the left side of the picture. It's China Unicom's logo for its WCDMA 3G Network. China Unicom has an agreement with Apple that allows it to sell iPhones. China Unicom also has an online list of dealers and currently this store is not listed there either. Even if the store should be on the list, its sales of non-iPhone products, the choice of the displayed store name, etc. remain issues.

There were other stores selling Apple products, many also with Apple-labeled PC monitors. And some stores weren't content with naming themselves "iPhone 4", but instead chose "iPhone 4S":

store with prominent sign above entrance with words iPhone 4S
An "iPhone 4S" store

stors with prominent signs with words iPhone 4,iPhone4S, and Android
iPhone, iPhone 4S, and Android too

The use of "iPhone 4s" was particularly fascinating since the iPhone 4S hadn't been authorized for sale in China when I visited any of these stores. In fact, its launch date is this Friday, January 13. So, what's the source for these phones which shouldn't be available in Guangzhou?

I spoke to assistants at several stores and they all told me the same story: the phones are purchased from nearby Hong Kong and brought to Guangzhou. They were very open about the source of the phones and one shop even had a sign stating the Hong Kong origin of the iPhone 4S phones:

store with a sign explaining iPhone 4S purchases

When I asked an assistant at the authorized Sunion store whether I could purchase an iPhone 4S she told me it would not be possible since they weren't available for sale in China. When I asked her why the other stores in the same mall already had them available she looked disgusted but refused to comment.

So, these examples are from just one mall and more exist there than what I've shared here. If you think that's a lot of iPhone stores to peruse in a single mall I can recommend you also visit the Starbucks a few levels below them (which I assume is genuine). Anyways, this is just a small taste of what you could likely find in Guangzhou. In other parts of the city I also noticed several stores with signs indicating they were authorized Apple resellers despite these stores not appearing on Apple's online list.

chang store with sign saying it is an authorized reseller
Is this store really authorized by Apple?

Maybe Apple's online list is not up to date. I did not contact Apple to check.

The examples from Guangzhou are striking, but it is one of China's more developed cities and may not be representative. What can be found in less prominent cities? Hengyang, Hunan province was another city I recently visited, and it provided a number of intriguing examples as well. Here's one store with an Apple logo prominently displayed:

Apple logo on store sign

It actually sold a broad variety of phones, but there was also a store nearby that focused on Apple products:

store in Hengyang with prominent Apple logo on its sign

This store sold iPhone and HTC products:

store in Hengyang with prominent Apple logo and word iPhone on its sign

Inside of the store

And this store claimed to be an authorized reseller:

store in Hengyang with prominent Apple logo on its sign and words Authorised Reseller

Now here's the kicker. Apple doesn't list one single authorized retailer in all of Hengyang. China Unicom does list one authorized reseller in the area I visited, though the address doesn't appear to be for the store above.

After Hengyang I visited Chenzhou, also in Hunan province. I should note that like Hengyang when I visited Chenzhou I hadn't expected to be taking photographs of stores selling Apple products. However, one day I was walking down a street and saw these stores all in close proximity to each other:

several stores in Chenzhou with Apple logos on their signs

store in Chenzhou with prominent Apple logo on its sign

store in Chenzhou with prominent Apple logo on its sign

store in Chenzhou with prominent Apple logo and word iPhone on its sign

store in Chenzhou with prominent Apple logo on its sign

inside of store

Get the point? And like Hengyang, Apple lists no authorized stores in Chenzhou and none of these locations are currently listed on China Unicom's site. Again, some of the stores might simply be missing from the lists.

All of the stores above from Guangzhou, Hengyang, and Chenzhou were very much out in the open and in highly-trafficked areas. Never did anyone ask me to not take photographs. In fact, in several of the "iPhone" stores employees were happy when I asked if I could take their photos. While they might not have thought they were really working for Apple as in the case in Kunming, I didn't get the sense that they had a feeling there was anything they might not want to be fully public.

So, it doesn't appear that Kunming is the only city with "creative" uses of the Apple brand, and I feel pretty safe in saying that Guangzhou, Hengyang, and Chenzhou are not unique in joining Kunming in this respect. Again, I'm not saying I'm sure that everything I've shared here is "bad", but there is certainly much that seems amiss. Perhaps most clear is that the sales of the iPhone 4S should not have been occurring.

All of this presents a mixed case of good and bad news for Apple. At least if the stores are selling genuine Apple products (which is another issue to explore) then presumably Apple is at least profiting from the sales, even if not in the manner they would like. It's a very different problem than what Microsoft faces with many people in China using pirated versions of Windows.

So while there are numerous locations in China where one can legitimately purchase Apple's products, it appears there may be many more locations where sales are less than proper. Whatever benefits there may be for Apple in reducing the number of "fake" Apple stores in China, there would mostly likely exist direct benefits for the properly authorized (and presumably Chinese-owned) reseller stores.

And by the way, I've noticed some other retailers who are indeed very careful not to improperly use Apple's logo or its products' names:

sale of MP3 players that look like the iPod Nano
On a sidewalk in Chenzhou

They just sell products that look remarkably like Apple's -- but for much cheaper of course.

1 comment:

  1. The shock to me was that it was such a shock to others.
    Over here in Taiwan it took me a little while to figure out that there were no official Apple stores...cuz those look-a-like really looked a lot alike!
    Interestingly, later I found out that the brother of Foxconn's CEO was the owner of "Studio A",the most prominent chain over here (apparently they are also expanding to China).
    What are the chances the younger Mr. Guo is getting a good deal on his stock?