Apple 2.0

Covering the business that Steve Jobs built

Inside Beijing's iPhone black market

November 17, 2009: 8:31 AM ET

iPhoneAsia's Dan Butterfield takes readers on a tour of China's electronics jungle

A bogus Apple reseller in China. Photo: Dan Butterfield

"There's no room for the meek," writes Dan Butterfield in a dispatch from Beijing's Zhongguancun-region electronics malls.

"Picture four or five Manhattan-sized Macy's department stores filled to the rafters with electronics outlets and sundry other goods. Untold thousands of shoppers fill these stores each day. From the moment you walk in the door (if you look like money or are a tourist) you're besieged by barkers attempting to coax you over to their store space. They are not subtle and will do anything to get your attention and ultimately your yuan renminbi. No judgment here, this is a game of survival in an electronics jungle."

Butterfield was on a mission to buy a Chinese iPhone. Accompanied by a hired guide/interpreter named Jennifer, he visited a wide variety of retail outlets, from the company's own Beijing Apple Store to some of the hundreds of bogus "Authorised Resellers," displaying phony Apple (AAPL) logos.

It's a retailing adventure filled with lessons any American electronics manufacturer hoping to break into the Chinese market.

You can read the full story here. A sample below the fold:

No sooner had Jennifer and I walked in the door of the Hypermart and barkers were into their shtick, shouting in Chinglish (for my benefit) "You wan computer? … buy cheap here." Jennifer uttered one word "iPhone" and instantly a fleet-footed barker in blue blazer and tie (the standard uniform throughout the malls) pulled us aside and beckoned us to follow. We were ushered down a hallway to a bank of elevators and up to the seventh floor, then down a corridor ("where the heck are we going," I thought) and into a private room.

It was not so private. There were 50 or so shoppers and at least a dozen blue-blazer salesmen engaged in enterprise. Our barker guide sat us down at a table and within moments another salesman appeared with an official looking iPhone box. The pitch was on. Jennifer asked my prearranged list of questions (in Mandarin of course) while I held and closely inspected the iPhone. It was real as best as I could tell and after navigating the UI it looked/functioned as expected. This was a gen one 8GB 2G iPhone and it had seen better days. No plastic covering on the screen and the casing had several scratches.

During the next few hours, Jennifer and I sat through eight or nine iPhone demos … all of them were jail-broken/hacked or unlocked iPhones. All but one of the iPhones appeared to be real (only one clear Shanzhai iClone) and I inspected them closely. There were several that were brand new 16GB and 32GB iPhone 3GS...

The hundreds of phony Apple "Authorised" stores (could be 100+ locations in Beijing alone) no doubt fool many shoppers. The Macs, iPods and iPhones on display look amazingly real. And I suspect that many are in fact the real McCoy. Yet buyer beware! I learned from some Apple savvy expats in Beijing that you can only tell you've got a bandit (Shanzhai ji) when you take your purchase home and discover the erratic (crappy) non-Apple like UI and inability to synch to iTunes.

You can read more of Dan Butterfield's China dispatches here.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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