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Fake Apple Stores popping up in China

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China's official Xinhua News Agency reported this month that police arrested more than 9,000 suspects in a nine-month anti-piracy campaign as it shut down more than 12,000 factories that produced counterfeit goods. China's supreme court said this spring that the nation's judicial system rendered verdicts last year in more than 40,000 intellectual property cases involving property with a combined value of almost 8 billion yuan ($1.2 billion).

(Photo: Associated Press)

Fake Apple stores are a "particularly egregious example" of brand piracy, but their emergence is not surprising given the amount of product counterfeiting faced by corporations such as Apple, said Ted Dean, president of BDA China Ltd., a telecommunications market research company. He said he once saw a fake Apple phone in China that had an apple logo — but with no bite taken out of it.

Apple said this week that China was "very key" to its record earnings and revenue in the quarter that ended in June.

Revenue was up more than six times from a year earlier to $3.8 billion in the area comprising China, Hong Kong and Taiwan, Apple's Chief Operating Officer Timothy Cook said in a conference call on Tuesday.

"I firmly believe that we're just scratching the surface right now. I think there is an incredible opportunity for Apple there," Cook said.

The company plans to open two more Apple stores in greater China — one in Shanghai and another in Hong Kong — by the end of the year.

Trade groups say illegal Chinese copying of music, designer clothing and other goods costs legitimate producers billions of dollars a year in lost potential sales. The American Chamber of Commerce in China says 70 percent of its member companies consider Beijing's enforcement of patents, trademarks and copyrights ineffective.

Piracy is especially sensitive at a time when Washington and other Western governments are trying to create jobs by boosting exports. In 2009, the World Trade Organization upheld a U.S. complaint that Beijing was violating trade commitments by failing to root out the problem.

Rampant copying also has hampered Beijing's efforts to attract technology industries because businesspeople say companies are reluctant to do high-level research in China or bring in advanced designs for fear of theft.

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