Want to make US$50,000 a day? Try making fake iPhones in Shenzhen, where a premium Chinese knockoff 6s now sells for under US$100
On the same day that the iPhone 6s was released on the Chinese mainland and Hong Kong, high-grade knock-offs were already selling for under US$100– about one-eighth of the cost of the original – in Shenzhen, Guangdong province.
In Hong Kong, where the iconic phones cost less than the real ones across the border, official retail prices start at HK$5,588 (US$721) for the iPhone 6s with a 4.7-inch display and HK$6,388 for the 6s Plus with a 5.5-inch display. The 6s is retailing for 5,288 yuan to 6,888 yuan (US$829 to $1,080) on the mainland.
READ MORE: Slow resales of Apple’s iPhone 6s during debut in Hong Kong amid same-day launch in mainland China
But in the grey market at Shenzhen’s Huaqiangbei they could be had for between 580 yuan (US$91) and 630 yuan. One of the city’s busiest commercial areas, this is also among the best places to shop for electronics, digital products and counterfeits in China.
“These are the first batch the factories have cloned according to Apple’s advertising pictures,” said Tang Shouquan, a trader selling counterfeit Samsung and Apple gadgets at Mingtong Digital City in Huangqiangbei.
“They will get the genuine model from Hong Kong today and immediately adjust the colour and shape to make the second batch an even better imitation.”
The fake iPhones were not yet available in rose gold, a newly introduced colour rumoured to have been added to Apple’s palette to appeal to Chinese customers, who now make up a significant share of Apple’s revenue.
“We expect to have a rose gold version in a few days,” Tang added.
Already quite hard to distinguish from the real deal, the knockoffs run on an Android operating system made to look like an Apple interface. They even have Apple-like icons on the home screen.
The phones come with a dual core processor, have a built-in 8GB SD memory card and – for the first time – can use an iPhone Lightning cable to charge.
Tang said most of the counterfeit iPhones would be sold to customers of second- or third-tier cities across the country, which includes dozens of capital cities of each province.
“There is a huge market for fake iPhones in the Chinese hinterlands,” Tang said.
“People there dream of possessing world-class products but most people who come from rural areas that’s all it is – a dream. They can’t afford to buy them.”
As such, iPhones now rank as one of the hottest status symbols in China, along with a MacBook Air, designer handbags by Hermes and clothes by Prada.
On Taobao, the online marketplace operated by Alibaba, merchants even sell fake Starbucks takeaway cups so people who can’t afford to buy the real coffees can parade them around.
Despite the country now being in the throes of an economic slowdown after decades of rampant growth – with nerves still rattled from the recent domestic stock market crash – even street vendors aspire to all the Western trophies of China’s fast-growing middle-class.
Huaqiangbei has a long history of cloning iPhones, from the first to the latest generation of the products. Each time Apple releases a new product, the factories churning out fakes improve the quality of their clones.
“Prices are also getting lower because the competition here is so intense,” Tang said.
The trader recalled one man who set up a large factory in the city four or five years ago purely to pump out fake versions of the iPhone 4 and 4s.
What is interesting is the way the work flow was so professionally organised, with different departments dedicated to purchasing accessories, assembling the products, and sales, Tang said.
“At the time, he was the top guy cloning the iPhone 4 in Huaqiangbei,” Tang said.
READ MORE: ‘The manufacturing boom in Guangdong is over’: Industrial robot makers the latest to get swallowed up by China’s economic slowdown
“Retailers across the country would line up in front of his office to hand over bags of money. We know he made several hundred thousand yuan a day at least.” (300,000 yuan = US$47,054)
“But now it’s hard to make that much money because the competition from all the cheaper Chinese smartphone brands is so fierce,” Tang added.
“We used to charge 2,000 yuan for a fake iPhone 4s. Now we sell the 6s for about a quarter of that.”
For the last decade, Huaqiangbei has stood at the heart of China’s “shanzhai” industry, or black market for counterfeits. The Chinese word literally means a fortified mountain village – i.e. somewhere outside of government supervision.
The market churns out electronic goods that imitate well-known brands, mostly mobile phones, and reportedly employs 1.8 million people.
Several years ago, mainland media reported that factories in the "countryside" of Shenzhen were known to be churning out over 90 million unbranded and knock-off mobile phones every year, some for as little as 200 yuan.