Will China Mobile Deal Lead to More Fake iPhones?

By Douglas A. McIntyre Published Dec 23, 6:41AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Its deal with China Mobile done, Apple Inc. (NASDAQ: AAPL) and its new carrier partner no doubt will begin a tremendous marketing campaign to press consumer demand for the world’s most famous smartphone. In the process, it will help fake iPhones flourish, which will cost Apple millions, if not tens of millions of dollars. The Apple product is about to become the hot consumer electronics product in the world’s largest nation by population. Why shouldn’t counterfeiters ride along?

Apple has not said what the price of the iPhone will be in China. If its practice in other countries is any evidence, the iPhone will be sold to the high end of the market. The new iPhone 5c will be offered as a lower cost alternative, but based on the retail prices elsewhere, it will not be much of a discount to the iPhone 5s.

Fake versions of the iPhone 5s were available in China long before the actual product was launched, a testament to the ingenuity of the counterfeiters. GooPhone had one of the earliest of these. Ironically, the fake ran Google Inc.’s (NASDAQ: GOOG) Android software, the single most powerful competition to Apple’s iOS. And fake iPhones and their chargers caused a string of injuries earlier this year. Apple reminded Chinese consumers that these products were not its own and actually poised dangers to people who used the bogus products: “Apple always puts the user’s safety first, so all of our products are subject to stringent safety and reliability testing.”

A fake product is almost certainly harder to market when consumers know that the real product is not even available. At that point, fake has to be fake. As real iPhones reach the Chinese market, and sell in the millions, counterfeit versions will allow people to claim they own the iconic product, probably at a fraction of the price of the real one.

There is no single large U.S. electronics or software company selling products in China that has not been the victim of massive counterfeiting. Apple, already facing the practice, will find it even harder to keep fakes out of the market when the real version is available en masse.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.