iPhones Produced in China Smuggled Right Back in 159
Ponca City, We Love You writes "Factories in China produce iPhones that are exported to the United States and Europe and then smuggled right back in helping explain why Apple says it sold about 3.7 million iPhones last year while only 2.3 million are actually registered in the United States and Europe. For Apple, the booming overseas market for iPhones is a sign of its marketing prowess but also a blow to Apple's business model, costing the company as much as $1 billion over the next three years, according to some analysts. Since negotiations between Apple and China Mobile, the world's biggest mobile-phone service operator with more than 350 million subscribers, broke down last month, the official release of the iPhone in China has been stalled producing a thriving gray market. Copycat models are another possible threat to Apple in China. Not long after the iPhone was released, research and development teams in China were taking it apart, trying to copy or steal the design and software for use in iPhone knockoffs, or iClones and some people who have used the clones say they are sophisticated and have many functions that mimic the iPhone. "A lot of people here want to get an iPhone," says Shanghai lawyer Conlyn Chan."
Re:Remember (Score:1, Interesting)
Isn't that theft? (Score:4, Interesting)
Apple is the only producer of these phones (well, through OEM partners), wich presumably moves the phones to some Apple warehouses and they, in turn, are moved off to Apple stores and authorised resellers (AT&T, Orange, T-Mobile and O2 if I'm not mistaking).
So, where do all the grey market phones come from? And how can Apple account for them if they've never been in their warehouses?
Mine was bought in an Apple store so I'm not even worried about it but I wonder about those I see in downtown Montreal cell phone outlets (at a premium price). Should those be considered stolen devices?
They're all in hong kong (Score:2, Interesting)
Grey markets will always exist until all companies hop aboard the concept of the global on-demand rather than the localized rubbish they peddle now.
Re:funny math (Score:3, Interesting)
the iphone is nice... but the lack of copy/cut/paste is frustrating - being edge only sucks very very very bad.. it's imap client leaves alot to be wanted.. but the no 3g and no bluetooth theathering for laptops is the deal killer for me...
but damn is it slick
Re:Remember (Score:1, Interesting)
Re:Isn't that theft? (Score:5, Interesting)
Company A from America contracts with Company C in China to build product I.
Company A orders 100,000 I's every month.
Company C builds 120,000 I's every month.
Company C ships 100,000 I's to company A.
Company C sells the other 20,000 I's domestically at a higher profit.
Happens all the time. That's how most IP/knockoffs in China come about. Same product line, same product, they just build a few extra (at their cost, their customers know what the BOM is, and can quickly figure out overcharges) and sell them locally for more profit.
The key to keeping IP "protected" in China is to partner with a strong Chinese manufacturer and give them financial incentives to police the market for you. It's what I do with my IP; I have two "blessed" factories in China authorized to build with it, and they get to maintain that "blessed" status as long as:
1. The products they build meet quality standards
2. The products they build meet typical BOM and profit margin costs
3. They monitor and police the Chinese market for me to watch for knock-offs
The carrot? They get a virtual "lock in" of clients. They get to charge a few percent more profit because my IP carries a premium.
The stick? They would lose the lock in, and either lose their "blessed" status or end up having two, three, or a dozen more factories so blessed and then lose their premium profit.
The key to China is pretty simple - make it worth their while to do the policing for you. It's all about the RMB, folks...
Having worked with apple since the late 80s (Score:5, Interesting)
Re:Isn't that theft? (Score:4, Interesting)
Restricting a component is a good approach, as long as you can guarantee restriction of that component. You know the back-channels of China, though! A cousin of the senior engineer happens to work at that component vendor and over dinner at the New Year's celebration a deal is struck...
Personally, I've found it better to control on deliveries to the destination market (usually the US and the EU), and incentivise the Chinese factory strong enough that they make the same amount of money AND don't have the headaches of extra production to just play ball from day one.
BTW, for those others reading this little piece of lint (that is what a small, sub-thread is, right?) the problem is bad in China, but about 5X worse in India, based upon my experiences (consumer electronics products).
Another piece of purposedly planted misinformation (Score:4, Interesting)
Both lies were nothing more than another drops in the long stream of manipulative misinformation about Apple concocted by stock market criminals. Steve Jobs clearly debunked these rumors, but apparently, after waiting for a short while, the criminals are trying to milk this cow again.
Re:Don't build in China (Score:3, Interesting)
That's true but when you provide the factory and the bill of materials, it makes their job a lot easier. That's the problem companies have; the "knock-offs" are (or were) often being built by the same people building the "real" product. I saw it in Korea (in the late 80s and early 90s) and it happens now in China, Indonesia, and other places. It's a part of doing business and like you said, it happens no matter where you manufacture.
Re:failed projections and "costs" (Score:4, Interesting)
The only question I have for you is the following: You said you lived in an underdeveloped country. Is it illegal in your country to pirate US-made stuff? I Don't live in the US myself, so I sure as hell don't follow US laws. I follow my country's laws (which however, support copyrights), and thats it. If tomorrow the law says that copyright is null and void, I'll only buy videogames (because I'm a collector), but movies will all get pirated, and software will be free (and as a software developer, I'll change job!).
Personally though, when I was young, my family could barely afford food (if that). If we couldn't afford something, we didn't buy it. Simple as that. Didn't go and get a bootleg. Sure, it meant I spent most of my life with no computer, no videogame, no nothing, but Im still alive.
(I'd make exception to that on softwares and tools that would help someone get OUT of poverty. Entertainment is one thing.... education and such, I feel is a RIGHT, not a priviledge, like games are.). Besides, if pirating tools and software get you rich, then you'll have money to buy them later
Re:Isn't that theft? (Score:3, Interesting)
About 10% of the Germans at the tech conferences I went to had iPhones. IIRC think none of them came from T-Mobile, the only authorized reseller in Germany.
Re:Remember (Score:3, Interesting)
The reason the Chinese own the United States has nothing to do 'theft of intellectual property'; it doesn't even have much to do with trade. It [msn.com] has to [state.gov] do with debt [wikipedia.org]. You keep borrowing, and the Chinese, who are thriftier than you are, keep lending. And they've now lent you so much that you have to borrow more even to pay the interest. Face it - the Third World War is already over, and the United States lost.
China owns you.
Re:Closed source = Not interested (Score:3, Interesting)
Linux on my Asus eee is a lot like the Mac. It is very well integrated. Much better than Ubuntu on the same device. The more I think about it, Asus seem to have been inspired by the approach of Apple in designing this machine.
Once vendor supplied Linux takes off, distributions like Ubuntu may have to change their approach. This makes the deals with Dell look like a lost opportunity because the distribution was not significantly tailored for the hardware.