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2011-07-25 | All chapters

China orders two fake Apple stores to close
Reuters, 25th July 2011

KUNMING, China - Chinese officials have ordered two bogus Apple shops in the city of Kunming to shut, not because of piracy or copyright concerns, but because the stores in the southwestern city did not have an official business permit.

Five self-branded "Apple Stores" were found to be selling Apple Inc. products without authorization from the California-based company, but only two were told to shut, officials said.

An investigation into the stores was apparently sparked by a storm of media attention over an elaborate hoax Apple shop discovered by a blogger from the United States.The order did not apply to that store, which is applying for a reseller licence with Apple, a local government spokesman said.

"Media should not misunderstand the situation and jump to conclusions. Some overseas media have made it appear the stores sold fake Apple products," said Chang Puyun, spokesman for Kunming government's business bureau.

"China has taken great steps to enforce intellectual property rights and the stores weren't selling fake products."

Officials are investigating whether Apple had applied with the Chinese government to have its store design and layout protected by law, Chang added.

Inspections of about 300 shops in Kunming were carried out after a blog post by an American living in the city exposed a near-flawless fake Apple Store where even the staff were convinced they were working for the iPhone and iPad maker.

In addition to protecting trademarks, Chinese law prohibits companies from copying the "look and feel" of other companies' stores, but enforcement is often spotty.

The U.S. and other Western countries have often complained China is woefully behind in its efforts to stamp out intellectual property theft.

"We hope that they will take continuous action against other intellectual property rights violations," Ioana Kraft, general manager of the Shanghai chapter of the European Union Chamber of Commerce in China, said in an emailed comment to Reuters.

In May, China was listed for the seventh year by the U.S. Trade Representative's office as a country with one of the worst records for preventing copyright theft.

Piracy and counterfeiting of U.S. software and a wide range of other intellectual property in China cost U.S. businesses an estimated $48 billion and 2.1 million jobs in 2009, the U.S. International Trade Commission has said.

Countless unauthorized resellers of Apple and other brands' electronic products throughout China sell the real thing but buy their goods overseas and smuggle them into the country to skip taxes.

Angry customers berated staff and demanded refunds at one of the fake stores late last week, uncertain of legitimacy of the products being offered.

All five unauthorized Apple shops in Kunming were selling genuine Apple products bought from other authorized resellers in China, said Huang Yinghui, an official at the city's business bureau.

Apple has just four genuine Apple Stores in China, in Beijing and Shanghai, and none in Kunming, in Yunnan province. The company, which has 13 authorized resellers in Kunming, could not be reached for comment.

Apple's brand is the world's most valuable, worth about $153 billion, according to a study released this year.