"Fake" Apple Stores in China

A "real" Apple Store in Shanghai

Last July, an American living in China wrote on her blog, BirdAbroad, about a store in Kunming, Yunnan province that in many ways looked liked a genuine Apple Store despite the fact that it was not. While some people found the story so incredible that they pondered if it was a hoax, for some in China it came as no great surprise. "Fake" can be rather common in China. In fact, just in Kunming alone police later found 22 stores "unlawfully using Apple's brand and logo". But as noted by Josh Chin on The Wall Street Journal's "China Real Time Report", the store highlighted on BirdAbroad was a jewel specimen showing the lengths some would go.

I've come across a number of "Apple stores" in a variety of other cities in China. None of the stores were on the scale of the one in Kunming, but they help paint a broader picture of the environment in China for a brand such as Apple. In that spirit, I'll share some of what I've seen in 3 of the cities I've most recently visited. For a number of the examples I'll share, I discovered them purely by chance as I walked around exploring the cities. Others where found when I deliberately visited certain shopping districts, though not because I knew I'd find stores selling Apple products there. Especially given that I wasn't deliberately seeking out such stores, I suspect that what I'm sharing is just the tip of the iceberg for these cities. To be clear, for some of the examples I can't be absolutely sure anything improper is occurring. But based on what I know and the example of the store in Kunming, there is certainly much that should at least raise some eyebrows.

Before sharing any examples of questionable sales of Apple's products or uses of its trademarks, I want to clarify one issue that I've seen cause some confusion. In addition to its official Apple Stores in China, Apple also allows select businesses to be official Apple resellers. Some of these stores only sell Apple (and Apple-related) products. Even in Shanghai where three large Apple Stores currently operate there are also numerous authorized Apple resellers where one can purchase Apple products. Here is a photo of an authorized Apple Reseller at a large shopping mall in Guangzhou, Guangdong province that is similar to many others I have seen:

Sunion is a common Apple reseller in China. I'm sure this store is legitimate not only because of the "Premium Reseller" sign prominently displayed (which of course could be faked) but also because this specific store appears on Apple's list of authorized resellers in China. While official resellers often have some of the look and feel of an Apple Store, as referenced by Loretta Chao and Sue Feng (also on The Wall Street Journal's "China Real Time Report") there are guidelines they must follow. I'm not absolutely sure if this is part of the rules, but it's worth pointing out that the above store's name does not include "Apple" in it. Also, the employees wore shirts with "Sunion" written on them - not "Apple" or an Apple logo as was found in the now famous store in Kunming.

So, as far as I could tell all looked good there, as in many other authorized stores in China.

However, in the very same mall as the store above I saw a number of other stores also selling Apple products. None of them currently appear on Apple's list of authorized resellers. For example, there was this store with "iPhone 4" displayed where a store name is typically located:

An "iPhone 4" store

To provide some context, this section of the mall had numerous stores with their apparent "real" name posted in the same relative location above their main entrance. This store's business card did not indicate "iPhone 4" and instead provided a nondescript Chinese name for the business. The store sold a variety of Apple products such as iPhones and iPads. In addition to the Apple-like feel of the store, I also noticed PC monitors which did not appear to be Apple products with stickers of Apple's logo on them. You can see a hint of one in the photo.

Also of relevance is the logo in the red sign on the left side of the picture. It's China Unicom's logo for its WCDMA 3G Network. China Unicom has an agreement with Apple that allows it to sell iPhones. China Unicom also has an online list of dealers and currently this store is not listed there either. Even if the store should be on the list, its sales of non-iPhone products, the choice of the displayed store name, etc. remain issues.

There were other stores selling Apple products, many also with Apple-labeled PC monitors. And some stores weren't content with naming themselves "iPhone 4", but instead chose "iPhone 4S":

An "iPhone 4S" store

iPhone, iPhone 4S, and Android too

The use of "iPhone 4s" was particularly fascinating since the iPhone 4S hadn't been authorized for sale in China when I visited any of these stores. In fact, its launch date is this Friday, January 13. So, what's the source for these phones which shouldn't be available in Guangzhou?

I spoke to assistants at several stores and they all told me the same story: the phones are purchased from nearby Hong Kong and brought to Guangzhou. They were very open about the source of the phones and one shop even had a sign stating the Hong Kong origin of the iPhone 4S phones:

When I asked an assistant at the authorized Sunion store whether I could purchase an iPhone 4S she told me it would not be possible since they weren't available for sale in China. When I asked her why the other stores in the same mall already had them available she looked disgusted but refused to comment.

So, these examples are from just one mall and more exist there than what I've shared here. If you think that's a lot of iPhone stores to peruse in a single mall I can recommend you also visit the Starbucks a few levels below them (which I assume is genuine). Anyways, this is just a small taste of what you could likely find in Guangzhou. In other parts of the city I also noticed several stores with signs indicating they were authorized Apple resellers despite these stores not appearing on Apple's online list.

Is this store really authorized by Apple?

Maybe Apple's online list is not up to date. I did not contact Apple to check.

The examples from Guangzhou are striking, but it is one of China's more developed cities and may not be representative. What can be found in less prominent cities? Hengyang, Hunan province was another city I recently visited, and it provided a number of intriguing examples as well. Here's one store with an Apple logo prominently displayed:

It actually sold a broad variety of phones, but there was also a store nearby that focused on Apple products:

This store sold iPhone and HTC products:

Inside of the store

And this store claimed to be an authorized reseller:

Now here's the kicker. Apple doesn't list one single authorized retailer in all of Hengyang. China Unicom does list one authorized reseller in the area I visited, though the address doesn't appear to be for the store above.

After Hengyang I visited Chenzhou, also in Hunan province. I should note that like Hengyang when I visited Chenzhou I hadn't expected to be taking photographs of stores selling Apple products. However, one day I was walking down a street and saw these stores all in close proximity to each other:

Get the point? And like Hengyang, Apple lists no authorized stores in Chenzhou and none of these locations are currently listed on China Unicom's site. Again, some of the stores might simply be missing from the lists.

All of the stores above from Guangzhou, Hengyang, and Chenzhou were very much out in the open and in highly-trafficked areas. Never did anyone ask me to not take photographs. In fact, in several of the "iPhone" stores employees were happy when I asked if I could take their photos. While they might not have thought they were really working for Apple as in the case in Kunming, I didn't get the sense that they had a feeling there was anything they might not want to be fully public.

So, it doesn't appear that Kunming is the only city with "creative" uses of the Apple brand, and I feel pretty safe in saying that Guangzhou, Hengyang, and Chenzhou are not unique in joining Kunming in this respect. Again, I'm not saying I'm sure that everything I've shared here is "bad", but there is certainly much that seems amiss. Perhaps most clear is that the sales of the iPhone 4S should not have been occurring.

All of this presents a mixed case of good and bad news for Apple. At least if the stores are selling genuine Apple products (which is another issue to explore) then presumably Apple is at least profiting from the sales, even if not in the manner they would like. It's a very different problem than what Microsoft faces with many people in China using pirated versions of Windows.

So while there are numerous locations in China where one can legitimately purchase Apple's products, it appears there may be many more locations where sales are less than proper. Whatever benefits there may be for Apple in reducing the number of "fake" Apple stores in China, there would mostly likely exist direct benefits for the properly authorized (and presumably Chinese-owned) reseller stores.

And by the way, I've noticed some other retailers who are indeed very careful not to improperly use Apple's logo or its products' names:

On a sidewalk in Chenzhou

They just sell products that look remarkably like Apple's -- but for much cheaper of course.

"Find Me": Oppo's Bold Media Campaign for a Smartphone

As I've mentioned before, while China's mobile phone industry continues to include explicit copying of global brands, a number of Chinese brands, such as K-Touch and BBK, are trying to grow their own identities. One of the brands that I think is particularly worth following closely is Oppo. It can often be found next to popular global brands such as Nokia, Samsung, Sony Ericsson, etc. at mobile phone stores across China.

Oppo section at Mobile World (通信天地) in Shanghai

Oppo store in Guangzhou, Guangdong province

Oppo offers a variety of phones, some of which can be seen here:

Maybe even more than its broad availability and wide variety of phones, something that highlights Oppo's ambitions has been its recent marketing campaign for its Android-based Find X903 mobile phone. It's not hard to notice the advertisements which can be found in many places in China, whether in the larger cities:

Oppo Find advertisement in a Shanghai subway station

or those much smaller:

Oppo Find advertisement in a shopping district in Heyuan, Guangdong

And yes, that is Leonardo DiCaprio appearing in most of the photos above. He was reportedly paid 5 million dollars (US) for his role in the Oppo campaign. A brief (in English) describing the media campaign can be found here. The brief provides a useful (although presumably biased) overview and is worth checking out. One note though: while there are repeated mentions of "Twitter", Twitter was of course not part of the campaign as it is currently blocked in China. Replace "Twitter" with "Sina's and Tencent's micro-blogging services" (roughly similar in concept to a hybrid of Twitter and Facebook) to clarify that issue.

The video included in the brief poses the problem of how Oppo can stand out in a market that is dominated by global brands. It says research indicated:

...male consumers enjoy exploring the unknown, they don't like to be simply told the facts but instead they like to find out the truth by themselves. Therefore, we should challenge their knowledge to search for our product rather than just present our product in front of them.

The rest of the video and other information on the page explains how this intriguing claim guided the design of an interactive media campaign. Oppo's targeting of male consumers for this campaign is notable since in the past it has often targeted female consumers.

Oppo's "Find Me" website is here (Chinese) and as described in the brief includes many interactive experiences and also several trailers & TV commercials which were directed by Jeremy Haccoun. The movie-like style of the videos is obvious and many have commented on their similarity in style with a film in which DiCaprio starred -- Inception. There is a video on several Internet sites that combines the videos but some sections aren't exactly the same as what's found on Oppo's websites. Since it's simpler to present, here's a version on YouTube:

On the "Find Me" website you can find videos of the 3 trailers here and the 2 TV commercials here (note: in addition to the audio for the videos there is music playing in the background of the webpage which can be turned off by clicking on the gramophone icon). Oppo's website for the Find X903 phone (here) seems to only have 2 of the trailers and neither of the commercials.

The campaign, which was created by NIM Advertising, has won several awards such as the Digital Media Awards Asia's award for Technology and Telecoms and earlier received some buzz on advertising news websites such as chinaSmack, Adweek, and brandchannel. Peter Fuhrman, Chairman of China First Capital, Ltd., commented on Oppo and this media campaign last August:

It’s a bold move by a little-known Chinese mobile phone company to storm into the big time, and grab market share from Nokia, Samsung, LG and Apple. None of these global brands uses a big name to front its ads in China. Oppo is determined to compete as equals with these larger companies. It’s still learning the rules of building a successful brand. Its tactics and ad strategy are a little off-beat. But, Oppo has the resources and distribution in China to challenge the large global mobile phone brands, and so cause them headaches in the world’s largest mobile phone market...

Oppo is trying to pull off a challenging feat: to catapult above the hundreds of no-name mobile phone manufacturers and brands, and establish itself as a premium brand in China. The other Chinese mobile phone brands do little to no advertising, and instead compete mainly on price.

There are a number of curious or problematic issues I could address regarding the campaign, ranging from strategy to website usability, but I'll put them aside for now. What is most significant is that Oppo attempted a campaign of this scope and nature. Its competitors, both Chinese and those abroad, would be wise to pay close attention to Oppo as it attempts to grow.

There are reports that Oppo will soon release the next version of the Find phone (so far being given the name Find 2). It appears that not all of the videos for "Find Me" have yet been released so it will be interesting to see if they're used for the advertising campaign of the next Find phone. For now, we'll just have to wait to see if the "Find Me" theme continues. However, if Oppo decides it wants to make the phone more easily discovered, an advertisement for a large upscale mall in Guangzhou may have already beaten Oppo to a potentially appropriate follow-up theme:

Inspired by Oppo?

McDonald's in China - Localized, Growing, and Influencing

When I compared a KFC and McDonald's in Yueyang, China, I mentioned that KFC has had much success in China and that one of the possible reasons is its localized menu. While McDonald's success hasn't been as great, that doesn't mean McDonald's hasn't localized its menu or that it is doing poorly in China.

Some examples of its localized menu include a taro pie and some different dipping sauces for its Chicken McNuggets -- such as chili garlic. See here for more examples of McDonald's food offerings in China (in Chinese and may not load in some browsers). I haven't bothered to try quantifying it, but my impression is that KFC's menu has been more modified from its US version than McDonald's. Whether that could be a key reason KFC has seen more success in China is another question.

And although the McDonald's in Yueyang wasn't busy at the time I visited, I've seen plenty of others that were. For example, recently I passed by a McDonald's in Hengyang, Hunan province:

and another in Chenzhou, Hunan province:

Both were full of customers eating and drinking. There are also broader signs of McDonald's success in China. As reported on Bloomberg News this past summer:

McDonald’s Corp. (MCD), the world’s largest restaurant chain, should open an outlet a day in China as it challenges Yum! Brands [owner of the KFC and Pizza Hut brands] for dominance in Asia’s largest economy as rising salaries boost spending on fast food.

“We should be opening a restaurant every day in the next three to four years” in China, Peter Rodwell, company president for Asia excluding Japan, Australia and New Zealand, said in an interview in Singapore today. “We’re now opening a restaurant every other day.”

Even with that growth rate, though, McDonald's has its work cut out if it wants to surpass KFC. Not only is KFC currently far ahead of McDonald's in terms of number of stores in China, but it's likely to expand further. In fact, I've seen signs of potential new locations for KFC that I'll share in a later post.

McDonald's growth isn't good just for the company, but it has benefits for China as well. Again, from Bloomberg News:

The Oak Brook, Illinois-based company has said it plans to recruit 50,000 employees in China this year, including 1,000 university graduates as management trainees. McDonald’s, which trails Yum in number of Chinese locations, moved its China training center from Hong Kong to Shanghai last year.

Furthermore, the benefits aren't limited to McDonald's and China. For example, last April I had the opportunity to speak with these two employees of a McDonald's in Nanning, Guangxi:

Happy McDonald's employees

The young lady on the left was a college student and working part-time. The extra income was useful for her, and she preferred the job to what she did the previous year when I first met her -- promoting a brand of tea at a large park in Nanning:

Green tea promotion

What was most notable, though, was how she absolutely gushed about how much she enjoyed working at McDonald's -- the friendly atmosphere, the supportive management, etc. She didn't think she could have such a positive work experience in most similar Chinese companies, and her experience clearly influenced her view of the US in a positive manner. I can't provide any numbers, but based on other conversations I've had I know she isn't alone in her feelings. This is yet another example of America's "soft-power" that I have mentioned before in a very different context.

So, if McDonald's is localizing its menu for China and is playing a role in shaping Chinese people's opinions of the US it raises an important question.

Should McDonald's ever offer the McRib in China?

Scenes of China: Chenzhou, Hunan Province

In the previous post I shared where I spent the last days of 2011 -- Hengyang, Hunan province. Typically I don't do two "scenes" posts in a row, but in the spirit of symmetry I'll now share where I spent the first days of 2012 -- Chenzhou, Hunan (map).

Like in Hengyang, the weather was overcast and caused me again to forgo a nature trip. This time I had hoped to see Suxian Hill -- a place of natural scenery and Taoist relics. Again, maybe in another year or life I'll see it.

Despite some rainy drizzle at times, I took the opportunity to explore the city. Some of my walks were directed to places of potential interest I saw on a map and others were more random. One thing I noticed that is consistent with what I've more recently read about Chenzhou was that the food didn't have the characteristic spiciness found in the food of other regions of Hunan. I suspect Chenzhou's close proximity to Guangdong province, where cooking styles aren't known for their spiciness, is at least partially responsible.

If you've kept track of the last 4 cities (including Chenzhou) I've posted about, you may see a connection between them. That connection will provide a clue both for where I headed after Chenzhou and for what I plan to write about in a future post.

But for now, here's some of what I saw in Chenzhou:

The department store on the right was very busy on New Years Day

Nearby Xinglong Pedestrian Street

Popular place for Cantonese style snacks
People thrust money at the very busy server to get her attention to take their orders - not my hands.

The lady in the red coat saw me passing by outside and was eager to speak some English. So, I went inside and said hello.

Seemingly new apartment complexes. Similar ones nearby appeared to be mostly empty - a not uncommon sight in China.

Some farming in the city

Bridge under construction

Walking in the rain

Chen River

Baby Bar -- No, I didn't try it.

Snoopy by Peanuts car

Fruit and vegetables for sale at a street market

Street vendor selling a sort of peanut crisp

Remnants of fireworks

Scenes of China: Hengyang, Hunan Province

Like I did with the city where I spent my Thanksgiving I was thinking of seeing if anyone could guess the city where I spent the last two days of 2011 based on a photo or two. Nobody figured out the Thanksgiving city, though, and I think this one would be even harder, especially with the photos I have available. So, I decided to give it a pass. For readers anxious for another try, fear not. I have some other photos in mind to try again with another city later.

As the post title indicates I spent the end of 2011 in Hengyang, Hunan province (map). While there, I had hoped to make an excursion to the main region of Mount Heng (衡山) which is sacred in both Buddhism and Taoism. Unfortunately, the weather was very foggy and overcast so I'll have to save that for another year (or maybe life if Buddhists have things figured out). However, Mount Heng includes 72 peaks and I did make it to the small Huiyuan Peak which is located in a pleasant park in a central district of the city.

The weather also didn't stop me from exploring the city itself. So here are a few photos to provide a small taste of life in Hengyang:

Ordinary street

Ferris wheel near the top of a hill in central Yueping Park

Busy traffic on the Hengxiang Highway No. 2 Bridge

Sidewalk on Zhongshan Street

By the Xiang River

Playing cards

Alley

Harley Davidson Van

Hello Kitty Car

Young students buying stinky tofu

Clothes hung out to dry

Another scene on the bridge