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Diplomatic cable details Apple's problems with Chinese knockoffs

August 31, 2011|By David Sarno, Los Angeles Times

Apple Inc.'s problems with Chinese knockoffs have been about as bad as it gets.

As of late 2008, factories in mainland China were "exporting enough counterfeits to single-handedly supply the world with fake Apple products," according to a cable written by U.S. diplomats in Beijing at the time, and which was published by WikiLeaks last week.

The missive details Apple's efforts to hire a team of anti-counterfeiting specialists to stem the international deluge of fake Apple products, many of which originate in Chinese factories. "As amazing as it seems," the cable said, Apple had no global anti-counterfeiting team until early 2008, long after its iPod had become a global hit.

Apple has a fraught relationship with China. The nation has become one of the company's largest markets for its products, accounting for billions of dollars in sales in the recent quarter. But China is also a global hub of piracy and counterfeiting.

This month, the Chinese government shut down a number of phony Apple storefronts that had been designed to look like authentic stores, down to the employees' uniforms and badges. News agencies reported there were at least two dozen fake Apple stores in the southwestern city of Kunming alone.

To lead its fight against Chinese fakes, Apple in 2008 hired Don Shruhan, a former Pfizer Inc. product security operative, the WikiLeaks cable said. At the time, Shruhan was starting his battle against knockoffs "more or less from scratch" the cable's author wrote. "The company had not so much as registered its trademarks in China or Hong Kong until he joined."

Ruminating on the likelihood that Shruhan and his team would succeed, the cable's author noted that "the key will be whether their personal relationships with [Chinese] customs, law enforcement and judiciary officials will be enough."

Apple declined to comment on the content of the cables.

david.sarno@latimes.com

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