Chinese police have arrested five members of an organized gang that was making and selling fake iPhones. The members would buy components, some of them genuine, on the black market and assemble the phones in rented Shanghai apartments. The police seized about 200 iPhones in the raid. Each iPhone had an estimated build cost of 2,000 yuan (US$313 as of this writing) and sold for almost twice that on the black market. These dupes were so well done that many people had a hard time distinguishing the fake iPhones from the real ones.
It's always been known that imitation iPhones were available in China, but the extent of this forgery was not known until an American blogger posted up images of a phony Apple store earlier this year. This report kicked off a series of subsequent reports detailing similar unauthorized stores that were selling bogus Apple products.