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Today in Shanghai, police cracked down on a fake iPhone production ring, making five arrests.

A local newspaper reported that around 200 fake iPhones were found during the investigation. The devices had been assembled in apartments in Shanghai from parts bought in southern China.

Some of the components were genuine Apple parts, and the cost to make one counterfeit phone was estimated at $313.

The fakes in this bust looked and worked just like real iPhones, albeit with a shorter battery life, and they also cost around the same as a real iPhone. Consumers likely thought they were getting the real thing rather than a counterfeit, said police.

In fact, over the summer, consumers discovered that fraudsters had set up an entire fake Apple store in Kunming, China — complete with fake Apple staff — for marketing and selling (possibly fake) Apple products. During August, around 22 fake Apple stores like this were discovered and shut down.

The Chinese market for counterfeits is old news; the People’s Republic has long struggled with issues surrounding international intellectual property violations and the enforcement of IP laws across a huge swath of consumer goods, from apparel to medications to gadgets and far beyond. A Chinese theme park even opened an unlicensed Angry Birds attraction earlier this month.

This news comes in advance of Apple’s highly anticipated announcement of the iPhone 5. The announcement is expected to take place October 4, when Apple is hosting an event for press and others at its Cupertino, Calif. campus.

Image courtesy of ivyfield.

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