Five people have been arrested in Shanghai for making and selling fake iPhones.The five were part of a gang who specialise in counterfeiting Apple products, The Guardian reports.

According to the police report, components for the 'iPhones' were bought from Guangdong in the south of China, and assembled in Shanghai; the gang was using a rented apartment as its "manufacturing" facility. The production costs were about £200 (2000 yuan) but the iPhones were sold on the black market for twice that price, still cheaper than the real iPhones.

Oddly enough, between the 200 iPhones found by the police there were several "hiPhone 5" handsets copied from leaked images and rumours surrounding the release of the iPhone 5.

For Chinese customers, spotting the difference between a real iPhone and the counterfeited ones was quite difficult, since the fake iPhones had the same functions, but shorter battery life, and even included some genuine components.

The recent incident comes just a month after the discovery of 28 fake Apple stores in China. The stores looked very real to the untrained eye, had huge Apple logos incorporated in the modern interior design, employees had Apple uniforms and some of the staff were even convinced that they were working for Apple China.

The genuine iPhone 5 is expected to be announced on this coming Tuesday, October 4th.