Chinese fakes cash in on Dr. Dre’s Beats headphones bonanza

Johan Nylander, for CNN
Updated 8:37 PM EDT, Sun October 13, 2013
On the streets and down in the Shenzhen subway, in-ear fake Beats headphones are sold for as little as $1.
China's fake Beats market —
On the streets and down in the Shenzhen subway, in-ear fake Beats headphones are sold for as little as $1.
Johan Nylander
Global demand for Beats by Dr Dre headphones is on the rise, and Chinese pirates are quick to supply cheap rip-offs.
China's fake Beats market —
Global demand for Beats by Dr Dre headphones is on the rise, and Chinese pirates are quick to supply cheap rip-offs.
Johan Nylander
In mega-malls in the Shenzhen's Huaqiangbei commercial district -- China's most famous place for electronics and hi-tech knock-offs -- Beats by Dr Dre has become one of the most popular items.
China's fake Beats market —
In mega-malls in the Shenzhen's Huaqiangbei commercial district -- China's most famous place for electronics and hi-tech knock-offs -- Beats by Dr Dre has become one of the most popular items.
Johan Nylander
In an attempt to trick customs officials, counterfeiters send fake Beats in two boxes; the outer box, on the right, has a made-up name to hide the real goods.
China's fake Beats market —
In an attempt to trick customs officials, counterfeiters send fake Beats in two boxes; the outer box, on the right, has a made-up name to hide the real goods.
Johan Nylander
Rapper Dr. Dre performs onstage at the 2012 Coachella Valley Music & Arts Festival. His Beats line have helped make him one of the world's richest entertainers.
China's fake Beats market —
Rapper Dr. Dre performs onstage at the 2012 Coachella Valley Music & Arts Festival. His Beats line have helped make him one of the world's richest entertainers.
Getty Images
For bigger quantities of fake headphones you negotiate wholesale prices with the factories' sales executives. Occasionally, they even offer factory visits.
China's fake Beats market —
For bigger quantities of fake headphones you negotiate wholesale prices with the factories' sales executives. Occasionally, they even offer factory visits.
Johan Nylander
Many stores in Shenzhen offer fake Beat by Dr Dre products, as demand from consumers and international businesspeople is on the rise.
China's fake Beats market —
Many stores in Shenzhen offer fake Beat by Dr Dre products, as demand from consumers and international businesspeople is on the rise.
Johan Nylander
China's fake Beats market

Story highlights

Popularity of high-priced headphones has led to a rise in fakes coming out of China

CNN goes behind the scenes of sales of counterfeit Beats by Dr. Dre in Shenzhen

Wholesalers sell knock-offs at $70 to global buyers who can resale as high as $400

Seller: "Buy cheap from me, you sell expensive in your home country, we all make a lot"

Shenzhen, China CNN  — 

Three weeks ago, hip-hop star Andre Young – better known as Dr. Dre – made news as his Beats Electronics line, a maker of premium headphones, was valued at more than $1 billion thanks to an investment from the Carlyle Group.

But the former N.W.A. rapper is not the only one profiting from his headphone line. Across the Pearl River Delta in southern China, counterfeit Beats are flowing out of factories, assembly workshops and shops, attracting businesspeople that sell the headphones on global markets.

A CNN reporter approached wholesale companies about buying in bulk in order to learn how the underground sale of knock-off headphones works. “Business is very good,” said a woman, who, with her family, runs a wholesale company selling copied headphones in one of Shenzhen’s many mega-malls. “You buy cheap from me, you sell expensive in your home country, we all make a lot of money,” she added.

To prove her point, she shows an Excel spread sheet on her laptop listing customers from all over the world: Italy, Denmark, United States, Canada, Dubai, Russia and more. She said she recently sold a large amount of counterfeit Beats by Dr. Dre for $50,000 to a British businessman who sent them to the UK by jet – which is considerably more expensive than container ship – and sold them as originals.

While top-line Beats headphones retail for $400, the Shenzhen operators interviewed sell knock-off versions wholesale for $70. “A lot of people are making a lot of money on Beats right now,” she said.

Factory owners here ha