Shanghai police said yesterday they have cracked down on a gang for producing and selling more than 200 forged iPhones at downtown cell-phone markets.

They said five suspects have been arrested so far.

Police said the gang was well-organized with members having specific roles in purchasing components, assembling the phones and selling them.

Officers, after talking with engineers from Apple Inc, said "it's really hard for customers to distinguish the fake ones from the genuine ones."

The gang's workshop was discovered in a residential complex in July in Zhabei District, close to the city's largest cell phone market, police said.

Police seized more than 200 fake iPhones and found more than 5,000 components. The case involved an estimated 5 million yuan (US$782,230).

The components were purchased in Guangdong Province in south China and the bogus phones were sold to the city's unauthorized dealers and on the Internet, police said.

The gang's cost to make a forged phone was relatively high - about 2,000 yuan - as some key components were genuine or came from overseas. Police said the suspects sold the fake phones for more than 4,000 yuan each, a few hundred yuan cheaper than genuine ones.

The fakes are equipped with all of the functions of the real ones, but their battery life is quite short, police said.

"The cell phones sell well with more than 30 ... sold in one day," officers said.

The gang's leader, surnamed Dong, would hire teenagers to assemble the cell phones in the rented apartments, police said.

As part of the crackdown, a nearby electronic products market in which the fake phones were sold was closed by authorities in July.