You can bet your ass Apple would sue, its their favourite hobby on weekends. But not in China.
Exactly. This is the land where +90% of software is pirated. Microsoft had to price Windows and Office for pennies on the dollar in order to make any headway at all.
Apple may eventually shut these folks down, but it's not like it is in the States.
It's totally, entirely different.
It is very unlikely that they are "fake" products, or pulled off the Foxconn product line. More likely they are acquired from US or Hong Kong Apple Stores via reseller activity, or bought direct from distributors.
As for warrantees, Apple could say they weren't purchased through official channels, but if they're legitimate products, Apple will not leave their customers out to dry. Apple gets paid either way. That's the beauty of it.