The quality will be bad; most no-name rip off phones (like http://www.aliexpress.com/item/N9-3-6-LCD-ONE-sim-dual-band-...) have a lot of design flaws and very cheap parts. The power supply electronics and the plugs will randomly break, short circuit etc. I buy them for cheap hardware prototyping, as they do have everything in there for a very low price. So when prototyping a device, it makes sense to just use that instead of doing something yourself (well to me at least). When the prototyping phase is done, I would never have the final product made in China. I can do it better locally. It'll be slightly more expensive, but not much and you are sure of the quality. In EU moulding and CNC are not very costly anymore due to the lack of work and the quality is very high.
Edit: I forgot to say; it's rather depressing if this is actually the iphone 5 design. It's boring.
It's fun to follow the rip off phone market from China, where all that phones look fairly decent on features, but in reality they are often so bad they are impossible to use. One iPhone knock off I bought for fun, had a radio tuner, and dual sim support. The touch screen was so bad, it required a stylus to operate and even with that it was almost impossible to use. The software was also really bad. For example, if you were composing an SMS and made a mistake, which would happen due to the bad screen, you had to hit two buttons to correct it. Both options were right next to the option to cancel the entire message, which you would inevitably hit. It also would answer the call if anything was touching the screen when a call came in, which was always unless it was on a table. Video playback was at 12fps. It shipped with two batteries, which I thought was nice, until it turns out that they die after a few charges.
It goes for most rip off stuff indeed; and not only that. The white label companies ship stuff which is simply unusable as you say. You have to be a hacker/modder to make it work. Which then actually works fine for the price. Out of the box however it's pure crap. If it has a custom OS (not android/linux) then you really need to look out; Android usually is already bad with the wrong/non working drivers etc, but when they made something themselves it's usually so bad that you cannot use it at all.
It's stuff to experiment with to try out different cases and such, but for real day to day use, you would not buy it.
> I would never have the final product made in China.
But you are aware, that FoxConn, who are a major company in the production of the iPhone have their HQ in Taipeh, which is, coincidently, in China? Other products made by FoxConn are the iPad, the iPod, the Kindle, the PS3 and the Xbox 360. Major customers include Motorola Mobility, Nokia and Samsung Electronics.
To put it short: The final product isn't always made IN China, but almost certainly made by a chinese company, employing chinese standards.
EDIT: To make things a bit clearer, the country Taipeh (Taipei) is in is obviously Taiwan, officially called Republic of China. Just to let you know where the "China" came from in the above written.
This is one of the most repugnant and misinformed posts I've seen on HN in a long time.
Taipei isn't a country. It's the capital city of Taiwan, which has had de facto independence for over 60 years but is unrecognized by the UN as a country due to the fact that China carries a veto and will cut relations with any country that does recognize Taiwan.
Taiwan has never been part of the PRC (which is the country commonly referred to as "China"). Taiwan has a separate currency, democratic governance, a separate military and a separate national identity for virtually the entire populace except for a few graying nationalist soldiers. Its "standards" as you put it are much closer to Japanese or Korean standards than they are to Chinese ones.
Furthermore, even going back before WWII, Taiwan was a Japanese colony, not Chinese. You have to go all the way back to the Qing Dynasty before Taiwan was controlled by China. Using that kind of reasoning, most of Eastern Europe would belong to the Austrian Monarchy.
Note: I've spent over 7 years living in Taiwan and also 2 years in Beijing.
Yes you're right, I got terribly mixed up here. My apologies. That got me interested in the regions history (of which, as I just demonstrated, I have no clue) though, I'll read into it a little when I've got some spare time.
I am aware of that :) I don't say it's impossible if you have enough resources (like Apple). For a small(er) company it's very hard to do it though. Even if you go there. For instance OpenPandora.org has had a lot of miserable quality from the casings coming from China. They moved production to Germany.
German production is almost always superior in quality to the far-east products, there's no doubt about that. You've got to give that to the germans, they do know how to produce things. They're more expensive though, and unfortunately that is what ultimately counts for the big players.
That's also what I suspect to be the prime reason why we haven't got a proper free phone yet. Free as in free speech that is, running some variation of Linux with the necessary device drivers to use GSM/HSDPA/LTE/whatever, since Android isn't really free. It's just jolly expensive to build one of those if you're a small player and customers aren't prepared to pay for it.
Edit: I forgot to say; it's rather depressing if this is actually the iphone 5 design. It's boring.