This freedom exists in pretty much all 3rd world countries. I mean, you can buy all kinds of movies and software from computer shops. There are even companies (with a public address) that compiles these CDs/DVDs of pirated software.

Yes, but the scale of IP infringement plus labour force in China is unparalleled. From idea to fruition, you could cheaply build the next thing. Why else would Apple risk the 'good' reputation from dealing with such cheap labour?