Feb 16th 2012, 15:22 by V.V.V. | HONG KONG
FEW brands are as loved in China as Apple, and few business leaders worshipped as much as the late Steve Jobs, Apple’s longtime boss. In time, the booming Chinese market is likely to become the company’s biggest and possibly its most profitable. And yet Apple, whose shares touched $500 apiece this week, appears to be doing everything wrong in the country.
Three things have called into question its strategy. Last month, the firm had to delay the launch of the latest iPhone after chaos broke out among the throngs who had queued overnight for the gizmo. The firm, it seems, had not prepared adequate security and logistics. Then fresh allegations of poor working conditions surfaced at Foxconn, the Taiwanese contract manufacturer that makes Apple’s devices. This caught Tim Cook, the firm’s new boss, on the back foot. But it should not have; he was, after all, its penny-pinching head of operations for many years before taking on the top job.
Now comes the astonishing news that exports of iPads may, just possibly, be halted from China. Proview Technology, a Chinese firm based in Shenzhen, has for some time claimed that it holds the mainland trademark for “iPad”. Apple, through intermediaries, had paid Proview’s sister company, based in Taiwan, for what it thought were global rights to the name. But a court in Shenzhen has already ruled against Apple on the matter, and another court in Shanghai is due to hear Proview’s challenge on February 22nd. Apple hotly contests the claims made by Proview, and is appealing the ruling and actively contesting other court cases on the matter. Much hangs in the balance.
This week, it was reported that Proview had persuaded several Chinese cities to pull iPads off the shelves at retail stores. Xianghui Xie of Grandall, one of Proview’s lawyers, says it has asked over 40 cities to do so. He also confirms that the firm has asked China’s customs authorities to halt exports of the iPad. Initial reports suggested that this was unlikely to happen, but if it does Apple would be dealt a powerful financial blow.
Is this merely shameless extortion by a trademark “troll”? Mr Xie does not deny that his client is after money; a billion dollars, he says dryly, would probably be enough. But he vows his client is no mere troll. He insists it did develop an actual product in 2000 called the Internet Personal Assistance Device (though he does not produce one for inspection) and that it has real manufacturing facilities for it (though when outsiders visited the firm’s purported address in Shenzen this week they found a desolate warehouse). Despite claims to the contrary from Apple, he insists that the evidence and the law is on his client’s side. The Chinese blogosphere is abuzz with punters offering up possible alternative names (MacPad, anyone?).
On balance, it seems likely that Apple will prevail, if only by coughing up enough money to send Proview packing—something it should probably have done as soon as it realised its due diligence on the mainland had fallen short. But there is an irony here worth noting. Foreign technology firms often paint Chinese companies as copycats and cheats, and demand that China does more to respect intellectual property. It would be rum indeed if Apple were to be humiliated, exports of iPads interrupted and the name of its famous tablets changed for the local market simply because intellectual property rights and the rule of law are, in fact, upheld.
In this blog, our Schumpeter columnist and his colleagues provide commentary and analysis on the topics of business, finance and management. The blog takes its name from Joseph Schumpeter, an Austrian-American economist who likened capitalism to a "perennial gale of creative destruction"
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Of course Apple is getting everything wrong now. Jobs is dead. The party's over. Deal with it.
Apple, please go away from China! We Chinese do not need you. For all the Americans who are blaiming Chinese government here, we blame our government too. In particular, we blame our government for lending so much money for someone who does not know how to appreciate.
“A rose by any other name......”
If Apple looses then change the name. iPads will sell like hot cakes anyway.
As to the slave labor insults, Apple’s Foxconn factories attract plenty new workers who love to escape destitution at home to get decent wages by Chinese standards.
China has a long way to go to get to EU standards of pay and social security. And let’s not mention USA standards for the 99%.
Yes it is all about extortion when it comes to the Chinese being on the other side of a sue, and it is about patent infringement when the Chinese were being sued.
Here are a few facts:
1. The registered trademark in China was filed by Proview Shenzhen. So stop bringing up Hong Kong's case, Hong Kong has no jurisdiction over Shenzhen. Hong Kong's case affects Hong Kong iPad trademark only.
2. Apple purchased trademark from Proview Taiwan, sued Proview in Hong Kong, both does not have jurisdiction over each other OR Shenzhen, while the trademark holder is Proview Shenzhen.
3. If the above does not explain the situation enough, Apple purchased the trademark with ANOTHER name, its subsidiary (which name has almost never been mentioned) in disguise, IP Application Development. You don't need to be told why it is creating this subsidiary for.
Yes, sometimes greed does backfire. So being the good ole Apple, sue Proview Hong Kong, sue Proview China for defamation, all good, but yeah definitely, how DARE the Chinese sue Apple?!
You should take a look at the documents Apple filed regarding this case:
http://allthingsd.com/20120216/take-a-look-at-some-of-apples-evidence-in...
1) It seems that Apple bought the TM rights from Proview Taiwan because Proview China stated in their emails to Apple's lawyers that Proview Taiwan were the owner of the TMs.
2) As part of the purchase agreement, Proview Taiwan gave a warranty that they were the "unencumbered sole owner" of the TMs.
If, as you say, Proview China was actually the owner of the TMs, it would appear that Proview Taiwan have breached the agreement. If Proview Taiwan knew they didn't own the TMs but still gave the warranty some might think that was fraud.
Re: your point 3, I don't know why you think it makes any difference that Apple approached Proview through a subsidiary. This makes good business sense - the price that Proview would ask from a small UK company is likely to be about 100 times smaller than the "Apple" price. It's no more deceptive than buying a house through an agent, rather than in person.
I'm not usually interested in 'business' issues, but I'm going to keep my eye on this one as best I can. I may not be the only American who doesn't want to see an American company cheated out of a billion dollars by the Chinese. I was planning on buying an iPad for my son's birthday. Now it seems I may be buying a MacPad. PS It's time for Apple to start bringing its manufacturing home.
Actually, it has nothing to do with the manufacturing back to States.
Actually, I don't care. I'm capable of two different thoughts in a comment. Notice the PS. I stand by both thoughts. I'm sick and tired of being scruwed by the Chinese; and I want American companies returning home, preferably on their own. If not, then by coercive taxation and/or consumer movements. As long as Americans are going to be suffering economically, I want it to be on our terms and under our control. We need to take our power back. This global-thingy hasn't worked for us. Unfortunately in our culture we have a tendency to believe that when something isn't working it means we haven't done enough of it. Well, enough. The Chinese emperor's naked.
then would you like to work 12 hours a day and only get money for basic living?
This young man,he played 1
He played I-tune with his thumb
With a Knick knack PaddyMAc
Give a dog a 'phone
This young man came strolling home
The new name and a jungle to go with it. Just in case there's a chink in the law - it's my copyright.
Nic Mudie - the bard on the hill
I think the Beatles record label should reopen its lawsuit against Apple for copyright infringement. Then Apple would have to change its name to some different fruit like mandarin oranges!! They could rename the Ipad the Opad.
That would be brilliant marketing because the Opad is a subtle sexual innuendo. They could make commercials like "Baby, touch my Opad and you'll make me scream!". They could call the little button on the Opad and the Ophone the Gspot. "Just touch the Gspot to wake up your Opad from its sleeping state." They could make some really great commercials just by changing the name, and as every Madison Avenue ad man knows, sex sells.
You see their is more than one way to skin a cat and Sun Tzu would respect Apple if they did a little subtle maneuvering and simply abandoned the Ipad trade mark for the Opad and with its patented Gspot button.
What a marvellous idea! Saloot!
icopy therefore iam
ancient wisdom
iAmerica! so iAm
iEngland! so iAm
iGermany! so iAm
iFrance! so iAm
.
.
not so ancient wisdom, about 150 years ago!
Proview is a firm based in Shenzhen. The court that ruled against Apple is also based in Shenzhen. From my understanding of the way people in mainland China conduct business, I wouldn't just write these facts off as a coincidence.
You can continue running an illegal business in the mainland if you're well connected to local judges and government officials. There is no rule of law in China.
If foreigners are more worried about copyright infringement in China than anything else, they should move their manufacturing operations to a place where IP rights are protected (i.e. Where the relevant laws are actually enforced).
Not a smart move for the world's factory...
I hope Foxconn and other Chinese based Apple partners who have been blessed with heaps of Apple pie do their share to make sure a suitable outcome is realized.
Surely these companies have the connections in place to host a few banquets and gift a few choice bottles of Maotai to turn the decision in their favour.
Apple makes crap products using 1 million ANIMALS at Foxconn factories. I want to go Safari there. These people treat Chinese workers like animals;
Read;
http://news.yahoo.com/foxconn-apologises-over-bosss-animal-report-040824...
iRony
HAHAHAHA - that has to be the best response. Brilliant!
Time to reflect upon moving manufacturing from China? Mexico is closer
and factories need not be near the border if what a corporation wants is cheap labor. China offers sweet deals but there is no way to know how long they will last. Or the US needs to learn how to prevent manufacturing elsewhere what is invented here.
If a Chinese law firm dreamed this up without an American patent lawyer, they have definitely closed one gap in intellectual achievement. Or is there an American lawyer involved? And are the legal fees hourly or contingent? And what are the judges' cuts?
The Chinese are doing there tricky Economic "Art of War" stuff. They intend to get even with the " ewil capitawist west dirty dogs".
There was an article in the Wall Street Journal on February 15, 2012, about how companies like GM, who make tons of money and have invested tons of money over in mainland China, can't repatriate their profits. The Chinese won't allow money to leave their country, they have all of these rules in order to prevent "capital flight".
It is absolutely ingenious economic maneuvering. Sun Tzu would be proud.
The solution is simple - move Apple production out of China.
Even though the solution is simple, it (unfortunately) isn't feasible. The costs of Apple products would increase tremendously if manufacturing is moved out of China, and so much fewer products would be bought. The ugly truth is that we consumers all love the idea of fair rights for workers and bringing manufacturing jobs outside of countries like China until we look at the price tags and gasp.
Unless Apple has an alternative to producing in China (e.g. major production move to Foxconn Brazil) then, the Chinese government will extort Apple for a piece of the action - just like any effective organised crime family. Sadly, none of this will benifit Foxconn Shenzhen line workers.
One billion is totally over the top. A few millions for the settlement sounds about right.
Otherwise it may be "Brasil - here we come" for the IPad manufacturing...
Brazil ?? no - one has to find another Communist regime that abuses their workers rights to make the products cheap and maximise profits. Maybe Viet Nam, hhhmmm maybe Myanmar.... Cuba is a no (Cuba has no technical ability).... how about North Korea???
The copy of the contract document between Apple's subsidiary and Proview is pretty clear (now online). The findings of a Hong-Kong court supports Apple. What needs attention is the question of whether any amount of due diligence can protect a trademark transfer agreement in this geographical area. Not surprisingly, this smells of state backed extortion and highlights the need to exercise extreme cautions when making deals there. Time to move operations to Brazil or Japan for Apple? What did G W Bush say? You fool me once...
You are right - this smells weird:
1. Why now and not a few years years ago when the first Ipad came out?
2. The speed with which the "Chinese authorities" confiscated Ipads.
3. The timing - just when the US is complaining about the mass copyright infringement perpetrated in China.
Maybe is time for Apple to move their manufacturing somewhere else...
This is not weird, and just absolute business !! Also not the timing of US complaining copyright. USA complain copyright all the time, not just now.
When Apple think everything is correct and ignore Proview for so long, then it's self to be blamed! Apple underestimate the case !!
What else, it is about money. When problem can be solved by money, then it is no problem.
And it is not about moving production to elsewhere, Apple cannot sell iPad in China too.
Apple should make a corporate decision to move manufacturing back to the U.S.. When you're screwing around with foreign countries, some crap is going to undoubtedly take place.
I will say though, it seems ridiculous that China holds a double standard on IPR's. They consistently turn a blind eye to vast amounts of IPR violations, and now when it might benefit them, they are concerned.
China is learning quick from American brother. Apple, Microsoft, Google, Facebook, IBM, Samsung, LG, HDT all suing each other for money.
I would agree. Although, they might be better off disregarding American corporate values. We don't have many left.
When China hold its value then China is evil. Opposite is always justice. Who is double standard?
Right Proview invented the Ipad, not Steve Jobs.
Maybe they will bring some of those manufacturing jobs back home. I'll pay a few hundred more for an American made tablet that doesn't require slave labor to produce.
A few hundred more? You sire, are one in a million. Americans are very price-sensitive and many would buy the cheapest thing without giving a thought to conditions under which it was produced.
For a socially conscious product whose manufacture does not cause the suffering of countless thousands of others, I would gladly shell out that much, and more.
Nobody becomes as powerfull as they are, without some skeletons in the closet.
The human way or the highway...