Apple's winning ways bode well for future in China
IT’S NOT SO long ago that seeking help with a Mac laptop in smaller Chinese cities would be met by incomprehension and slightly awed comments about “pingguo”, the Chinese word for apple. This is no longer the case.
A report this month by Campaign Asia-Pacific 2012 entitled Asia’s Top 1,000 Brands showed that Apple was the number one brand among consumers in China, ahead of such names as Nestlé, Chanel, Sony, Samsung, Nike, Canon and Starbucks.
So it is perhaps no surprise that one of the more bitter legal battles in China in recent years is over an Apple trademark. Last week Apple settled with Proview, a small, bankrupt Chinese tech company, for $60 million (€48.8 million) over the ownership of the iPad trademark.
The settlement is being seen as a victory for Apple, as it is far less than the $1 billion Proview had been looking for, but it also highlights how legal disputes over trademark issues are becoming a major theme in China.
Apple disguised its identity – normal behaviour apparently when trying to avoid drawing attention to what might become the biggest product in the world – when it bought the rights to the iPad name from Proview’s Taiwan subsidiary in 2009 for about €44,000.
Proview had tried to halt sales of the iPad in China as well as stop the company from exporting the devices, which are assembled by Taiwan-based Foxconn in Chinese factories.
The legal tussle at the Higher People’s Court in Guangdong province was particularly tense because, had the Shenzhen-based Proview succeeded, it could have affected Apple’s bottom line – all of its worldwide supplies of iPads are made in the country, and it raised the prospect of serious shortages of iPads around the world.
The case was significant because it was a test of the Chinese legal system to see whether an international company would be given the same treatment as a domestic company. Apple is a major employer in China and the country is also Apple’s fastest-growing market.
Quarterly data shows Greater China, including Hong Kong and Taiwan as well as mainland China, accounts for about €6.4 billion of Apple’s sales worldwide. The company’s chief executive, Tim Cook, recently described Apple’s rise in China as “mind-boggling”.
Products usually arrive in China later than in other countries, which has fostered a significant grey market in new Apple devices. For a long time, cabin crew working for Chinese airlines flying to Hong Kong and elsewhere were restricted in the number of iPhones they could bring in. Signs in shops in Hong Kong say that no more than two phones can be sold at any time to stop the grey market thriving on the mainland.
Most of the excitement in China regarding the settlement is about the fact that this clears the way for the Cupertino-based company to launch the new iPad in China. Online rumours have it that will happen on July 27th.