China

Apple’s iPad trademark dispute with cash-strapped display company Proview has continued to drag on despite the Chinese company claiming it was in negotiations with Apple as recent as February. Today, several reports suggested Apple and Proview are now involved in court-moderated mediation with senior officials who are boasting Apple could lose the right to the iPad trademark in China. The mediation would be the first confirmation of settlement talks between the two companies. The Associated Press reports:

Apple Inc. risks losing the right to use the iPad trademark in China, a senior official suggested Tuesday, as a Chinese court was seeking to mediate a settlement between the technology giant and a local company challenging its use of the iPad name… Yan Xiaohong, deputy director of the National Copyright Administration, told reporters in Beijing that the government regards Shenzhen Proview Technology as the rightful owner of the trademark for the popular tablet computers

If Apple and Proview are unable to come to a settlement in the talks, Guangdong High Court in southern China will rule over the case in the months to come. According to Deputy Director of China’s State Administration for Industry and Commerce Fu Shuangjian (via The Wall Street Journal), Proview is still the legitimate owner of the iPad trademark in the country:

“Currently, Proview Shenzhen is still the legitimate registered owner of the IPAD trademark,” Mr. Fu said. But he indicated that officials are waiting for the Guangdong court’s final judgment, after which the industry and commerce sector “will deal with the case according to law.”

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With all of the controversy and media attention Apple has experienced since The New York Times’  “How the U.S. Lost Out on iPhone Work” article, a post from Motherboard (via iFixit) provides yet another reason why Apple makes its products in China—rare earths. While noting China’s cheap labor and lack of environmental regulations certainly contribute to Apple’s decision, the post explained how Apple’s use of rare earth elements might make it hard to move manufacturing elsewhere:

But there’s another important reason why Apple and other manufacturers have their heels stuck in Chinese mud. iPad manufacturing, like the manufacturing of other electronics, requires a significant amount of rare earth elements, the 17 difficult-to-mine elements used in all kinds of green technology. It’s hard to say exactly what rare earths are in an iPad, since Apple is really tight-lipped about their materials

iFixit ‘s Elizabeth Chamberlain spoke with Cambridge engineering professor Dr. Tim Coombs who “guesses that there may be lanthanum in the iPad’s lithium-ion polymer battery, as well as ‘a range of rare earths to produce the different colours’ in the display.” He also thinks the magnets in Smart Covers and the iPad itself contain neodymium alloy. So how does rare earths keep Apple tied to China? The report explained:
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In an interview with the Guardian over the weekend, Google cofounder Sergey Brin said:

[…]he was most concerned by the efforts of countries such as China, Saudi Arabia and Iran to censor and restrict use of the internet, but warned that the rise of Facebook and Apple, which have their own proprietary platforms and control access to their users, risked stifling innovation and balkanizing the web.” There’s a lot to be lost,” he said. “For example, all the information in apps – that data is not crawlable by web crawlers. You can’t search it.”

It is interesting that “lost” is defined above as “not crawlable by Google’s search engine.” Framing the argument—as “what is in the best interests of users” versus what Google wants—would probably have helped his case. We are supposed to think that it is just a coincidence the two biggest corporate threats to Google are also the two biggest threats to humanity/the Internet. (via Slashdot)

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http://www.youtube.com/watch?feature=player_embedded&v=5cL60TYY8oQ

Marketplace reporter Rob Schmitz is the second reporter ever to get an inside look at Foxconn, the manufacturing plant where Apple’s products are made. Today, Schmitz posted a video showing our first-ever look at the assembly process of an iPad as it goes down the assembly line at the Foxconn plant in Shanghai, China. It is interesting to look at how machines streamline some of the process. Schmitz also noted a few other interesting points, such as workers switching positions every few days while making $14 a day when first starting.

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Last year, a Chinese teenager sold his kidney in southern China to buy an iPad and iPhone. Now his renal deficiency is deteriorating, and five people have been charged with intentional injury related to the operation.

The teenager is known in reports by only his surname Wang. According to Reuters (via Xinhua News Agency), prosecutors in Changzhou city, Hunan province claim Wang is suffering from renal deficiency, which also means he is facing a potentially life-threatening decrease in kidney function.

“I wanted to buy an iPad 2 but could not afford it,” said the boy […]. “A broker contacted me on the Internet and said he could help me sell one kidney for 20,000 yuan.”

On April 28th, the boy went to Chenzhou City in neighboring Hunan Province for the kidney removal surgery arranged by the broker. He was paid 22,000 yuan (an extra 2,000–) or $3,400 after his right kidney was taken out at Chenzhou’s famous No. 198 Hospital.

One of the five defendants earned 220,000 yuan (or $35,000 USD) to arrange the transplant, and then he paid Wang 22,000 yuan for the kidney and split the remainder with the surgeon, three other defendants, and various medical staff. The Xinhua report did not detail who received and paid for the kidney.

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A Japanese TV crew approached a booth at the Foxconn plant in the suburbs of Taiyuan in Shanxi Province and asked a woman manning the booth about the 18,000 people Foxconn is recruiting for the next iPhone (video here at 7:10 via Macotakara). She said something about “being built for June.”

That plant is hiring many workers (and facing strikes from current workers) for iPhone production, according to local reports.

While she seems to imply that Foxconn is ramping up for a June production or release (or it may not), we are not convinced this is a credible source with knowledge of Apple’s plans.

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[youtube=http://www.youtube.com/watch?feature=player_embedded&v=E5odytJoYmo#!]

The results of the Fair Labor Association’s investigation into Apple’s suppliers beginning with three Foxconn facilities officially published yesterday. While finding excessive working hours and many violations of Chinese labor law, Foxconn and Apple agreed to reduce workweek and overtime hours within Chinese law to 49 hours per week and 36 overtime hours per month based on the FLA’s recommendations. Foxconn will also hire tens of thousands of new employees and implement a compensation package to make sure workers’ salaries remain the same amid reduced working hours.

In the interview above with Reuters, head of the FLA Auret van Heerden talked about the investigation and noted the agreement could set a new standard for working conditions throughout China. One unanswered question is whether the agreement will lead to higher prices for consumers (which is not necessarily a bad thing)…

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We knew the Fair Labor Association would publish the initial findings of its investigation into Apple’s Foxconn facilities, and now the report is officially available through the organization’s website. The full report released today and is here. The press release outlining the investigation is below. According to the recommendations, Foxconn committed to “bring its factories into full compliance with Chinese legal limits and FLA standards on working hours by July 2013.”

The last we heard from the FLA about its audits into Apple’s Foxconn facilities was that it found “tons of issues.” Apple became the first technology company accepted as a member into the organization after controversies surrounding working conditions in Apple’s supply chains abroad became mainstream. As for what the FLA found in its audits of the three Foxconn facilities, here is an excerpt from the report:

FLA’s investigation found that within the last 12 months, all three factories exceeded both the FLA Code standard of 60 hours per week (regular plus overtime) and the Chinese legal limits of 40 hours per week and 36 hours maximum overtime per month. During peak production periods, the average number of hours worked per week exceeded 60 hours per worker. There were periods in which some employees worked more than seven days in a row without the required 24 hours off.

The FLA said Foxconn’s commitment will “reduce working hours to legal limits while protecting pay, improve health and safety conditions, establish a genuine voice for workers, and will monitor on an ongoing basis to verify compliance.” This will lead to a maximum 49-hour workweek, including overtime for employees and a decrease in monthly overtime from 80 hours to 36 hours. While we reported some workers were unhappy with working fewer hours, Foxconn also committed to a compensation package for workers with reduced overtime:

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Apple will open its biggest flagship retail store in Dalian, China, according to advertisements spotted in Parkland Mall (via M.I.C Gadget). A translation of the ad claimed, “Apple’s World’s Biggest Flagship Store will be coming soon” to the shopping center.

It appears the initial stages of construction are already underway due to the large Apple barricades outside of the mall, but the report claimed rival shopping center Dalian Department Store sent its security team to “push down the Apple Store banners.” The video below shows the security guards from the Dalian Department Store destroying the barricades after negotiations were unsuccessful.

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We knew earlier this week that Tim Cook had “great meetings with Chinese officials” during his first trip to China as chief executive officer of Apple, but today a report from Bloomberg gives us new details about exactly who he met in China. According to the report, Cook met Chinese Vice Premier Li Keqiang, who could replace Wen Jiabao as Premier of the country’s government in 2013. Cook also met with Beijing Mayor Guo Jinlong a day before. Apple spokesperson Carolyn Wu told Bloomberg that Li and Cook had a “great meeting,” but she declined to talk about the specifics.

However, a report from The Wall Street Journal cited local media reports and claimed Cook and Li were discussing “intellectual-property issues and greater cooperation.”

According to representatives for the creditors of Shenzhen-based Proview, the company Apple is in a dispute with over the iPad trademark, Cook is on a “political public relations campaign” regarding the legal disputes. Li Su, president of Hejun Vanguard Group who represents Proview’s creditors, made the remarks. When Apple’s spokesperson Carolyn Wu asked about Li’s comment, she said the following:

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[slideshow]

Earlier this month, we told you Apple awarded a $10,000 iTunes Gift Card to Chunli Fu of Qingdao, China for downloading the 25 billionth app from the App Store. As part of her prize, Apple flew Fu to Apple headquarters in Beijing for a visit to the corporate offices and then the Sanlitun retail store to collect her prize at a press event and award ceremony. Several local reports from qdqss.cn and elsewhere were summed up in a story over on MIC Gadget.

According to the report, Fu was an iPhone user for only a month before being contacted by Apple about the contest:

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Reports are surfacing in China that claim Apple plans to integrate Baidu into iOS next month as the country’s possible default search function.

According to Chinese news website Sina Tech (machine-translation):

Sina Technology News on March 26 morning news, according to informed sources, Apple iOS operating system next month will be formally introduced Baidu search, Baidu and Apple between cooperation component in the China region.

Google’s Susan Creighton revealed last fall that two-thirds of the Mountain View, Calif.-based Company’s mobile search comes from Apple iOS devices.

Meanwhile, recent speculation claims Apple is moving to an in-house Mapping solution that would replace Google Maps. The firm also recently removed its publish to YouTube option in QuickTime for Mountain lion. If these latest rumors deem true, Apple’s move to Baidu would further indicate a significant effort to reduce Google’s presence in iOS.

With that said, the move to Baidu might be more than a snub to Google. As SearchEngineLand noted, Baidu holds 80 percent of the search market in China, and it would make sense for the Chinese to carry the same search on their mobile devices as they have on their desktop.

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Officially from the T-Mobile Blog:

Will refarming make your network compatible with the iPhone? And will you stop offering 2G services?
A nice side benefit of the refarming effort is that our 4G network will be compatible with a broader range of devices, including the iPhone. The other important benefit of our network modernization effort is the coverage improvements it will deliver, especially when it comes to in-home coverage. As we refarm our 1900 spectrum, we will continue to fully support our customers with 2G devices.

The move is a result of the “re-farming spectrum” from the botched AT&T merger.

We are also going to make more effective use of the spectrum we already have by refarming a portion of our 1900 MHz PCS spectrum to support HSPA+ services, which frees up additional AWS spectrum for LTE. With the AT&T breakup spectrum factored in, T-Mobile will have sufficient spectrum to roll out LTE with 20MHz to about 75% of the top 25 markets in 2013. Most remaining markets will have 10MHz. Our course, we’d love to have more spectrum to further strengthen our position to compete in the marketplace.

T-Mobile executives told analysts as much last month, but this is the first official word on T-Mobile’s website. We are hearing that 3G iPhone owners on T-Mobile could start seeing access in areas like Philadelphia in a matter of weeks.

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Following an overwhelming launch day for the iPhone 4S in China plagued by massive crowds of scalpers, Apple suspended in-store sales of the device to walk-in customers and employed a lottery system for reservations that did not operate on a first-come-first-serve basis. Customers also had to bring government-issued ID when picking up their device. Apple confirmed on its website it will be doing the same for the new iPad launch with reservations beginning the morning of March 15 and pick ups available March 16 at the IFC Mall store in Hong Kong.

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With Apple currently allowing the Fair Labor Association to inspect the working conditions of its supply chains abroad, a new report from NPR profiled 25 of the 59 workers injured in an explosion at the Pegatron iPad factory in Shanghai, China last December (audio here – MP3). The explosion was attributed to a build-up of aluminum particles. According to Pegatron, it started in the machinery meant to collect the dust. Today’s report from NPR gives us a look into the conditions of the Shanghai plant before, during, and after the explosion from the eyes of workers.

A similar explosion months before in May at a Foxconn factory in Chengdu was the focus of The New York Times’ recent story sparking controversy over Apple’s suppliers. Zhang Qing explained to NPR that Apple inspected the Shanghai factory just hours before the explosion:

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Bloomberg quotes a Gartner analyst:

“I don’t expect Apple to replace Samsung any time soon,” Gartner analyst Sandy Shen said in an interview. “China Telecom [story] is the nation’s smallest carrier, so the extent to which they can help Apple is quite limited.”

The 16.8 percentage-point gap in China between Cupertino, California-based Apple and Samsung almost doubled from the third quarter. While Samsung is No. 1 and Apple No. 5 in China, the global story is different: Worldwide, Apple passed its Suwon, South Korea-based competitor to become the biggest smartphone vendor in the fourth quarter, according to Gartner.

When you consider that the iPhone is not yet made for China’s dominant carrier, which holds two-thirds of a BILLION customers, the news that Samsung is gaining market share on Apple is not surprising (15 million iPhones ride on incompatible China Mobile).

I will be surprised, however, if Apple does not close the gap next year. The sixth-generation iPhone will almost certainly work on China Mobile’s network.
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image via M.I.C. Gadget

Sina Tech reports that CDMA iPhone 4S’s are being snapped up by its 130 million mobile subscribers today after the No. 2 player in the world’s largest mobile market recieved 200,000 pre-orders (and counting) starting last week.

We previously noted that the iPhone 4S on China Telecom would be available in every configuration: 16GB, 32GB, and 64GB. The phone will start at “free” with a contract. China Telecom received its license to sell the iPhone in January. China Telecom officially announced it would begin selling the iPhone 4S last month.

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China Mobile, the world’s largest wireless company with 665 million subscribers, confirmed Monday that it now hosts 15 million iPhones on its network with an average of 35,000 new iPhone activations each day. Back in October, its network hosted 10 million iPhones. People get excited about T-Mobile USA’s 1 million iPhones, so it is worth pointing out that China Mobile’s number is more than seven times larger than what Sprint has—and it is not even Apple’s official carrier yet.

The real kicker: Those people do not get 3G service as China Mobile’s 3G TD-SCDMA network is incompatible with iPhone 4S. Similar to T-Mobile USA, China Mobile employs a different type of high-speed 4G-radio technology that the iPhone 4S cannot use. As a result, both networks’ customers are relegated to using EDGE/GSM data speeds.

iPhones are sold in China through carrier China Unicom, but that is bound to change soon. China Telecom, the country’s second-largest carrier with 130 million subscribers, will start selling the sought-after smartphone this Friday.

It would seem the China Mobile iPhone is a no brainer as 15 million people already unofficially use the device on China Mobile’s network with many more millions in the 1.33 billion-people market deemed potential subscribers. Another piece of information also indicates that Apple and China Mobile could be in the final stages of negotiations to bring the iPhone to China Mobile’s network. Read on…

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The iPad maker is defending its moniker by insisting the device became synonymous with both the company name and the tablets. PCWorld quotes Apple’s legal representatives who argued at the Guangdong Province Higher People’s Court hearing this morning that Apple made the iPad name famous in the first place:

Among consumers across the world, the iPad trademark is already uniquely connected with Apple. When consumers see a tablet with an iPad trademark, they know it comes from Apple, and not from another company.

No ruling occurred during the six-hour long hearing, and the judges adjourned without setting a new court date. Should Apple lose the appeal, Proview’s request to put a sales ban on the iPad in 30 Chinese cities will go-ahead. Moreover, Apple would risk lawsuits seeking damages. Last week, the Shanghai Pudong New Area People’s Court rejected a preliminary iPad sales injunction until the Guangdong court made its ruling on the appeal.

Apple’s argument might actually backfire, because its legal standoff with Proview has blown up. Wikipedia claims, “A trademark owner takes a risk in engaging in such a corrective campaign because the campaign may serve as an admission that the trademark is generic.” I am not a lawyer, but it seems obvious Apple might be calling upon itself long-term damage with this testimony.

Arguing that the iPad became a generic term for tablets theoretically means anyone could use it as a descriptor. Besides, why do you think Proview brought this battle to the United States? The opposite argument is that Apple actually owns the iPad name, and it is the only company marketing a product that became synonymous for tablets in the first place.

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The embattled monitor maker Proview, fighting Apple over rights to the iPad name in China, suffered a blow as the Shanghai Pudong New Area People’s Court rejected a preliminary injunction against the sale of the iPad. This means Apple can continue selling iPads in its flagship Shanghai stores without fear (and embarrassment) of sales suspension.

The hearings are now postponed, because both companies are awaiting the results of a separate case in the Guangdong provincial high court, the Wall Street Journal reported today.

Proview had sought the injunction, saying it owns the iPad trademark in China. Apple, which contends that it previously purchased the rights to the iPad name from Proview, had applied in Shanghai to suspend proceedings on Wednesday. Ma Dongxiao, an attorney representing Proview, said the company doesn’t yet have a response.

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