News Digest: May 16, 2012 报摘： 2012年5月16日

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The following press releases and media reports about Chinese companies were carried on May 16. To view a full article or story, click on the link next to the headline.

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◙ Sina (Nasdaq: SINA) Reports Q1 Financial Results (PRNewswire)

◙ News Corp (Nasdaq: NWSA) to Acquire 20 Pct of Chinese Film Distributor (English article)

◙ SouFun (NYSE: SFUN) Announces Unaudited Q1 Results (Businesswire)

◙ NetEase (Nasdaq: NTES) to Launch Smartphone – Source (English article)

◙ Suntech (NYSE: STP), Krannich Solar Announce 120MW Sales Agreement (PRNewswire)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

Renren: China’s Next Gaming Company? 人人网：中国下一个网游企业？

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Renren (NYSE: RENN) has reported a widening loss that should normally be worrisome, and yet investors seem to be focusing on surprising strength in the online game business for this leading social networking site, which could perhaps finally lead it to its goal of long-term profits. The upbeat news for Renren’s game business comes as another major online game developer, Japan’s Nexon (Tokyo: 3659), is also reporting strong growth in its China business, testifying to the resilience of this market dominated by teen-agers and 20-somethings who seem less like to reduce spending on their hobby even as China’s economy shows signs of slowing. In fact, the slowing economy hit Renren’s other main business, advertising, in the first quarter, with ad sales climbing an anemic 15 percent as the business experienced a “challenging period”, Renren said in its results announcement. The advertising slowdown is hardly unique to Renren, with other major ad-dependent companies also like Sohu (Nasdaq: SOHU) and Phoenix New Media (NYSE: FENG) also reporting weakness in the most recent quarter. But while Renren’s advertising revenue reached just $9.3 million for the quarter, online game revenues soared 90 percent to $17.5 million, meaning games now account for more than half of Renren’s revenue. Despite that rise, the company’s net loss ballooned to $13.6 million, far bigger than the $2.6 million a year earlier. Investors clearly seemed to be focused on the upbeat story in online games, bidding up Renren shares by nearly 3 percent in after-hours trading after the results came out. If online games can continue growing at a similar rate, the business could potentially lead Renren to the elusive goal of long-term profitability, although such a shift would make the company look more like an online game company competing with names like Shanda Games (Nasdaq: GAME) and NetEase (Nasdaq: NTES) rather than a social networking company like Facebook. If that happened, Renren certainly wouldn’t be the first to make such a transition, as NetEase itself started out as a portal company before becoming a gaming giant, and gaming leader Tencent (HKEx: 700) also rose to fame on the back of its popular QQ instant messaging platform. Of course, the big risk in moving into online games is becoming dependent on individual game titles as a major revenue source, meaning one needs to develop or license a steady stream of new games to stay successful. Meantime, Nexon, supplier of a popular gaming title to Tencent, has said its China sales also rose similarly by nearly 90 percent in the first quarter and should remain robust throughout the year, even as the broader China online game market is only expected to grow about 12 percent. (English article) All that says that there’s still plenty of growth opportunity in China’s online game market despite the broader economic slowdown, though companies with popular titles and a wider arrange of complementary social networking offerings like Renren and Tencent could be better positioned to thrive in the current climate.

Bottom line: An unexpectedly rapid growth in gaming revenue could help lead Renren into the profit column by the end of this year, transforming it into an online game play.

Related postings 相关文章:

◙ NetEase: Still a Gamer With WoW Renewal　　网易续签《魔兽世界》运营权

◙ Online Games: Where’s the Excitement? 中国网游企业增长有限

◙ Shanda Delists: Thanks for the Profits 盛大网络退市：获利可喜

Lenovo’s TV Gamble: Failure Ahead? 联想电视赌注：未来会失败吗？

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I should credit leading PC maker Lenovo (HKEx: 992) for being ahead of the curve by releasing its new smart TV in China last week, getting a slight lead on a widely anticipated launch for by Apple (Nasdaq: AAPL) for a similar new product group that could revolutionize the way people watch TV. (English article) Reviews are still few for Lenovo’s new product, a 55-inch TV called the K91; but based on its past track record as a company with limited capability in new product design, I would offer only a very small chance for this product to succeed, potentially costing Lenovo hundreds of millions of dollars in development and marketing costs. The reason for my pessimism is simple: Lenovo, a specialist in PCs for developing markets, has never shown any ability to be a leader in new product design, especially in areas where it has little or no experience. Its previous forays into cellphones, gaming consoles and tablet PCs have all been mostly flops, failing to generate any buzz or excitement after having to compete with better designed products from the likes of more innovative firms like Apple, Samsung (Seoul: 005930), Asustek (Taipei: 2357) and HTC (HKEx: 2498). Given that poor track record, I have little reason to believe this latest initiative will succeed either, especially since such smart TVs are a completely new category and thus there are few products out there to use as a guidebook into what works and what doesn’t for this area. I do at least have to give Lenovo credit for trying hard by buying state-of-the art technology for its first smart TV, with components coming from such top-end suppliers as chip designer Qualcomm (Nasdaq: QCOM), audio technology firm DTS (Nasdaq: DTSI) and its operating system based on Google’s (Nasdaq: GOOG) popular Android platform. The company may also be making a smart choice by launching the product in its home China market, where it is the dominant PC brand and which accounts for around half of its sales. But its early launch even in China could mean very little if its product doesn’t contain content and functionality that ordinary consumers want. What’s more, competing products from Samsung and especially Apple are likely to hit the market in a matter of months, meaning Lenovo won’t have much of a head-start over these rivals whose products will no doubt contain more features and generate more buzz than the Lenovo TVs. Lenovo hasn’t said very much about response for the product in the week since its launch, saying only that performance has exceeded its expectations. (Chinese article) But considering its past track record, look for the K91 to post disappointing sales over the longer term, perhaps in the tens of thousands this year, and for this broader smart TV initiative to end up as a failure for Lenovo like many of its other new product initiatives.

Bottom line: Lenovo’s new smart TV initiative is likely to fail despite an early head-start over rivals in China, with products from foreign rivals likely to eventually dominate the market.

Related postings 相关文章:

◙ NEC China Cellphones: New Lenovo Tie-Up? NEC计划重回中国手机市场 或与联想联姻

◙ Lenovo Completes Leadership Change, Yang Uninspired 联想完成高层调整，杨元庆难鼓舞人心

◙ Apple Feasts on China, Baidu Burps 苹果在华享受盛宴，百度盛宴停顿

Bottom line:

China: Room for How Many Amazons? 中国电商市场到底有多大？

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China’s e-commerce space seems to get noisier by the day, with about a half dozen companies vying to become the nation’s next Amazon (Nasdaq: AMZN) by launching a steady stream of new initiatives in recent months taking them into a dizzying array of new product areas, many far removed from their roots. But at the end of the day there may only be room for 2 or possibly 3 mega online retailers in the market, and we should expect to see many of these aggressively expanding players ultimately either merge with rivals, or more likely quietly shutter their online shops in the next 1 to 2 years as they feel the heat of excessive competition now gripping the market. The latest in the steady flow of new initiatives has Suning (Shenzhen: 002024), better known for its bricks-and-mortar shops selling home appliances and electronics, opening a wine shop this week on its fast-expanding e-commerce site. (English article) News of this new online direction actually first emerged last month, along with reports that Suning would also get into the even more unrelated business of online travel services. Suning is hardly the only one to be branching into all kinds of strange new directions these days in the online space. Its forays into wine and travel come as the country’s second largest e-commerce site, 360Buy, which also goes by the name of Jingdong Mall, has also embarked on its own series of strange initiatives far beyond its original focus as an online electronics seller. Earlier this year the company launched a new book-selling business, and more recently reports have emerged that it will also get into the somewhat unrelated real estate and travel services businesses. (previous post) Then there’s Dangdang (NYSE: DANG), China’s only publicly listed e-commerce company, which began life as an online book seller similar to Amazon. But also similar to Amazon, the company has recently expanded into a number of new directions, including a major tie-up with GOME (HKEx: 493), one of China’s top bricks-and-mortar electronics retailers, in a bid to enter the online market for electronics and home appliances. If all of this is starting to sound like everyone is stepping on everyone else’s turf, it’s because that indeed seems to be what’s happening, with apparently little or no regard for profits or focusing on strategic new areas to complement existing core businesses. Not to be outdone in all this, the nation’s leading e-commerce site TMall, owned by Alibaba, is reportedly gearing up to significantly beef up its presence in the electronics space by signing major names like Philips (Amsterdam: PHG), Lenovo (HKEx: 992) and LG Electronics (Seoul: 066570) to an expanded area in its online mall dedicated to the highly competitive space. Outside all this expansion by domestic names, US retailing giants Wal-Mart (NYSE: WMT) and Amazon itself are also aggressively building up their China presences, the former through its investments in another major site called Yihaodian and the latter through its Joyo platform purchased several years ago, which recently changed its name to Amazon China. The Chinese e-commerce market is certainly big and can support more than one major player, though I seriously doubt it can support all these big names now scrambling to get into just about any new area they can find. The broader e-commerce market itself was worth around 500 billion in 2010, meaning perhaps its now worth about $100 billion — certainly not a small sum but also not enough for all the companies now chasing that limited pot of dollars. At the end of the day, look for 2 or perhaps 3 of these big players to survive in the longer term, with profitable companies like TMall and ones with cash-rich backers like Amazon China and Yihaodian, standing the best chances for success. But even those companies may have to make major adjustments before the current situation stabilizes, bringing widespread pain to nearly everyone as players open and close new business areas before they find the right mix.

Bottom line: The recent rapid expansion of major e-commerce firms into new product areas is unsustainable, and will end with many failures before 2-3 players emerge after a coming cleanup.

Related postings 相关文章:

◙ Alibaba’s Tianmao Takes on Electronics 天猫发力家电市场

◙ Dangdang, GOME In New Alliance, More to Come 国美携手当当网 或开启类似合作序幕

◙ 360Buy Losing Focus With Travel Plan 京东商城涉足在线旅行服务业 偏离核心业务

 

News Digest: May 15, 2012 报摘： 2012年5月15日

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The following press releases and media reports about Chinese companies were carried on May 15. To view a full article or story, click on the link next to the headline.

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◙ China Mobile (HKEx: 941) Responds to Obstacles in US, Believes Will Get License (Chinese article)

◙ Suning.com (Shenzhen: 002024) Launches Wine Channel (English article)

◙ DTS (Nasdaq: DTSI), Lenovo (HKEx: 992) Bring High-Definition Audio to Smart TVs (Businesswire)

◙ Renren (NYSE: RENN) Announces Unaudited Q1 Financial Results (PRNewswire)

◙ Vipshop (NYSE: VIPS) Reports Q1 Financial Results (PRNewswire)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

Dongfeng Joins China Own-Brand March 东风追逐中国民族汽车品牌复兴大潮

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China’s domestic car makers are continuing their drive to develop their own brands in their search for bigger profits outside their foreign joint ventures, with Dongfeng Motor (HKEx: 489) the latest to join that march as it prepares to revive its mothballed namesake brand. But success for these new initiatives is far from guaranteed, and Dongfeng and the many other Chinese automakers to announce similar own-brand plans in recent months certainly aren’t preparing to abandon their lucrative foreign joint ventures anytime soon. Dongfeng itself recently launched another new brand, called Venucia, with longtime Japanese partner Nissan (Tokyo: 7201) (previous post); and more recently news has emerged that it is in talks for yet another foreign joint venture with France’s Renault (Paris: RENA). (previous post) According to a Chinese media report, Dongfeng is currently working on a plan to revive its namesake brand using technology from France’s Peugeot (Paris: UG), and could show the first models at the Shanghai Auto Show next spring. (English article) China auto buffs may want to have a look at this report, as it contains a detailed history of the Dongfeng name, which was China’s first self-developed brand with its launch in the late 1950s. But production of the car was short-lived, and the brand has been absent from Chinese roads now for more than half a century. Dongfeng’s plan follows a range of similar ones by other Chinese automakers, all of which also have successful joint ventures with major foreign automakers. News recently emerged that SAIC (Shanghai: 600104), China’s largest automaker which has joint ventures with GM (NYSE: GM) and Volkswagen (Frankfurt: VOWG), was planning to revive its Shanghai brand of cars. (previous post) At the same time, FAW Auto has been working on a 1.8 billion yuan plan to revive Hongqi, or Red Flag, a brand that was once synonymous with luxury cars in China but ceased production in the 1980s. Meantime, Beijing-based BAIC, which has a joint venture with Mercedes, is also rolling out its own brand cars based on technology it purchased from Swedish car maker Saab. Many of these plans have the common trait of using older foreign technology as their basis, which is probably a smart move as all of these Chinese companies are relatively inexperienced at developing their own new models. Still, launching a new brand is far from easy, as it requires new infrastructure to service such brands and also marketing campaigns to raise public awareness. What’s more, the market is already quite crowded and showing signs of slowing down. The Hongqi, Shanghai and now Dongfeng initiatives all look smart from a marketing perspective, as all will draw on well-known historical brands that should quickly grab attention from Chinese consumers. At the end of the day, I would expect some of these brands to succeed, with perhaps the Shanghai and Hongqi brands having the best chance for gaining some traction with domestic car buyers. The ones that fare worse will end up costing their developers big losses, and could easily see some of these older brands returned to the historical junk pile once again.

Bottom line: Dongfeng’s revival of its namesake brand is part of a trend by Chinese automakers to develop their own brands, with about half of these new initiatives likely to succeed.

Related postings 相关文章:

◙ 2 China Car Brands Set for Renaissance? “上海”和“红旗”汽车将重出江湖

◙ Nissan, VW Jump on China Brand Bandwagon 日产和大众进军中国低端车市场

◙ Geely Leans on Struggling Volvo 吉利依靠处于困境中的沃尔沃

Alibaba-Yahoo Buyout: Back to Square One 阿里巴巴股权回购重回起点

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When the history books are finally written, the ongoing divorce between e-commerce leader Alibaba and its controlling stakeholder Yahoo (Nasdaq: YHOO) could well go down as one of the longest in corporate history. But unlike the case with most divorces where messy issues like who gets to keep what assets complicates the matter, this case will see Yahoo taking most of the blame for the protracted delays, which have been extended yet again with the sudden resignation of Scott Thompson just a half year after he took over as CEO of the tarnished US Internet giant. (English article) For those who haven’t followed this story too closely, Thompson has been the subject of a tempest-in-a-teapot scandal over the last couple of weeks after a dissident Yahoo shareholder discovered the new CEO had made misstated part of his degree on his resume, claiming a double degree when in fact he only had a single one. Perhaps I’m being too harsh in calling this scandal a tempest in a teapot, as clearly it’s improper to exaggerate on one’s resume. At a more fundamental level, this gaff does seem to highlight the dysfunctionality that seems to be all too common at Yahoo these days, which brings me back to the original point of this posting, namely that this latest development will deal yet another major setback to Yahoo’s long and tortured talks to sell back some or all of the 40 percent stake it owns in Alibaba. To recap briefly, the pair were all smiles when they first announced their union in 2005, with Yahoo buying its 40 percent of Alibaba — now worth more than $10 billion — for just $1 billion. The honeymoon didn’t last for very long, and relations soured considerably under the brief tenure as CEO of Carol Bartz, who repeatedly clashed with Alibaba founder Jack Ma before her abrupt firing last September. (previous post) With Bartz out of the picture, Yahoo started to negotiate a sale of the stake back to Alibaba last fall, but unreasonable expectations by both sides, combined with a lack of leadership at Yahoo later caused those talks to collapse. After Thompson’s hiring, both sides returned to the bargaining table earlier this year, and foreign media were reporting as recently as a week ago that a deal might be just weeks away that would see Yahoo sell 15-25 percent of its stake back to Alibaba. I suspect that Thompson was a major driver of that deal, as he was clearly in control and keen to resolve that issue so he could focus on his much bigger task of returning Yahoo to health. If that was the case, that means that Thompson’s resignation, which has also thrown Yahoo’s board into turmoil, could easily mean the deal being negotiated will now be scrapped. What’s more, the board, which has named an acting CEO, is likely to take at least another couple of months to name a new long-term chief executive, who will then need to get acquainted with the company before relaunching any buyback talks. At this rate, I seriously doubt the 2 sides will be able to reach a deal this year, and the earliest we could see an end to this troubled marriage would be in the first half of 2013.

Bottom line: The sudden resignation of Yahoo’s new CEO will further delay its ongoing divorce with Alibaba, with a deal unlikely until the first half of 2013 at the earliest.

Related postings 相关文章:

◙ Alibaba’s Yahoo Buyback: Deal Finally Near? 阿里巴巴回购雅虎所持股权可能为期不远

◙ Alibaba: Let’s Get This Show Finished 阿里巴巴和雅虎赶紧“离婚”吧

◙ Yahoo: A Good Time to Break From Alibaba? 雅虎与阿里巴巴分手时机还不成熟

Deloitte, SEC Butt Heads As China Looks On 我觉得“德勤与美国证券交易委员会在中国公司问题上的冲突

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The auditor for a Chinese firm whose collapse helped to spark the current confidence crisis for US-listed China stocks is refusing to hand over related documents to government investigators probing the case, capitalizing on mistrust and lack of cooperation between the US securities regulator and its Chinese counterparts to impede the investigation. Regulators in both the US and China need to move beyond this kind of turf war and learn to work together to tackle these sorts of issues, or risk seeing the reputations and stocks of some of China’s most prominent entrepreneurial companies undermined for many years to come.The latest twist in this ongoing saga that began a year ago saw the Securities and Exchange Commission (SEC), which regulates US stock markets, charge Deloitte Touche Tohmatsu’s Shanghai office last week with failing to assist in a financial fraud probe against Longtop Financial, a Chinese financial services firm which collapsed last May after short sellers questioned some of its accounting. (SEC announcement) Several months after Longtop’s collapse, the SEC subpoenaed Deloitte in an effort to obtain some of the company’s accounting documents, and was rebuffed by the accounting firm, which all along has cited Chinese law as the reason for its refusal. In this and similar instances Deloitte and other international auditors are exploiting a loophole in the complex system allowing Chinese firms to list in New York. That system has left both the SEC and the Chinese securities regulator with very little power to actually oversee and investigate these companies for technical and territorial reasons. In a bid to close this loophole, SEC officials traveled to China last July to meet with government officials to discuss better cooperation, though it appears that little was accomplished. (previous post) While all this was happening, opportunistic short sellers launched a steady stream of similar attacks against other US-listed Chinese firms throughout last year, seeking to capitalize on the ballooning confidence crisis towards those companies. Some firms survived such attacks, but others were not so lucky and suffered similar fates to Longtop. The scandals went on to infect the entire sector of US-listed China stocks, causing their shares to plummet, and also cast a chill over the IPO market for Chinese companies looking to list abroad. The SEC has taken a number of steps to halt the confidence crisis, including launching several investigations like the one against Longtop. It has also worked to de-list shares of some smaller, more questionable Chinese companies that obtained their status by taking over existing publicly traded companies, a practice known as “back door listings.” But the impasse between the SEC and Deloitte spotlights the big limits the regulator faces when trying to conduct deeper probes into these firms – an obstacle it would never face from US-based firms. By failing to find a way to work together to address the problem, the US and China are giving auditors like Deloitte and their publicly traded clients a convenient and excuse to avoid producing documents that could implicate the companies for fraud, and also the accounting firms for lax oversight. If the two countries want to clean up this problem and restore confidence to the markets, they will need to find a way to work together effectively to force companies and their accountants to live up to their responsibilities as publicly traded firms. Otherwise, the result could be a prolonged confidence crisis for all US-listed Chinese stocks that would benefit nobody.

Bottom line: US-listed Chinese firms and their auditors will continue to evade regulatory scrutiny until the US securities regulator and its China counterparts learn to work together.

Related postings 相关文章:

◙ Deloitte, SEC Clash in New Confidence Crisis Chapter

◙ China, US Move to Ease Confidence Crisis 中美合作解决在美上市中国企业的信任危机

◙ Qihoo: The Next Accounting Victim? 奇虎360：下一个会计丑闻受害者？

News Digest: May 12-14, 2012 报摘： 2012年5月12-14日

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The following press releases and media reports about Chinese companies were carried on May 12-14. To view a full article or story, click on the link next to the headline.

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◙ US Senator Questions Fed on Chinese Bank Decision (English article)

◙ Perfect World (Nasdaq: PWRD) Announces Findings of Internal Investigation (PRNewswire)

◙ Baidu’s (Nasdaq: BIDU) Qunar Sues Ctrip (Nasdaq: CTRP) for Defamation (English article)

◙ Xueda Education (NYSE: XUE) Buys 60 Pct of Weilan Int’l for 18.9 Mln Yuan (Chinese article)

◙ Home Inns (Nasdaq: HMIN) Reports Q1 Financial Results (PRNewswire)

◙ Latest calendar for Q1 earnings reports (Earnings calendar)

Yum’s New Tie-Up Smells of Slowdown 百胜在苏宁店内开餐厅

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I was initially intrigued on reading that restaurant operator Yum (NYSE: YUM) was forging a new tie-up to open its KFC and Pizza Hut restaurants in appliance stores owned by Suning (Shenzhen: 002024), one of China’s top retailers, in what seems like a good expansion opportunity. (English article) But after some more consideration, this kind of a move almost looks to me more like a sign that Yum, after years of relentless expansion in China, may finally be running out of good growth opportunities in the huge market and is now having to look for newer, less obvious areas for expansion. If that’s the case, look for Yum’s phenomenal China growth to slow markedly in the next couple of years, putting a big damper on one of its few big growth stories that has made the company a popular investment choice even as many of its other major global markets remain sluggish. Let’s look at the actual news, which has Yum planning to open 150 new restaurants under its KFC, Pizza Hut and newly acquired Little Sheep hot pot brands in Suning stores over the next 5 years. This latest announcement comes as Yum now has 5,000 restaurants in China, with plans to open another 600 in the near future, further consolidating its spot as the country’s biggest operator ahead of the second largest player, McDonalds (NYSE: MCD), which has about 1,500 stores now and is aiming for 2,000 by the end of next year. Yum’s Suning tie-up looks similar in its less conventional nature to McDonalds plan announced last year to build up its drive-through business catering to a growing number of Chinese car owners. (previous post) That plan was followed by news in November that Yum itself was forging its own new partnership with oil major Sinopec (HKEx: 386; NYSE: SNP; Shanghai: 600028) to open restaurants in gas stations. (previous post) McDonalds is also exploring greatly expanding its franchising business, similar to what it already does in the US. While I applaud all these new moves for their innovation, they also seem to reflect the increasingly apparent reality that China’s first- and second-tier cities where Yum has found most of its success so far are quickly becoming saturated, with fewer and fewer attractive new opportunities for expansion. Gas stations and now Suning appliance stores certainly get lots of traffic, but it’s far from clear to me that either of these new initiatives will provide a big new growth area, as people who go to these places don’t usually come to eat a meal, though perhaps they might enjoy a snack during their visit. All that said, I would expect many of these new initiatives, including this new Suning tie-up, to produce very mixed results, contrasting sharply with the stellar performance of most of Yum’s existing China stores. If that’s the case, I wouldn’t be surprised to see Yum’s China growth slow quite a bit in the next 2 years, which seems almost inevitable, and for many of these new initiatives to ultimately end up as only modest successes or perhaps even as failures.

Bottom line: Yum’s latest tie-up with Suning appliance stores is the latest in a growing number of unusual new initiatives that show it may be reaching the saturation point in China.

Related postings 相关文章:

◙ Yum’s New China Strategy: Fill Up With Gas, Food

◙ Growth-Hungry McDonalds Explores Risky Franchising Route

◙ McDonald’s Revs Up for China Drive-Thru 麦当劳寄望“得来速”汽车餐厅拓宽中国市场

 

Apple Nearing iPad Trademark Settlement iPad商标权纠纷和解渐行渐近

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UPDATE: Since first publishing this commentary yesterday, it has come to my attention that Apple’s offer for the iPad name is actually 100 million yuan, or about $16 million, which is obviously far less than the $100 million that I wrote in my commentary. This shows that clearly there is still quite a distance between the amount that Apple is willing to offer Proview, which is reportedly seeking a minimum asking price of $400 million (that figure was correctly identified as US dollars) for the iPad name. I suspect this gap is Apple’s way of saying it won’t give in to Proview’s high demands, but still expect the 2 sides will settle the dispute, because that’s what China wants. Given the gap, however, a settlement may take a bit longer, perhaps a couple of months, and the final amount could be closer to $100 million.

The latest in a steady string of news leaks indicate a settlement may be near in the ongoing dispute between Apple (Nasdaq: AAPL) and a small near-bankrupt company that formally owns the rights to the iPad trademark in China. In the latest twist, Chinese media are citing unnamed sources saying that the near bankrupt company, called Proview International (HKEx: 334), has rejected Apple’s offer to buy the iPad name in China for $100 million. (Chinese article) This latest report comes after Proview’s lawyers have commented regularly on negotiations involving the trademark, and I have no doubt that this new comment is also coming from them even though they have chosen to remain anonymous this time. Previously, Proview’s lawyers have indicated they would like to get at least $400 million for the valuable trademark, already a sharp reduction from the $1 billion figure that was being cited in some earlier reports but still quite high for a trademark that Apple believes it already legitimately purchased several years ago in a transaction that was never formally consummated for technical reasons. Apple refuses to comment on the case, but it’s clear from all the reporting that the US tech giant has softened its original stance, which saw it refusing to negotiate a settlement and instead preferring to let the Chinese courts decide the matter despite losing an initial judgment in the case late last year. (previous post) While there is clearly still some distance between Proview and Apple  — $300 million to be exact — it does seem like the gap between the 2 sides is rapidly narrowing and that they will eventually reach a settlement in the next few weeks, probably in the middle somewhere at around $200 million. So why is Apple, a company famous for not yielding on any legal matters when it believes it is right, taking the unusual step of negotiating a settlement in this case? For people who have followed the matter closely, the answer seems obvious: because China wants to see the 2 sides reach a settlement, which would remove the huge pressure now being felt by an inexperienced Chinese legal system that would inevitably draw criticism no matter how it ruled in the case. A ruling in Apple’s favor would draw criticism from people saying the courts were yielding to pressure from a major multinational company; a ruling for Proview would send a chill through the global business community, which would see such a judgment as a sign that China is inherently biased towards its own domestic companies. Faced with such a no-win situation, China wants the 2 companies to settle the matter on their own in a way that will seem fair to everyone. Apple normally ignores such pressure, preferring to stand on principles. But in this case it has to tread very carefully, as its growth in China has exploded in the last year on the popularity of its iPhones and iPads, with the Greater China market accounting for a fifth of its global sales in its latest quarterly report. (previous post) Considering all those factors and the latest reports, Apple really has no choice but to settle in this matter, which is likely to happen within the next month. Such a move will be good for everyone, allowing Apple to finally sell its newest iPad in China and focus its attention on developing a market that will be key to maintaining its growth for the next 2 years.

Bottom line: The latest signals from talks to settle a trademark dispute over the iPad name in China indicate a settlement is likely in the next month, with Apple likely to pay $200 million for the name.

Related postings 相关文章:

◙ New China Noise in iPad Dispute Bad for Apple 政府官员发表评论对苹果iPad之争不利

◙ Apple Feasts on China, Baidu Burps 苹果在华享受盛宴，百度盛宴停顿

◙ More Proview Empty Talk in iPad Dispute 唯冠寻求禁售新款iPad将是徒劳之举