Apple’s Loss in China Could Turn Into Samsung and Lenovo’s Gain

Apple Inc’s legal row over its iPad trademark in China creates a window of opportunity for rivals such as Lenovo Group Ltd and Samsung Electronics Co Ltd as they try to chip away at the U.S. firm’s dominance of the potentially vast Chinese tablet market.

"Apple's loss could be Lenovo and Samsung's gains," said Jonathan Ng, an analyst with CIMB in Singapore. Photo: Lincolnblues/Flickr

Apple’s dispute over the iPad trademark deepened Monday after the Chinese company that claims ownership of the name said it won a court ruling against sales of the popular tablet computer in China, reports The Star.

Apple Inc. said in a statement Monday that its case is still pending in mainland China. The company has appealed to Guangdong’s High Court against an earlier ruling in Proview’s favour.

Apple insists it holds the trademark rights to the iPad in China. “We bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honour their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter,” said Apple spokeswoman Carolyn Wu.

Xie Xianghui, a lawyer for Shenzhen Proview Technology, said the Intermediate People’s Court in Huizhou, a city in southern China’s Guangdong province, had ruled on Friday that distributors should stop selling iPads in China.

Proview, a maker of LCD screens which is based in Guangdong, has asked regulators to seize iPads in China in a possible prelude to demanding a payout from Apple. A Shanghai court is due to hear a similar case on Wednesday.

Apple contends that it acquired the iPad name when it bought rights in various countries from a Proview affiliate in Taiwan in 2009 for 35,000 British pounds ($55,000). Proview won a ruling from a mainland Chinese court in December that it was not bound by that sale.

Apple’s iPad enjoys a huge lead over rival tablet PCs in China with a 76 percent share. Lenovo and Samsung trail a distant second and third with about 7 percent and 3 percent respectively, data from research firm IDC showed, according to Reuters.

“Apple’s loss could be Lenovo and Samsung’s gains,” said Jonathan Ng, an analyst with CIMB in Singapore.

“Samsung will probably benefit more from Apple’s ongoing lawsuit because both of them are after the same higher-end consumers given their price points,” said Dickie Chang, an analyst from IDC in Hong Kong.

“The impact on Lenovo may be less because Lepads are lower priced and are aimed more at entry-level users.”

China has 505 million Internet users now, with the number of microbloggers exceeding 300 million — more than that of active Twitter users.

Tablet PC makers are clamoring for more market share in a country where consumers are increasingly tech-savvy and prefer to play online games, tweet and email while on the road. Apple has said it is so far only scratching the surface in China.

IDC said in the third quarter Apple sold about 1.3 million iPads in China, while Lenovo, the world’s second largest PC maker, sold around 120,000 Lepads in its home market and South Korea’s Samsung sold 58,000 Galaxy Tabs.

A basic iPad 2 typically costs 3,688 yuan ($585), roughly the same price as 7-inch Samsung Galaxy Tab, while some models of Lenovo’s Lepad were selling at roughly half that price on online retail sites.

Meanwhile, Apple’s fans in China are resorting to other means of getting hold of an iPad.

“With Apple iPads banned in some places, it’s going to create more opportunity for Lenovo and Samsung to increase their market share,” said Sun Peilin, an analyst with Analysys International in Beijing.

“All the more so since the prices of iPads smuggled into China will rise more,” Sun said.

In Shijiazhuang, where authorities have told resellers to take iPads off their shelves, potential buyers were being told to ask for it secretly.

“You have to come back between 5 and 6 p.m. If you come during the day we’ll have to tell you we don’t stock any iPads,” said one salesman, adding that authorities would confiscate any iPads on display.

Apple, based in Cupertino, California, points to a Hong Kong court ruling in July that said Proview had acted with the intention of “injuring Apple.”

According to that ruling, Apple set up a company in Britain to buy the iPad trademark from owners in various markets without revealing Apple was the purchaser.

Proview has accused Apple of acting dishonestly when it bought rights to the iPad name from Proview’s Taiwan affiliate. A Hong Kong court document shows that once the dispute arose, Proview demanded $10 million (U.S.) for the iPad name in China. But Hong Kong’s legal system is separate from the mainland’s.

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