Apple Inc's Tim Cook, on his first trip to China as the chief executive officer, has visited an iPhone production plant run by the Foxconn Technology Group, which is being accused of improper labor practices.
China is the world's largest mobile market and already Apple's second-biggest market overall, but its growth there is clouded by issues ranging from a contested iPad trademark to treatment of local labor.
Picture handouts dated March 28 and e-mailed to Reuters show Cook seen smiling and meeting workers in the newly built Foxconn ZhengzhouTechnology Park in the north central province of Hebei. The facility employs 120,000 people, the handouts said.
Foxconn is a major part of Apple's global supply chain, assembling most of its iPhones and iPads, but has been hit by a string of worker suicides in recent years that activist groups blame on tough working conditions.
The group is the Taiwan parent of Hong Kong-listed Foxconn International Holdings and Taiwan-listed Hon Hai Precision.
Cook took the reins at Apple in August after the death of the firm's visionary founder, Steve Jobs. His closely guarded itinerary has included talks with Vice Premier Li Keqiang, Beijing's mayor and a visit to one of Apple's two stores in the capital.
On Wednesday, state media reported that China's vice premier promised Cook the country would boost intellectual property protection.
the official Xinhua news agency cited Vice Premier Li Keqiang as saying.
"To be more open to the outside is a condition for China to transform its economic development, expand domestic demands and conduct technological innovation."
Apple has tie-ups with China Telecom and China Unicom to sell its iPhone, with the only other Chinese carrier, China Mobile, the country's biggest mobile operator, also looking to clinch a deal.
Apple is embroiled in a long-running dispute with Proview - a financially weak technology company that claims to have registered the iPad trademark - that is making its way through Chinese courts and threatens to disrupt iPad sales.
COMMENTARY: I would gladly give up one case of Chateauneuf du Pape '04 to find out what Apple CEO Tim Cook told Foxconn management during his visit to the plant concerning their sweat shop conditions, progress on Apple inspections of their plant, and plan to improve worker relations and pay.
Cook's visit to Foxconn makes good public relations--images of the powerful new Apple CEO visiting Foxconn, gives one confidence that finally those sweat shop conditions will end, Foxconn will comply with Apple's Code of Suppliers and everything will be hunky-dorey. As I said in my post prior to this one, Apple is not a socially conscience company. They are all about increasing shareholder value and profitability.
If Apple CEO Tim Cook really wanted to impress me, he would give Foxconn an ultimatum, and if they failed to comply after regular inspections, he would promise to move the manufacturing all Apple products to the U.S. This would create an estimated 250,000 jobs, many of them right here in Silicon Valley, where we need them the most.
I would be very interested in hearing from Apple evangelists--owners of Apple magical devices whether the iPhone, iPad or iPod. Foxconn makes all of them, so you can enjoy that magical experience.
Courtesy of an article dated March 29, 2012 appearing in Reuters and an article dated March 28, 2012 appearing in Brian Fontenot Blog
Here's how Apple (AAPL) allegedly got Proview International Holdings to sell them the iPad trademark 35 days before Steve Jobs unveiled the device at a San Francisco press conference.
Apple hired a British firm called Farncombe International and its managing director, Graham Robinson, to be its secret agent.
Robinson created a British shell company called IP Application Development Limited ("IPAD Ltd.").
Using the alias Jonathan Hargreaves, Robinson opened talks in Taiwan with Proview, concealing the fact that he was negotiating on Apple's behalf.
Asked why he wanted the trademark, Robinson said it was an acronym for IP Application Development.
Asked what business IPAD Ltd. was in, Robinson was evasive: He said. "I'm sure you can understand that we are not ready to publicize what the company's business is, since we have not yet made any public announcements."
He further stated, apparently in an e-mail, that "the company will not compete with Proview."
These details -- some familiar, some fresh -- come from a Proview press release issued Monday. It describes an amended complaint filed in a California federal court that is charging Apple with "fraud by intentional misrepresentation, fraud by concealment, fraudulent inducement, and unfair competition."
Reached for comment, Apple denied none of the details in the complaint. Rather, it issued the same statement it's been giving out for nearly a week:
"We bought Proview's worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honor their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter. Our case is still pending in mainland China."
The irony is that Proview is trying to get a U.S. court to nullify an agreement that it claims in Chinese courts never existed -- namely the one that Apple says sold them the rights to the iPad trademark in mainland China.
Proview's press release has answer for that:
"The legal questions and remedies in the China and U.S. lawsuits are separate and distinct and have no bearing on one another."
COMMENTARY: That's what I call "cutting it close," and very sneaky on Apple's part to acquire the iPad trademark through a third-party.
Apple unveiled the iPad tablet on January 27, 2010, which would put iPad, Ltd's negotiations to acquire the iPad trademark from Proview right around December 22, 2009. If Apple had been unsuccessful in acquiring the "iPad" tradename from Proview, what would Apple have named its new "magical" tablet?
However, I am still a bit confused, because on January 20, 2010, The Jesus Tablet blog reported that Fujitsu owned the trademark "iPad" and that would either prohibit or discourage Apple from using the mark. What has not been reported is that Apple filed requests with the US Patent & Trademark Office (USPTO) several times in late 2009 to extend the time given to oppose Fujitsu's trademark with the USPTO. The USPTO granted the request and extended the time to oppose to 2/28/2010 "on behalf of potential opposer Apple Inc."
Apple's 60-Day Request For Extension of Time to Oppost Upon Concent with USPTO of December 23, 2009 (Click Image To Enlarge)
Letter from USPTO dated December 23, 2009 granting Apple a 60-Day Extension of Time to Oppost Upon Consent (Click Image To Enlarge)
As you can clearly see from the above United States Patent and Trademark Office 60-day extention request filing and the letter granting the 60-day extension, Fujitsu owned the "iPad" trademark, not Proview.
Maybe Fujitsu owned the iPad trademark only in the U.S., not China. Proview apparently ownes the iPad trademark in China, which is the subject of the lawsuit.
I assume that Fujitsu granted Apple the iPad trademark. I have not found proof of this yet. If Proview wins its lawsuit, then the iPad name could not be used in China, unless it is licensed from Proview, and this could be very costly for Apple. This is going to get interesting. Stay tuned for further developments.
According to CASM's public relations group, Oglivy,
"This is the first time the Department has ever applied critical circumstances before a preliminary determination. This is a win for CASM and the U.S. solar manufacturing industry. Moreover, it confirms our report from last week that the Chinese were pushing product into the US market to avoid tariffs."
CASM has a brilliant sense of timing. They announced their initial claim during the U.S. solar industry's largest trade show in October. They just announced the decision by commerce during a phone briefing on a CASE study with findings on job losses due to tariffs.
Here's the text of the statement from the Department of Commerce:
"In summary, in accordance with section 703(e)(1) of the Act, we find that there is a reasonable basis to believe or suspect that certain subsidy allegations under investigation are inconsistent with the SCM Agreement, and we find that there have been massive imports of solar cells over a relatively short period from Suntech, Trina, and all other producers or exporters.
Given the analysis summarized above, and described in more detail in the Preliminary Critical Circumstances Memorandum, we preliminarily determine that critical circumstances exist with respect to imports of solar cells from the PRC for Suntech, Trina, and all other producers or exporters."
Although, the Department of Conmerce has not announced the size of the duties yet - the bottom line is that they have determined there has in fact been harm.
The SolarWorld/CASM solar panel anti-dumping and countervailing duties case is still percolating at the International Trade Administration. It's a case with long-ranging implications for U.S. and Chinese solar manufacturers and the entire U.S. solar ecosystem. We've covered the case in detail and have provided perspectives from a number of angles since its initial filing on October 19 of last year.
There's not much to do other than wait, now until March 2, and in the meantime the parties will busy themselves with publishing studies and launching further public relations campaigns.
The decision on countervailing duties will wait for another month.
According to the Department of Commerce,
"SolarWorld made a second timely request on January 19, 2012, for further postponement of the preliminary countervailing duty determination by 18 days, to March 2, 2012 and the department "has found no compelling reason to deny the request."
In Obama's State of the Union address last week, he announced the creation of a Trade Enforcement Unit to investigate trade issues, saying,
"I will not stand by when our competitors don’t play by the rules."
CASM, the SolarWorld-headed coalition has estimated that
"Chinese producers have more than doubled imports of crystalline silicon solar cells and modules in advance of potential U.S. government duties on those imports, according to an evaluation of U.S. Customs and Border Protection data. The coalition alleges that the recent "110 percent surge in import volume since July 2011 is further proof of illegal dumping and subsidies by Chinese solar producers and warrants a finding of critical circumstances that would apply retroactive duties to Chinese imports."
CASM cites Suntech and Trina Solar as ranking amongst those Chinese producers.
Trina Solar has responded with these points:
We are opposed to any suggestion that our U.S. imports surged as the result of efforts to evade potential tariffs.
Nearly all of Trina Solar's U.S. shipments served orders tied to the federal 1603 grant expiration. We stand by our practices and the fact that they matched an increase in overall U.S. market demand.
Further, due to production cycle and delivery logistics, it is an established industry pattern to see the majority of any quarter's shipments occurring in the last month.
We'll get you more details shortly on a new report by The Brattle Group on the economic and job impacts of tariffs on imported solar PV cells and modules.
We've contacted the International Trade Administration and asked them about the process itself, and specifically, about how and if citizens and concerned parties (other than the claimant) can make their views or evidence available. We await their response.
COMMENTARY: In a blog post dated October 23, 2011, I reported on the anti-dumping and countervailing-duty complaint filed by solar producer SolarWorld and the CASM with the U.S. Department of Commerce and International Trade Commission (ITC) on Wednesday, October 19, 2011.
Gordon Brinser, president of SolarWorld Industries America Inc., said in a statement.
"Central planning has subsidized most facets of these companies' businesses. China actually has no production cost advantage. China's labor is less productive, its raw material and equipment have come from the West, and China must pay for long-distance shipping. Yet massive state subsidies and sponsorship have enabled Chinese manufacturers to illegally dump their products into a wide-open U.S. market."
The complaint reads.
"Chinese producers and exporters have pushed - and will continue to push - large and growing volumes of dumped and subsidized [crystalline-silicon PV] products into the U.S. market, regardless of demand. In the absence of the restraining effects of anti-dumping and countervailing-duty orders, the domestic industry faces a grim future."
The CASM demanded that the ITC and DOC to impose duties to counteract Chinese subsidies and bring the prices of imported solar products to true market levels.
John Smirnow, vice president of trade and competitiveness at the Solar Energy Industries Association said.
"U.S. companies have the right to bring a case. There are competitive pressures in the marketplace, and the coalition believes the competitive pressures are the result of unfair competition."
In a blog post dated October 29, 2011, I commented on the Chinese PV manufacturer's response to the U.S. solar coalition complaint. Naturally, the Chinese PV manufacturer's claimed that the "allegations made by the U.S. petitioners will eventually prove to be unfounded" and that "the transactions with its United States customers were made in accordance with international trade practices."
On January 25, 2012, the CASM sent out a press release titled, "Chinese producers flood U.S. market with solar cells and modules ahead of upcoming ruling in solar trade case." The press release reads as follows:
"Washington, D.C., Jan. 25, 2012 – Chinese producers have more than doubled imports of crystalline silicon solar cells and modules in advance of potential U.S. government duties on those imports, according to an evaluation of U.S. Customs and Border Protection data released today by the Coalition for American Solar Manufacturing (CASM). The coalition, which represents 11,000 U.S. workers at more than 150 American companies across the country, alleges that the recent 110 percent surge in import volume since July 2011 is further proof of illegal dumping and subsidies by Chinese solar producers and warrants a finding of critical circumstances that would apply retroactive duties to Chinese imports.
'This significant increase in imports demonstrates that the Chinese know they have violated U.S. and international trade rules and are trying to evade the consequences,' said Gordon Brinser, president of SolarWorld Industries America Inc., based in Oregon. 'Year to date, Chinese imports of solar cells and modules in 2011 are up 346 percent by quantity and 138 percent by value. Since 2008, Chinese imports have risen 939 percent by value and 1664 percent by quantity. This most recent surge of Chinese solar imports gives the U.S. Department of Commerce the evidence it needs not only to make a preliminary determination in our favor, but also to apply a critical-circumstances finding to address this last-minute import surge.'
Under U.S. trade law, Commerce can make a finding of critical circumstances that requires importers of record to post bonds or cash deposits on tariffs on imports dating back 90 days from preliminary determinations on whether duties are warranted and, if so, by what margin. A preliminary determination is expected on Feb. 13, meaning imports from Nov. 15 onward would be subject to duties.
Using publicly available data from the Customs and Border Protection’s Port Import Export Reporting Service (PIERS), CASM researchers found imports from Wuxi Suntech Power Co. Ltd.(known as Suntech), a Chinese manufacturer and respondent in the ongoing trade investigations, surged 76 percent in November, compared with October. PIERS reports also show that imports from Changzhou Trina Solar Energy Co. Ltd.(known as Trina Solar), another Chinese manufacturer and respondent, spiked 209 percent in the first half of December, compared with the first half of November 2011.
Further, CASM research found numerous examples of companies stockpiling dumped and illegally subsidized Chinese imports, providing credible evidence to support a finding of critical circumstance. For example, Sun Electronics, a Miami importer and wholesaler, brought in 31,000 Chinese solar laminates on a single day: Dec. 21, 2011. This enormous shipment, consisting of at least 77 shipping containers, required Sun Electronics to rent six forklifts and drivers and devote four-five other people to screen and sort the laminates. Sun Electronics noted in an advertisement that it has recently obtained an entire second storage warehouse, likely demonstrating its intent to receive other large shipments of Chinese solar products.
'The Chinese have made it clear that, contrary to various World Trade Organization agreements they signed 10 years ago, they will employ any means necessary to dominate the American and international solar markets,' Brinser said. 'Rather than reward the Chinese for cheating, Commerce and the International Trade Commission need to take every possible action to enable American manufacturers to compete fairly.'
A complete list of the CASM findings can be found on the CASM website
On Dec. 2, the U.S. International Trade Commission issued a unanmimous preliminary determination that Chinese trade practices are harming the U.S. domestic solar manufacturing industry. The next step in the trade case will be Commerce’s Feb. 13 preliminary determination on whether to levy countervailing import duties to offset the effects of any illegal Chinese subsidies. On March 28, Commerce is scheduled to make its preliminary antidumping determination, imposing duties to offset the effects of Chinese import pricing at artificially low prices."
The CASM also released a comprehensive report of solar cell and panel imports to the U.S. for all countries, including China. Here is the summary totals from the report pertaining to China's solar cell and panel imports:
It's obvious that China must've known that the U.S. Department of Commerce would impose penalties, so they flooded the market to the tune of $277.9 million in solar cells and panels in November 2011. Sneaky, sneaky, sneaky.
Whether this anti-dumping and countervailing-duty complaint victory by the U.S. solar industry will spark a round of similar trade complaints in other industries remains to be seen or even spark retaliation by the Chinese on U.S. imports into China remains to be seen.