No more iPads?

[Seadog]

A display manufacturer in China who had sold the rights to the iPad name, is using legal trickery to prevent Apple from continueing to use the iPad name. According to the reports, Apple bought the rights from them for the name in 10 countries, including China. Preview Technologies who is in financial trouble, is somehow changing the rules and demanding $1.6B from Apple. They have already gotten the "court" in their hometown to allow the police to confiscate any iPads they find. Now they are trying to get an export ban on all iPads. If that happens, no one will get an iPad.

They may be able to rebox everything and remove all reference to iPad, but I suspect that this is one case where Apple needs to flex their muscle and smash these people. From what little I can find on the subject, the company is failing and is using this as a last resort means of bailing theirselves out.

 

[Billee]

Easy way out, change the name. MaxiPad?

 

[Seadog]

One report is that this is in retaliation for Apple allowing an investigation of Foxconn, thus angering the Chinese warlords (excuse me, I meant leaders). Long term, there are solutions, but it would cut off all Apple production in China, and possibly affect the other products too. It could destroy Apple financially. In the meantime, China will continue to crank out thousands, if not millions of copies in violation of world copyright laws with no penalty. I do not know what is the answer, but I recognized over a decade ago that China held a heavy hand over our economy. We can get out from under their thumb, but not without a long period of struggle that can damage us. I would recommend reading the Bear and the Dragon by Tom Clancy for more insight of the situation. It does give some interesting insight to how the Chinese regard western consummers.

 

[idave23]

This could get very political very quickly.

 

[AdmiralAdama]

I think profitability will win the day in Beijing and Cupertino.

AA

 

[Seadog]

Unfortunately, all businesses who deal with any country, are involved with politics. Compared to many Asian nations, the influence business has here in the US is moderate. It would be easy to dismiss this issue, as so many have in the past, but it puts Apple in a tough spot. They either pay what could amount to blackmail, or shutdown operations for a couple of years. What is not well recognized is that often, the actual construction of new factories is relatively quick. It is the hoops that must be jumped through to get permission, and then the hiring and training of employees. Look at the situation with hard drives. The major factories were concentrated in a zone that got flooded. It has been a long time now and they are saying that it will take until 2014 to fully restore production. And they have the permits and labor force already.

I have no doubts that Apple is contemplating a move out of China, but it may take them a decade to do so. If the Chinese get their way, are people going to be willing to pay another $100 for their iPads?

 

[thewitt]

Short term worst case Apple will rebrand the iPad under a different name in China. Significantly cheaper than paying the blackmail.

Of course that will only happen if they lose their appeal.

 

[Kaykaykay]

I have no doubts that Apple is contemplating a move out of China, but it may take them a decade to do so. If the Chinese get their way, are people going to be willing to pay another $100 for their iPads?

Apple has been trying to expand production outside of China, but has run into problems in Brazil, for instance. China generally is lax about labor and environmental standards, and has a low cost of doing business, even with bribes factored in. It also has a relatively large labor supply for such jobs (relatively trainable and cheap, and usually in their 20s or younger). When you move production, you also have to consider how far you'd be from your supply chain. Apple is in China only because the circumstances are good for its profit margins and its quality control.

 

[idave23]

Unfortunately, all businesses who deal with any country, are involved with politics. Compared to many Asian nations, the influence business has here in the US is moderate. It would be easy to dismiss this issue, as so many have in the past, but it puts Apple in a tough spot. They either pay what could amount to blackmail, or shutdown operations for a couple of years. What is not well recognized is that often, the actual construction of new factories is relatively quick. It is the hoops that must be jumped through to get permission, and then the hiring and training of employees. Look at the situation with hard drives. The major factories were concentrated in a zone that got flooded. It has been a long time now and they are saying that it will take until 2014 to fully restore production. And they have the permits and labor force already.

I have no doubts that Apple is contemplating a move out of China, but it may take them a decade to do so. If the Chinese get their way, are people going to be willing to pay another $100 for their iPads?

And of course Apple is completely innocent in all this. Their demands for high profit margins and large dividends have nothing to do with it? Their insistence on their overseas suppliers being capable of delivering a sometimes huge amount of parts and products at a usually low price along with the ability to change specs at the last minute and still meet those demands has nothing to do with how those companies end up treating and paying their employees? And the American consumer's demand to have the latest and greatest version of each device at the cheapest price plays no role either I suppose.

And if they do move out of China? Is anyone naive enough to think those demands won't be made to the next company in the next country? Will it make everyone feel better if it's Brazilians or Indonesians being over-worked and under-payed so we can all have our iDevices for $100 less?

 

[Seadog]

For most major electronics companies, it is impossible to manufacture their products in the US. Smaller companies that do not do mass production are doing just fine. In fact, many smaller companies have moved their manufacturing back to Silicon Valley. A jounalist looked into the decision making process and found out that at the large scale level, it was not possible to build them here in the states. It was not just wages and working conditions, it was the endless bureacratic snafus, lack of qualified workers, and many other features. This type of manufacturing requires a different work concept than we have here. It is like the Japanese automakers when they were faced with a shortage of workers to build cars in Japan. One company tried to go to a robotic factory. They found that it did not save them any money, and it limited them when they had to make changes. You can tell a human to use part B instead of part A, but a robot has to receive extensive re-programming to do even the simplist change. And instead of production line workers, you had a lot more maintenance crews and programmers.

As for the original subject, the latest work has that China authorities are saying they cannot prevent the export of iPads due to Apple having the legal right to the name in ten other countries. It would onl be in China that they can be blocked. Since the Chinese market is very big, Apple will probably negotiate. However, what if they decided to change the name of the iPad sold in China? How about iP@d? iMad? iBad? I like iShoyu.

 

[idave23]

For most major electronics companies, it is impossible to manufacture their products in the US. Smaller companies that do not do mass production are doing just fine. In fact, many smaller companies have moved their manufacturing back to Silicon Valley. A jounalist looked into the decision making process and found out that at the large scale level, it was not possible to build them here in the states. It was not just wages and working conditions, it was the endless bureacratic snafus, lack of qualified workers, and many other features. This type of manufacturing requires a different work concept than we have here. It is like the Japanese automakers when they were faced with a shortage of workers to build cars in Japan. One company tried to go to a robotic factory. They found that it did not save them any money, and it limited them when they had to make changes. You can tell a human to use part B instead of part A, but a robot has to receive extensive re-programming to do even the simplist change. And instead of production line workers, you had a lot more maintenance crews and programmers.

You're no doubt referencing the same NYT article I am. And the conclusion in part was not that it was impossible to build them here, but that it was much more cost-prohibitive. Not the same thing. Apple and others don't want to deal with the "hassle" of having to use companies that treat and pay their employees in a manner US workers are accustomed to. But that's not the same as being impossible.

 

[daffy67]

Big business (Apple) will find a way around this.
China is also making money, ceretainly not as much as Apple perhaps but it needs consumers to buy the products made in its country.

 

[s2mikey]

You're no doubt referencing the same NYT article I am. And the conclusion in part was not that it was impossible to build them here, but that it was much more cost-prohibitive. Not the same thing. Apple and others don't want to deal with the "hassle" of having to use companies that treat and pay their employees in a manner US workers are accustomed to. But that's not the same as being impossible.

I have to agree with this. I've about had enough with companies seeking out the cheapest and most miserable workforce. As soon as a country starts to increase their standard of living and actually wants a little more out of the deal, the companies find the next most desolate and downtrodden area to build things in. It's not a lack of a workforce or skill set. That's a bunch of fooey. I'm all about capitalism and generating wealth though business and such. But, what's wrong with paying the workforce a little more? What's wrong with facilitating a strong middle class...ya know, people that buy iPads and stuff? Why does it always have to be the lowest common denominator when dealing with labor? Geeshus.

Awe well. I hope this all works out for Apple.

 

[Seadog]

The article I read was that it was not about paying more for the workforce. It is about quickly assembling a large skilled work force. We do not have that. Oklahoma is home to one of the best vocational/technical programs in the nation. Every school has a technology training center within its travel range, and they teach an excellent course selection. But even so, there is no way that they could train to staff a large industrial complex. And I know the type of work forces available. It would take an eternity to assembled the required number of people, weed out the ones that cannot cut it, and get the rest trained to the level that most of the Chinese are at. It is not in our collective skill set, because it was never there to begin with. It requires a mobilization effort similar to a military function. A lot of companies are leaving China because the cost of workers is going up faster than anywhere else in the world. Apple is not making any major plans to leave. They will be diversifying their manufacturing, but I think you will find that the past year has shown them that despite the advantages of having almost all your suppliers in a zone, if there is a major disaster, you are in big trouble.

 

[thewitt]

Apple has over 10,000 dedicated workers at Foxconn. No place in the US is this possible today.