Mainland firm Meizu has been making MP3 players and handsets for more than seven years, but it recently learned a modern business lesson: beware the wrath of Steve Jobs.
The chief executive of Apple has a reputation as a control freak (just ask Adobe). And he’s not afraid to bring his rivals to court over patent infringements (as HTC and Nokia will testify).
The Chinese gadget maker’s squabble with Apple started in early September, when the manufacturer of the iPod and iPhone complained that Meizu’s flagship product, the M8 smartphone, bore an appearance similar to the iPhone (true enough, see photo).
Apple officially filed a complaint earlier this month with the State Intellectual Property Office (SIPO), demanding that Meizu stop all production of the M8. SIPO agreed with Apple that the M8 does indeed look too similar to the iPhone and ordered Meizu to stop producing the phone or face the potential closure of its factory.
Apple didn’t think that was enough, demanding that Meizu not only stop production but also cease all sales of the remaining stock of Meizu M8 phones. SIPO concurred again, threatening Meizu’s factories with closure if it did not comply.
Meizu executives were astonished with the directive, warning that Apple’s ban will force many of its stores, as well as those of its franchisees, out of business.
The Shanghai Evening News also reckons that Meizu still has 50,000 M8 handsets in its inventory. Although there is a new handset model (the M9) in the pipeline, Meizu says the new device will not go into production until December.
Jack Wong, Meizu founder and chief executive, said he is going to retaliate by taking the case to court if he is prevented from selling the remainder of his M8 stock.
“I can cope with a production freeze, but not with having our shops closed and thus not being able to use up our inventory,” Wang wrote on his company’s public message board. “If Apple and SIPO make further impossible demands, I can only go head to head against them.”
Taking on Steve Jobs will strike some as plucky. But more puzzling: how will he take on the State Intellectual Property Office? After all, it’s a government body.
The fact it backed Apple will be viewed as welcome by foreign CEOs.
But the Chinese press were baffled as to why Apple has singled-out Meizu for such close attention. After all, it is hardly the first handset maker to make touchscreen smartphones that resemble the iPhone. And though the two do look alike, the M8 runs on Android, the open source software platform created by Google, and not Apple’s OS. Besides, Meizu sales account for less than 1% of China’s smartphone market.
According to Jobs, Apple decided to take Meizu to task “because they stole our ideas and intellectual property”. His statement was published on Meizume, an unofficial Meizu fan site, after a fan had sent Jobs an email asking why he had targeted the Chinese firm.
Analysts say Jobs might have taken a special interest in Meizu because the M8 is the closest clone to the iPhone yet. When it first came out in 2009, it also generated an unanticipated level of positive feedback. Then, of course, there’s the price. An iPhone 4 costs about $870 in China. The Meizu equivalent is available for a little more than $300.
But perhaps the feud between Apple and Meizu is another sign of China’s growing importance to the Californian company. Apple is finally taking the world’s largest mobile market seriously. Noticeably, it has shortened the delays between its launch of new products in the US and when it starts bringing them to China (see WiC80). It has also deepened its Chinese distribution. Analysts say the recent introduction of the iPhone 4 and the iPad marked a major step forward for the tech firm in the domestic market.
“Our four China stores are our highest-traffic stores in the world and are among our highest performing,” said Apple chief financial officer Peter Oppenheimer last week. The company has promised to open 25 stores in China by the end of 2011.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.