HONG KONG/BEIJING (Reuters) - Apple Inc Chief Executive Tim Cook has jetted into China for talks with government officials as he seeks to clear up a pile of problems in the firm’s biggest growth market, from its contested iPad trademark to treatment of local labor.
Cook is on his first trip to the country since taking over from late co-founder Steve Jobs in August, keeping to a closely guarded agenda that has included talks on Monday with Beijing’s mayor and a visit to one of Apple’s two stores in the capital.
“Tim is in China meeting with government officials. China is very important to us and we look forward to even greater investment and growth there,” said Carolyn Wu, China spokeswoman for the maker of iPhones, iPads and iPods.
Wu declined to give details of Cook’s full agenda, other than to say he would meet other government officials on Tuesday.
Cook was photographed smiling by eager fans at the Apple store, who posted some of the images on social networking sites.
The new chief executive has a thicket of problems to cut through in China, which is both Apple’s most important manufacturing hub and biggest potential market.
China is the world’s largest mobile market and already Apple’s second-biggest market overall, but the firm has been losing ground there to arch rival Samsung Electronics in smartphones and has yet to introduce the latest version of its top-selling iPad to the country.
In the last quarter of 2011, Apple captured three quarters of China’s tablet PC market, while its iPhone ranked fifth in the country’s smartphone sector, industry figures show.
SCRATCHED THE SURFACE
Apple has deals in place with China Telecom and Unicom to sell its iPhone in the country, with the only other Chinese carrier, China Mobile, looking to clinch a deal with the California company.
An alliance with China Mobile, the country’s biggest mobile carrier, is viewed by many industry analysts as crucial to the acceleration of iPhone sales through China, though compatibility problems with the carrier’s network have yet to be resolved.
Cook has said that Apple has merely scratched the surface in China as it looks to expand. It has only five stores in the country, though it also sells through more than 100 resellers.
Apple is also waging a legal battle with a Chinese firm over the local rights to the iPad trademark. The long-running dispute with Proview - a financially weak technology company that claims to have registered the trademark - is making its way through Chinese courts and has threatened to disrupt iPad sales.
Proview executives declined to comment on Tuesday over whether they will be meeting Cook. No meetings have been set so far between the Apple chief and the Chinese company’s lawyers and creditors, sources familiar with the situation said.
“He should be here to also understand more of the iPad issue and handle the situation,” said one source close to Proview.
Hejun Vanguard Group, a consulting company representing Proview creditors, issued an open letter to Cook on the occasion of his China visit on the trademark lawsuit.
Proview’s creditors said they are overseeing the assets of the loss-making company. Proview Technology (Shenzhen) said earlier in March it was in talks with a creditor that was seeking its bankruptcy.
“We are willing to fight the trademark case for five, 10 years or even longer,” Hejun Vanguard said. “We’ll see how long the biggest company in the world can exploit the law and intellectual property rights in China.”
Apple has not launched its new iPad in China yet, so people have been smuggling the new gadget from as far away as the United States and Australia. The new iPad has also been smuggled in from Hong Kong.
The device hit a hurdle in Australia on Tuesday as the country’s consumer regulator accused Apple of misrepresenting the iPad’s ability to connect to fast 4G mobile data networks and said it would seek corrections in advertising, and refunds.
Apple is also reviewing labor standards at the Taiwan firm it uses to assemble its iPhones and iPads, Foxconn Technology Group, which has been accused of running sweatshops in China. The group is the Taiwan parent of Hong Kong-listed Foxconn International Holdings Ltd. and Taiwan-listed Hon Hai Precision.
At the outset of Cook’s visit to China, an activist group based in Hong Kong published an open letter, demanding “that Apple ensure decent working conditions at all its suppliers.”
As the former chief operating officer, Cook helped set up Apple’s sprawling supply chain centered on Asia.
In the open letter, Students & Scholars Against Corporate Misbehaviour, listed grievances cited by employees at Apple suppliers, including “poverty wages” and excessive and forced overtime.
“They describe their daily routine as work, eat and sleep. They described themselves as machines that repeated the same monotonous motion for thousands (of) times a day,” it said.
“With all its success in the global marketplace, Apple undoubtedly has (the) ability to rectify these problems.”
Apple notes that it has begun releasing labor data monthly, and that it reached 84 percent compliance with its 60-hour work week policy in January, according to a survey of 500,000 workers at suppliers worldwide.
For February, compliance to the 60-hour work week rose to 89 percent, with the average work week 48 hours, Apple says.
“That’s a substantial improvement over previous results, but we can do better,” the company said on its website.
Additional reporting by Poornima Gupta in SAN FRANCISCO and Jonathan Standing in TAIPEI