Apple's Supply Chain and China: Why the Tech Giant Will Likely Be a Frequent Defendant in Patent Litigation in China
And this would be a net positive for China because Chinese companies are easier to control and contribute more money to China. Currently the vast majority of Apple's revenue stream runs through Ireland in order to avoid taxes. This means that a very small amount of Apple's income flows to China. Chinese competitors, however, do not have the option to avoid Chinese taxes. So at the end of the day, China benefits from Apple losing market share to domestic competitors.
The reason that Apple recently invested $1 Billion in Chinese ride-hailing app company Didi Chuxing was not because it loves taxis, but rather because it needs to curry favor with the Chinese government. But this investment is just a drop in the bucket, and will be replenished in the coming months and years. The reason that Apple needs to have a good relationship with China is not just because they use China to produce their products, but also because at least 25% of Apple's revenue comes from China:
All of this is to say that Apple cannot leave China, but is not China's favorite son (see, e.g., how Apple's iTunes movies and iBooks were blocked in China). This -- and Apple's huge profits -- leaves the company open for patent lawsuits by both Chinese and foreign companies, including licensing companies. Stay tuned over the next year or so to see how this evolves.
Welcome to the China Patent Blog by Erick Robinson. Erick Robinson's China Patent Blog discusses China's patent system and China's surprisingly effective procedures for enforcing patents. China is leading the world in growth in many areas. Patents are among them. So come along with Erick Robinson while he provides a map to the complicated and mysterious world of patents and patent litigation in China.
Erick Robinson is an experienced American trial lawyer and U.S. patent attorney based in Beijing. He is a Partner at Porter Hedges LLP, where he manages patent litigation, licensing, and prosecution in China and the US.
The ideas and opinions at ChinaPatentBlog.com are my own as of the time of posting, have not been vetted with my firm or its clients, and do not necessarily represent the positions of the firm, its lawyers, or any of its clients. None of these posts is intended as legal advice and if you need a lawyer, you should hire one. Nothing in this blog creates an attorney-client relationship. If you make a comment on the post, the comment will become public and beyond your control to change or remove it.