June 17, 2016 Last Updated 3:26 pm

Apple loses patent case in China to local phone maker in sign of future trouble

If you want to predict what kind of trouble the big consumer electronics companies will have in China look no further than the equipment manufacturers who went to China first. First they went in to sell their hardware, then they were instructed to build the equipment there, then local competition arose, then they were told that if they wanted to continue to sell in China they would have to partner with the new, local companies.

Baili-iPhoneIt didn’t take long for the good days to be gone.

Apple, which uses Chinese assemblers, is finding out that the future may not be so bright. Early today we learned that it lost a patent case to a local cell phone maker, Baili.

As you can see at right, the phone they sell looks a lot like an iPhone, – but then again, almost all modern cellphones look like an iPhone thanks to the original iPhone released in 2007.

Apple was ordered to stop selling their product in Beijing, where the court had jurisdiction, but Apple released a statement saying they continue to sell its iPhones locally. They had better say that because investors won’t be too happy with more bad news coming from the company. It missed earnings last quarter and there is no reason to believe this quarter will be better.

“iPhone 6 and iPhone 6 Plus, as well as iPhone 6s, iPhone 6s Plus and iPhone SE models, are all available for sale today in China,” Apple said in its statement released to the usual big media companies (but not made available to us peons). “We appealed an administrative order from a regional patent tribunal in Beijing last month, and as a result the order has been stayed pending review by the Beijing I.P. Court.”

The last news from China regarding Apple was that the company had to shutdown its iBooks and iTunes movie services in the country as China is not exactly a big believer in the free distribution of information. Maybe Apple is starting to get it, they cannot depend on China for continued growth indefinitely, and so better be thinking now about what its options are. Investors will want to hear that they have patched things up with the Chinese authorities, but Apple execs should not be under any illusions that things will not continue to move in this direction. China wants to be able to have its own companies sell low cost cell phones and to then use these products to compete in places like India.

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