03/27/2012 02:17 am ET Updated May 26, 2012

Apple's Tim Cook Visits China To Clear Up Problems

* China is Apple's biggest potential market

* Company losing ground to Samsung smartphones

* iPad trademark dispute clouds future sales

* Latest iPad version not yet released in China

* iPad hits snag in Australia

By Lee Chyen Yee and Terril Yue Jones

HONG KONG/BEIJING, March 27 (Reuters) - Apple chief executive Tim Cook on Tuesday held talks with government officials in China, where development of the company's biggest potential market is clouded by issues ranging from a contested iPad trademark to treatment of local labour.

Cook, on his first trip to the country since taking over from Steve Jobs in August, has said Apple has merely scratched the surface in China as it looks to expand.

Apple has only five stores although it also retails through more than 100 resellers.

China is the world's largest mobile market and already Apple's second-biggest market overall, but Apple has been losing ground 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.

Cook's closely guarded itinerary in China, his company's biggest manufacturing hub, 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.

She declined to give details but industry sources said Cook met with Vice Premier Li Keqiang, a vice commerce minister and officials of the National Development and Reform Commission.


Apple has tie-ups with China Telecom and China Unicom to sell its iPhone, with the only other Chinese carrier, China Mobile, also looking to clinch a deal.

An alliance with China Mobile, the country's biggest mobile operator, is viewed by many industry analysts as crucial to the acceleration of iPhone sales through China.

But 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 threatens to disrupt iPad sales.

Proview executives declined to comment on Tuesday over whether they will meet 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.

Hejun Vanguard Group, a consulting company representing Proview creditors, said it was willing to fight the trademark case for "five, 10 years or even longer."

"We will see how long the biggest company in the world can exploit the law and intellectual property rights in China," it said.

Apple has not launched its new iPad in China yet but the new gadget has been smuggled in from the United States, Australia and Hong Kong.

The device hit a hurdle in Australia where the consumer regulator on Tuesday 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 labour standards at the Taiwan firm which assembles 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 and Taiwan-listed Hon Hai Precision.

An activist group based in Hong Kong - Students & Scholars Against Corporate Misbehaviour - called on Apple to "ensure decent working conditions at all its suppliers."

Apple has begun releasing monthly labour data and said it reached 89 percent compliance with its 60-hour work week policy in February, up from 84 percent in January, according to a survey of 500,000 workers at suppliers worldwide.

"That's a substantial improvement over previous results, but we can do better," the company said on its website.



View the slideshow (below) for photos of Tim Cook throughout the years.

Tim Cook Through The Years