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China's Supreme Court to take on intellectual property cases
December 29, 2018 12:03 pm|Comments (0)

A Chinese national flag flutters near a minaret of the ancient Id Kah Mosque in the Old City in Kashgar in Xinjiang Uighur Autonomous Region, China September 6, 2018. Picture taken September 6, 2018. To match Special Report MUSLIMS-CAMPS/CHINA REUTERS/Thomas Peter

BEIJING (Reuters) – Intellectual property rights cases can from next month be taken to China’s Supreme Court, the government said on Saturday, as the country seeks to strengthen protections in the face of complaints from the United States about the issue.

China and the United States are currently in talks to resolve a trade dispute, in which both countries have put tariffs on imports of each other’s products.

The United States, along with the European Union, have long complained about poor enforcement of intellectual property rights in China, and this has been a key complaint of the Trump administration, along with forced technology transfers and a yawning trade gap.

Beijing in response has been seeking to show that it is serious about addressing U.S. concerns.

Deputy chief justice Luo Dongchuan told a news conference that from Jan. 1 the Supreme Court would begin handling appeals on intellectual property rights cases, whereas previously only provincial-level high courts would handle them.

“Setting up a Supreme Court intellectual property rights court is an important decision by the Communist Party, is a major step to strengthen the legal protection of intellectual property rights and will have a major impact at home and abroad.”

Luo did not directly answer a question about how the United States should view the move and what it said about China’s efforts to protect intellectual property, saying that such protection was a “basic national policy”.

“China is already the world’s second largest economy, and in the future China’s development will rely on innovation. The protection of innovation needs there to be legal protection for intellectual property rights.”

Reporting by Ben Blanchard. Editing by Jane Merriman

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Russia says detention of China's Huawei CFO shows U.S. arrogance
December 7, 2018 12:01 pm|Comments (0)

Russian Foreign Minister Sergei Lavrov arrives for a news conference on the sidelines of the Organization for Security and Co-operation in Europe (OSCE) summit in Milan, Italy, December 7, 2018. REUTERS/Alessandro Garofalo

MILAN (Reuters) – Russian Foreign Minister Sergei Lavrov said on Friday that the detention of Chinese technology giant Huawei’s chief financial officer in Canada was an example of “arrogant” U.S. policy abroad.

Speaking at a news conference in Milan, Lavrov said the detention showed how Washington imposes its laws beyond its jurisdiction.

Huawei CFO Meng Wanzhou, 46, who is also the daughter of the company founder, was arrested on Dec. 1 at the request of the United States. The arrest, revealed by Canadian authorities late on Wednesday, was part of a U.S. investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, people familiar with the probe told Reuters.

Reporting by Crispian Balmer; writing by Tom Balmforth and Maria Kiselyova; Editing by Peter Graff

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China's Xiaomi swings to net profit in third-quarter on robust sales in India, Europe
November 19, 2018 12:00 pm|Comments (0)

HONG KONG (Reuters) – Chinese smartphone maker Xiaomi Inc said on Monday it swung to a net profit in the third quarter, beating analyst estimates, driven by robust sales in India and Europe.

Xiaomi branding is seen at a UK launch event in London, Britain, November 8, 2018. REUTERS/Toby Melville

Profit for the three months through September reached 2.48 billion yuan ($ 357.23 million), versus an 11 billion yuan loss in the same period a year earlier. That compared with a 1.92 billion yuan average of five analyst estimates compiled by Refinitiv Eikon.

Xiaomi also said operating profit sank 38.4 percent to 3.59 billion yuan in the third quarter. Revenue rose 49.1 percent to 50.85 billion yuan.

The mixed results come amid a slowdown in smartphone purchases both in China, where Xiaomi once was the top-selling handset brand, and overseas.

Nevertheless Xiaomi, along with fellow low-cost handset makers Oppo and Vivo, accounted for around a quarter of the global smartphone market in the first half of 2018, showed data from researcher IDC.

Xiaomi’s fastest-growing markets are India, where it has had success with its budget Redmi phone series, and Europe, where it entered in 2017 with launches in Russia and Spain. Earlier this month it released its flagship Mi 8 Pro device in Britain.

But to weather the global market slowdown, analysts said Xiaomi needs to expand to new markets and also sell more higher-priced devices with wider profit margins.

The firm has been adding new brands to its smartphone portfolio to target niche consumers. Concurrent with today’s earnings, it announced a partnership with Meitu Inc, a maker of a photo app popular with young women, to sell phones under its brand. Earlier this year it launched Black Shark, a phone targeted at gamers, and Poco, a value-for-money device aimed at India.

Mo Jia, who tracks China’s smartphone makers at research firm Canalys, said attempts to sell more expensive devices requires changing its brand perception.

“It’s still very hard for Xiaomi to change its perception of being a low-end device manufacturer as the majority of its smartphone shipments are the Redmi series.”

Xiaomi also aims to transform itself from a smartphone firm into a software company. As the firm prepared for its IPO, founder Lei Jun touted internet services – namely advertisements placed on the firm’s in-house apps – as its future and key differentiator from other handset brands.

In the third quarter, Xiaomi’s smartphone division grew revenue by 36.1 percent while its internet service division grew 85.5 percent. But phones made up 64.6 percent of total sales, while internet services made up 9.3 percent.

The results are the second set released by Xiaomi since the smartphone maker raised $ 4.72 billion in an initial public offering (IPO) in June, valuing the firm at about $ 54 billion – around half of some earlier industry estimates of $ 100 billion.

Its shares have fallen roughly 20 percent since they started trading in July amid a broader Chinese stock market sell-off and concern about a slowdown in China’s tech industry.

Reporting by Josh Horwitz; Editing by Christopher Cushing

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China's ties with Taiwan chip firms under scrutiny as U.S. trade war heats up
November 7, 2018 12:03 am|Comments (0)

TAIPEI (Reuters) – Washington’s decision to cut off U.S. supplies to a Chinese chip-maker spotlights mounting tensions over China’s drive to be a global player in computer chips and the ways in which Taiwan companies are helping it get there.

FILE PHOTO: Men walk past a signboard of chipmaker United Microelectronics Corp (UMC) in Hsinchu, Taiwan January 10, 2006. REUTERS/Richard Chung/File Photo

Shut out of major global semiconductor deals in recent years, China has been quietly strengthening cooperation with Taiwan chip firms by encouraging the transfer of chip-making expertise into the mainland.

Taiwan chip giant United Microelectronics Corp (UMC) (2303.TW) last week halted research and development activities with its Chinese state-backed partner Fujian Jinhua Integrated Circuit Co Ltd, following the U.S. move.

Taiwan firms such as UMC have helped supply China with a steady pipeline of chip expertise in exchange for access to the fast-growing chip market there.   

China has faced a shortage of integrated circuit (IC) chips for years. In 2017, it imported $ 270 billion worth of semiconductors, more than its imports of crude oil.  

At least 10 joint ventures or technology partnerships have been set up in the last few years between Chinese and Taiwanese firms, according to industry experts, luring Taiwanese talent with hefty salaries and generous perks.

“Such companies will need to also take care to ensure no patent or IP infringement is involved as the U.S. has export control means to restrict support of critical technology,” said Randy Abrams, an analyst at Credit Suisse in Taipei.

Among the most valuable cross-strait partnerships for China would be ones that strengthen its foundry services and memory chip production. Those two sectors require much-needed help from overseas firms due to the complexity of the manufacturing technologies and intense capital requirements, analysts have said.

TRADE TENSIONS

But the technology transfer between China and self-ruled Taiwan has raised concerns amid the Sino-U.S. trade war and escalating tensions across the Taiwan Strait.

China has aggressively used “market-distorting subsidies” and “forced technology transfers” to capture traditional and emerging technology industries, Brent Christensen, the director of America’s de facto embassy in Taipei, told a business gathering in late September.

“These actions are harming the United States’ economy, Taiwan’s economy, and other economies.”

Taiwan is one of the largest exporters of IC globally and many worry the island could lose a key economic engine to its political foe.

Taiwan’s government views the island’s chipmakers’ cooperation with China cautiously and has implemented policies to ensure Taiwan’s most advanced technology is not transferred.

“When businesses go to the mainland to invest in wafer production, they must accept controls including one that requires the manufacturing technology to be a generation behind,” the economics ministry’s industrial development bureau said in a statement to Reuters.

INTELLECTUAL PROPERTY CONCERNS

Cooperation between UMC and Fujian Jinhua came under scrutiny last month, when the U.S. government put the Chinese company on a list of entities that cannot buy components, software and technology goods from U.S. firms amid allegations it stole intellectual property from U.S.-based Micron Technology. Fujian Jinhua denied the allegations.

Fujian Jinhua now faces big challenges to reach commercial high volume production as expected in 2020, industry observers say.

Last week, both UMC and Fujian Jinhua, which was only founded in 2016, were charged with conspiring to steal trade secrets from Micron in a U.S. Justice Department indictment.

“Taiwanese tech companies need to carefully re-evaluate their positions and supply chain arrangements as the tension between the two super powers escalates,” Bernstein analyst Mark Li said.

While China will need at least six years before it can catch up in chip manufacturing, according to some estimates, the scale of its chip-making abilities is already seen as a threat in other parts of the chip supply chain.

Barely 2-1/2 years after breaking ground on a 12-inch wafer plant in China, Nexchip, a joint venture between the Chinese city of Hefei and Taiwan DRAM maker Powerchip, started producing 8,000 wafers a month. Wafers are thin pieces of material, usually consisting of silicon, used to make semiconductor chips.

Nexchip’s main goal is to produce liquid crystal display driver ICs for flat-panel makers.

Using Powerchip’s resources and Taiwanese talent, which make up a quarter of its 1,200 employees, Nexchip is helping reduce China’s reliance on foreign chip suppliers.

With an aim to become “the world’s No.1 chipmaker for display drivers,” Nexchip plans to build three more 12-inch wafer plants and ramp up its monthly production to 20,000 wafers by 2019, according to a person with direct knowledge of the matter.

After visiting Nexchip late last year, researchers from Taiwan’s chip hub, Hsinchu Science Park, said progress at the Hefei plant was a “breakthrough”.

“This will likely increase Taiwan firms’ needs to invest in the China market, and it will be a test for the (Taiwan) government’s industrial policy.”

Reporting by Jess Macy Yu and Yimou Lee in Taipei

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China's Baidu tops revenue estimates with strong app traffic
October 31, 2018 12:00 am|Comments (0)

(Reuters) – Traffic growth on Baidu Inc’s mobile app helped drive higher-than-expected third quarter revenue as China’s biggest search engine operator places more emphasis on artificial intelligence (AI) and autonomous driving.

FILE PHOTO: A Baidu logo is seen at the Global Mobile Internet Conference (GMIC) at the National Convention Center in Beijing, China April 27, 2018. REUTERS/Damir Sagolj

Revenue rose to 28.2 billion yuan ($ 4.11 billion) from 23.49 billion yuan in the same quarter a year ago. That beat the average estimate of 27.53 billion yuan, according to Refinitiv data.

Baidu has been investing heavily in new business lines following tighter rules in China introduced in 2016 requiring search engines to make it clear which results are paid-for ads, but has said these projects may not help boost sales growth in the near term.

Baidu’s sales momentum has lagged technology peers Alibaba Group Holding Ltd and Tencent Holdings Ltd, and it has sold or closed several businesses over the past year which were in direct competition.

Baidu forecast fourth-quarter revenue of 25.48 billion yuan to 26.72 billion yuan, lower than financial analysts’ target of 27.69 billion yuan.

At the same time, Baidu has become one of China’s biggest names in AI, with its efforts endorsed by the government as well as international firms. This month, it became the first Chinese company to join an AI ethics group alongside members such as Apple Inc and Alphabet Inc’s Google.

“Baidu delivered a solid third quarter with impressive results from search, feed and new AI businesses,” said Baidu Chief Executive Robin Li.

He added that Baidu’s AI platform DuerOS saw strong adoption and Apollo, Baidu’s self-driving car technology, was now powering fully autonomous Apolong minibuses in over 10 locations.

Baidu said its AI system blocked over 430 million medical ads to combat misleading and low-quality medical advertisements in the third quarter. The stricter rules on Chinese internet advertising resulted from the death of a student who underwent an experimental cancer treatment which he found using Baidu.

Net income rose 56 percent from a year earlier to 12.4 billion yuan, the company said.

Excluding gains from the divestiture of its financial services business, Baidu posted adjusted earnings per share of 19.01 yuan versus Wall Street expectations of 16.70, according to Refinitiv data.

While the company said its Baidu App saw strong traffic in the quarter, its daily active user number dropped to 151 million in September from a peak of 161 million reached in August. The September number was up 19 percent year-on-year.

Baidu’s U.S.-listed stock was slightly lower following the results in after-hours trade on Tuesday. The stock is down over 20 percent since the beginning of the year amid a wider selloff of Chinese technology shares.

Reporting by Cate Cadell in Beijing and Jane Lanhee Lee in San Francisco; Editing by Meredith Mazzilli and Tom Brown

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China's Didi to halt some mainland services in new safety measures
September 4, 2018 12:00 pm|Comments (0)

BEIJING (Reuters) – China’s ride-hailing firm Didi Chuxing said on Tuesday it will halt some late-night services in mainland China including taxi and ride-hailing operations between Sept 8 and Sept 15 as part of their steps to improve safety.

FILE PHOTO: The logo of Chinese ride-hailing firm Didi Chuxing is seen at their new drivers center in Toluca, Mexico, April 23, 2018. REUTERS/Carlos Jasso/File Photo

Didi also said in a statement it will upgrade its police hotline function for customers and its investments for customer service.

The firm has been under mounting pressure from regulators and consumers after a 20-year-old passenger was murdered by her Didi driver in August. Another passenger was killed by a driver in May.

Reporting by Beijing Monitoring Desk; editing by Jason Neely

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China's ZTE posts 1.1 billion first-half loss on impact from U.S. supplier ban
August 30, 2018 12:00 pm|Comments (0)

HONG KONG (Reuters) – ZTE Corp (000063.SZ) (0763.HK) reported a first-half net loss of 7.8 billion yuan ($ 1.1 billion) on Thursday, weighed down by a ban on U.S. firms selling parts to the Chinese telecom equipment maker that forced it to cease operations for three months.

FILE PHOTO: The company name of ZTE is seen outside the ZTE R&D building in Shenzhen, China April 27, 2016. REUTERS/Bobby Yip/File Photo

The result compared with the 7 billion to 9 billion yuan net loss estimate disclosed last month, and the 2.3 billion yuan profit booked in the same period a year earlier.

Operating revenue in the first half fell 27.0 percent to 39.4 billion yuan.

In June, the network equipment and smartphone maker paid the United States $ 1.4 billion in penalties in a deal to have the supplier ban lifted. The ban, imposed in April in relation to sanction violations, crippled ZTE and became a source of friction in Sino-U.S. trade talks.

($ 1 = 6.8300 Chinese yuan renminbi)

Reporting by Sijia Jiang and Twinnie Siu; Editing by Christopher Cushing and Edmund Blair

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Exclusive: U.S. clears hurdle to lifting ban on China's ZTE
July 11, 2018 6:44 pm|Comments (0)

(Reuters) – The United States signed an agreement with ZTE Corp (000063.SZ) that paves the way for the Chinese tech company to resume operations after a nearly three-month old ban on doing business with American suppliers, the U.S. Commerce Department said on Wednesday.

FILE PHOTO: The logo of China’s ZTE Corp is seen on the building of ZTE Beijing research and development center in Beijing, China June 13, 2018. REUTERS/Jason Lee

The ban on China’s No. 2 telecommunications equipment maker will be removed once the company deposits $ 400 million in an escrow account, the Commerce Department said, which it can do now that Commerce officials signed an escrow agreement.

FILE PHOTO: The logo of China’s ZTE Corp is seen at the lobby of ZTE Beijing research and development center building in Beijing, China June 13, 2018. REUTERS/Jason Lee

“Once ZTE has completed the $ 400 million escrow deposit,” the Commerce Department said in a statement, it will “issue a notice lifting the denial order.” ZTE did not immediately respond to a request for comment.

The escrow agreement is part of a $ 1.4 billion settlement ZTE reached with the U.S. Commerce Department last month to regain access to U.S. suppliers, whose components it relies on for its smart phones and networking gear.

The escrow account gives the United States an additional $ 400 million if ZTE violates the settlement. ZTE paid the $ 1 billion fine to the U.S. Treasury last month.

Once lifted, ZTE, which employs around 80,000 people, is expected to restart major operations, which would remove a sticking point within the broader U.S.-China trade war. The reprieve for ZTE coincides with a new Trump administration threat of 10 percent tariffs on $ 200 billion of Chinese goods.

In its statement, the Commerce Department said the ZTE action is a law enforcement matter unrelated to broader discussions of trade policy.

Reporting by Karen Freifeld; Editing by Cynthia Osterman

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Trump working with President Xi to help restart China's ZTE
May 13, 2018 6:04 pm|Comments (0)

WASHINGTON (Reuters) – U.S. President Donald Trump said in a tweet on Sunday that he has asked the Commerce Department to help Chinese technology company ZTE Corp “get back into business, fast,” a concession to Beijing ahead of high-stakes trade talks that will take place this week.

FILE PHOTO: A ZTE smart phone is pictured in this illustration taken April 17, 2018. REUTERS/Carlo Allegri/Illustration/File Photo

ZTE, one of the world’s largest telecom equipment makers, suspended its main operations after the U.S. Commerce Department banned American supplies to its business.

Trump’s offer to help comes as Chinese and U.S. officials prepare for talks in Washington with China’s top trade official Liu He to resolve an escalating trade dispute between the world’s two largest economies.

Trump’s reversal will likely have a significant impact on ZTE’s U.S. suppliers such as Qualcomm Inc and Intel Corp. U.S. companies are banned from exporting goods to ZTE, making it difficult for the phonemaker to manufacture new products or update older ones.

“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter, saying he is working with Chinese President Xi Jinping on a solution.

The ban is the result of ZTE’s failure to comply with an agreement with the U.S. government after it pleaded guilty last year to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran, the Commerce Department said.

American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.

The Commerce Department did not immediately respond to a request for comment on Sunday.

Reporting by Valerie Volcovici and Chris Sanders, additional reporting by Karen Freifield; Editing by Lisa Shumaker

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In concession, Trump says will help China's ZTE 'get back into business'
May 13, 2018 6:02 pm|Comments (0)

WASHINGTON (Reuters) – U.S. President Donald Trump said in a tweet on Sunday that he has asked the Commerce Department to help Chinese technology company ZTE Corp “get back into business, fast,” a concession to Beijing ahead of high-stakes trade talks that will take place this week.

FILE PHOTO: A ZTE smart phone is pictured in this illustration taken April 17, 2018. REUTERS/Carlo Allegri/Illustration/File Photo

ZTE, one of the world’s largest telecom equipment makers, suspended its main operations after the U.S. Commerce Department banned American supplies to its business.

Trump’s offer to help comes as Chinese and U.S. officials prepare for talks in Washington with China’s top trade official Liu He to resolve an escalating trade dispute between the world’s two largest economies.

Trump’s reversal will likely have a significant impact on ZTE’s U.S. suppliers such as Qualcomm Inc and Intel Corp. U.S. companies are banned from exporting goods to ZTE, making it difficult for the phonemaker to manufacture new products or update older ones.

“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter, saying he is working with Chinese President Xi Jinping on a solution.

The ban is the result of ZTE’s failure to comply with an agreement with the U.S. government after it pleaded guilty last year to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran, the Commerce Department said.

American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.

The Commerce Department did not immediately respond to a request for comment on Sunday.

Reporting by Valerie Volcovici and Chris Sanders, additional reporting by Karen Freifield; Editing by Lisa Shumaker

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