Earlier this month we reported that the biggest factors that keep Chinese smartphone makers out of the West – and even developed countries in Asia like South Korea and Japan – are carrier subsidies, patents, and cultural stigma. On December 10 we learned just how true that statement was. With Xiaomi experiencing dramatic success within China, they had set their eyes on their next market target: India. Yet that plan was dealt a blow with the Indian High Court banning Xiaomi from selling, importing and advertising smartphones in their country. That single event has now inspired a powerful Xiaomi competitor within China to attack them on that same front.
Gartner's recent statistical report shows that Xiaomi, who is primarily a smartphone OEM in China, has come out of nowhere to take the number four spot in the top five global smartphone vendor's race and just a hair behind Huawei.
So it shouldn't come as any surprise that local first-generation smartphone manufacturer rivals in China such as Huawei and ZTE are now going after Xiaomi where they know they're weak: Patents. With Ericsson's success against Xiaomi in India, both Chinese rivals are now racing to file lawsuits.
A Korean report tapping into industry sources stated that earlier this week Huawei and ZTE were known to be preparing to sue Xiaomi, OPPO, and Bubugao for infringement of their patent rights.
Earlier, Huawei and ZTE sent out a warning letter to these companies asking them to stop infringing on their patents and pay legitimate royalties. However, as they did not respond, Huawei and ZTE decided to take legal action against them.
An industry source added that "It was confirmed that China's second-generation smartphone manufacturers had been violating four to five patents related to communications technology, including WCDMA, which is used in 3G mobile communications."
Huawei and ZTE are strong patent holders, collecting more than 70 percent of relevant royalties in China's mobile phone market. Huawei has nearly 30,000 of the 39,000 mobile phone patents in China. It has also registered 7,000 patents this year alone.
Patent wars between China's first and second-generation smartphone makers can even make it harder for the second generation to sell their products in the market at home, which has been the engine of their growth until now.
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