As workers stream from factories in Shatou Jiao Free Trade Zone, none emerge from Proview Technology (Shenzhen) Co.’s green-glass and white-tile plant.
A walk round back tells the reason. The mothballed south China factory of what was once the world’s fourth-biggest maker of computer monitors is being dismantled for scrap.
Almost a year and a half since Proview Shenzhen shut after missing payments to suppliers and banks, the company teeters on bankruptcy. Founder Rowell Yang and creditors led by Bank of China Ltd. are now wringing out Proview’s last possession of value: rights to the iPad trademark in China that Apple Inc. wants and may have to dip into its $98 billion cash pile to get.
“The creditors hope that Proview Shenzhen can be renewed and restart production,” Roger Xie, an attorney for the company, said in a March 2 interview at his office in downtown Shenzhen. “Proview Shenzhen has two hopes. One is to transfer or license the trademark. The other is for Apple to compensate them and purchase the trademark to give Proview Shenzhen the ability to clear its debts.”
Apple last week appealed a Shenzhen court ruling that its 2009 purchase of the iPad trademark in China from a Taiwan sister company of Proview was invalid. Consumers in China associate the iPad name with Apple’s tablet, and it would be unfair to give Proview the value of that trademark which Apple created, the Cupertino, California-based company told the Higher People’s Court of Guangdong.
Apple may unveil a new iPad tablet in the U.S. today.
Proview, which began selling its own product called the iPAD in 2000, shuttered its Shenzhen factory in November 2010. In contrast with the building’s facade, shattered windows scar the back, and rubbish is strewn on the yard.
During a March 2 visit, workers wearing blue dust-masks appeared from time to time to augment two towering piles of scrap in what used to be a loading bay. Metal sheets, pipes and tubes protruded from the heaps.
“It’s true,” said Yang, when asked whether the factory was being gutted, in a March 5 telephone interview. “The Banks have taken over the assets, and can sell them.”
Proview peaked at 10 percent of the global monitor market in 2006, when they ranked No. 4, said Alberto Moel, a Hong Kong-based analyst at Sanford C. Bernstein & Co.
“They could have at that point sustained themselves but they missed the window,” Moel said. “Competitors ramped production and took share. They blew up, but for a while, they actually were somebody.”
Proview’s plant is a half-hour car ride due east of Xie’s office, along an expressway that tunnels through rolling green hills. Exiting the highway, a winding road curves down the hillside, around a hairpin turn before emerging into the heart of Yantian district, across the border from Hong Kong.
Yantian was formally established in 1998, and is home to more than 200,000 people and a deep-water port, as well as the Shatou Jiao Free Trade Zone, according to the local government’s website.
Within four blocks of entering the district, visitors pass the Yantian People’s Court, where dozens of creditors sued Proview. Xie declines to give the exact number, saying only it was “20, 30, 50” or more. Those cases ultimately led to the Yantian court-monitored arbitration that put an eight-bank group in control of Proview Shenzhen’s assets from March 2009.
At the courthouse, two guards at the door ask numerous times “Are you with Apple?” And again, even after a government-issued press card is produced.
After finally gaining entry, an official who refused to identify himself during two hours of negotiations for access to court documents, said that records of suits involving Proview and its creditors are not available to the public.
Xie also declined to provide the documents.
Proview is well regarded in the community as one of its best-known exporters, according to Yang. The willingness of creditors to allow the company to reorganize its debt rather than push it into bankruptcy was because of intervention by the Shenzhen municipal government, which asked the banks to help in February 2009, he said.
Proview’s special place can be seen on every street. While there are many businesses in the trade zone, including Ritech Technology, Spectrum Quality Toys and Europtronic, Proview is the only one identified on tourist information maps posted by the district government along its tree-lined streets.
Proview first set up a factory there in 1992, moving into its current premises in 1998, a year after the company’s Hong Kong initial public offering, share sale documents show. Relative newcomer Apple opened its first store in China in 2008. Liu Zixian, a former director of the Shatou Jiao zone, was appointed to the board of Proview in 2004, filings show.
Plans to Restart
The Shenzhen plant was one of four factories of Hong Kong-listed Proview International Holdings Ltd. A lighting and audio products unit in Wuhan is the only one now operating, Yang said.
“We are trying to restructure and get an injection of capital,” Yang said. “We are working with an investor on different plans, including both with a settlement payment, and with no settlement payment. It’s very complicated, but we still hope to restart production.”
The Higher People’s Court of Guangdong is to give its judgment on Apple’s appeal within three months.
“If somehow for whatever reason the iPad case settles in their favor and they have some money to invest, the last thing I’d invest it in is the business they were in,” said Bernstein’s Moel. “The industry has moved on without them. It’s more concentrated, less profitable and more competitive.”