Reports early Monday from China suggest that a mass disturbance or riots may have broken out at a Foxconn factory in the Chinese city of Taiyuan.

It is still unclear what exactly happened, but posts on China’s popular twitter-like service, Weibo, from users in the area show photographs and video of large numbers of police in and around the factory – many in riot gear – blocking off throngs of people.

Other photos show debris strewn around the Foxconn compound and in one case, an overturned guard tower.

According to popular tech blog engadget, the disturbance kicked off after Foxconn security guards allegedly hit a worker around 10 p.m. on Sunday.

Censors in China have reportedly already started deleting pictures from the scene.

This is not the first time that Foxconn has had problems with its Taiyuan facility, which is reportedly responsible for the fabrication of the back plate of the immensely popular new iPhone 5. In March, strikes broke out there after workers did not receive a pay raise they had reportedly been promised.

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Meanwhile, Foxconn’s Chengdu plant in Sichuan province also has dealt with riots. In June, scores of Foxconn workers there got into a fight with a local restaurant owner that had to be broken up by police.

Foxconn is the Taiwanese electronics manufacturer responsible for much of the current production and assembly of Apple’s popular line of products as well as a wide variety of popular tech toys ranging from laptops to gaming consoles.

But Foxconn has been under fire for years for its tough working conditions, including long hours, low wages and strict rules on representation. The company has also dealt with a string of suicides at its plants across China, which led to the company in 2010 installing anti-jump nets to prevent more suicide attempts.

The company has taken steps to improve working conditions in its factories by reducing work hours and raising wages for its front-line workers.

Still, perhaps wary of the continued negative publicity that has plagued one of its primary manufacturers over the years, Apple recently took steps to diversify its portfolio of producers, recently awarding much of the manufacturing of its new iteration of the iPad to another Taiwanese company, Pegatron. 

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BEIJING – This time, Apple and its devoted Chinese customers weren’t taking any chances. 

Wary of a repeat of the iPhone 4S debacle in China in January, when Apple’s release led to scuffles and even an egging of its flagship Beijing store by angry hordes after it was forced to cancel sales due to the crowds, Apple’s managers here put their heads together and came up with a new strategy for dealing with the crowds.

They came up with a reservation style of ordering already in use in other countries like the United States. However, this time they decided to institute the reservation system as the only way to purchase the latest iPad, which features a sharper display and better camera than previous versions, for its China debut.

Around 50 customers quietly lined up outside the store in Beijing Friday morning, staring intently inside the store as an almost equal number of jovial blue-uniformed employees clapped, sang and danced in the minutes before opening.

It was a far cry from the sheer bedlam unleashed earlier this year when the iPhone 4S went on sale. On that day, many in the crowd were scalpers who local media said hired scores of people to line up with them to purchase the precious phones to be sold in other Chinese cities for a higher rate. 

‘It shouldn’t take too long to learn how to use’
First in line to purchase the new iPad in Beijing on Friday was Ye Huafei, a 34-year-old software engineer who arrived at the store just two hours before opening. Forced to purchase this new iPad after his iPad2 had been poached by his mother to watch TV dramas, Ye elected to arrive early to pick up his new iPad so he could bring it to work and show it off to his colleagues. 

“It feels great to be first,” said Ye. “The scene here is fantastic.” 

Apple’s new product releases tend to attract a younger, status-conscious crowd in China. But mixed in the opening throng of customers was Mr. Wu, an older customer who coyly put his age at “under 65.”

Wu owns an iPhone 4S, but decided to upgrade to an iPad because he is getting older and his eyes have been getting tired looking at the small screen.

With new iPad in hand, the first thing Wu did was walk over to a nearby counter where an Apple employee was offering hour-long lessons to new customers on how to use their new tablets.

Fresh from class, Wu excitedly showed us what he had learned.

“It shouldn’t take too long to learn how to use, I have a strong base,” he said happily. “I have an iPhone 4S and I know how to use that very well.”

He will need to learn quickly. With his purchase, Wu became the first member of his extended family to use an iPad.

One thing he did not take long to discover was the free WiFi at the Apple store. With no Internet connection at home, Wu decided to save money by not purchasing a 3G-capable iPad and bought a wifi-capable tablet instead.

Pointing to the Apple store behind him, Wu said, “I’ll just come here. My home is very close…I spent the money, so I should enjoy the product and the service.”

The ‘it’ product
Like in much of the rest of the world, Apple’s phones and tablets have become the “it” product to own in China, which is now Apple’s second-largest market after the United States. But with just five official Apple stores in the country, even a robust gray market for Apple products cannot always keep up with demand, especially in the days immediately following a high-profile release.

Apple was forced to delay the mainland release of the latest iteration of the iPad due to a lawsuit brought by a company claiming to own the iPad trademark in China. So the company had time to experiment with the new reservation system in Hong Kong for its iPad debut last March and found it effective in dealing with scalpers and the crush that has followed previous product launches.

Since the Cupertino, Calif., company settled the trademark issue for a reported $60 million earlier this month, mainland Chinese customers were invited yesterday to start registering to purchase the iPad at a special website created by the tech giant. Upon filling out the online form, customers were given a designated time to pick up their new iPads.

On Thursday morning, NBC News attempted to log onto the website when it opened at 9 a.m. but the usual crowd of customers apparently crashed the site. The site was up and running again within the hour.

Questions about whether news of the change in policy had gotten out to the public and to poachers were answered early Friday morning when the plaza outside the Apple store in Beijing was mostly empty.

Reports from the other four Apple-owned stores also showed smooth sales.

A man walks past an advertisement of Apple's iPad 2 on Feb. 28 in Shanghai, China. Proview Electronics said it is now seeking to regain worldwide rights to the iPad name and is suing Apple Inc. for alleged fraud and unfair competition, hoping to have a 2009 sale of the trademark ruled void.

BEIJING – Apple’s recent market valuation of over $500 billion has invited countless comparisons, even inspiring a website that gleefully chronicles the places and things the tech giant is now valued more than.

Among other things, Apple is now worth more than the entire GDP of Poland, all the gold in the U.S. Federal Reserve Bank of New York and America’s entire aircraft carrier fleet.

But is that enough to take the sting out of the $1.6 billion in compensation Proview Technology (Shenzhen) is rumored to be demanding in exchange for settling the thorny dispute over ownership of the iPad trademark in China? 

Last Wednesday, Guangdong’s Higher People’s Court heard an appeal from Apple after a lower court ruled in favor of Proview and declared them the actual owner of the iPad name in China. 

The significance of the case has not been lost in Chinese. Both local and foreign media were said to be staked outside the courtroom. In response to greater calls for transparency from the government, Wednesday’s legal proceedings before the three-judge panel were actually live-blogged by the court on a twitter-like service called Tencent Weibo.

The court now has almost 80,000 followers – but their decision has not been announced yet. According to Chinese law, the time limit for ruling on an appeal is three months. 

The stakes are high for everyone involved: Apple, Proview, the Chinese government and other Western investors.

High stakes
China is Apple’s second largest market behind the United States. It is also where most of its products are made –  including the highly anticipated iPad 3 which some tech-watchers are speculating may be released as soon as tomorrow. 
 
This court is typically the final word on legal proceedings in China, although Apple could still appeal to the Supreme People’s Court in Beijing. A loss would leave two undesirable options: An appeal to a Supreme Court that is not known for overturning many decisions of its lower court; or settling with the cash-strapped Proview. 

Alvin Chan / Reuters

Reporters wait outside the Higher People's Court of Guangdong in Guangzhou on Feb. 29 for Apple's appeal to the higher court in the Proview case.

For Proview, a company that at one time was an industry leader in the manufacturing of computer displays before falling on hard times, a win or an out-of-court settlement could set the stage for a dramatic revitalization of a company that now counts the Bank of China and China Banking Corp. as creditors. 

According to a Chinese-language report out last Friday, Proview’s consortium of creditors are said to be seeking $400 million from the cash-strapped company.

A settlement with Proview may be anathema to Apple; effectively inviting similar copycat suits against them in other jurisdictions, but the alternative of changing the name of a product they’ve already sold 32 million of worldwide is an equally bitter pill to swallow.

A warning for Western investors?
The need to legally resolve this issue is also uncomfortable for the Chinese government, which stands to lose politically regardless of who wins the case. 

Should Proview prevail and receive control of the trademark in China, it would stir up a certain crisis-of-faith among the foreign business community, whose concerns about intellectual property have become louder in recent years.

Sixty-six percent of respondents to the American Chamber of Commerce’s 2011 China Business Climate Survey said intellectual property rights protection is “very” or “critically” important to their business.

One U.S. businessman, who declined to be named for this piece, noted that while Apple’s spat with Proview is over the sale of a trademark and not the legal standing of the trademark itself, he would nevertheless be concerned about the strength of his company’s own trademarks in China should Apple lose. 

“Remember that line from the movie, ‘The Social Network,’ ‘You better lawyer up!’? You bet we have our lawyers looking closely now at all our company’s legal arrangements.”

It’s an example of corporate skepticism of the legal system here and a growing sentiment among the foreign business community of economic inequality between foreign and domestic companies.

That’s a sentiment that China’s ruling Communist Party wishes to avoid at all cost. In recent years the government has worked hard to improve intellectual property rights law in the country. They touted them as the Guangdong Higher People’s Court did on its Weibo feed of the court proceedings, inviting China’s web sphere to “witness the progress of intellectual property right protection in China.”

Ironically, the enforcement of those laws could potentially unravel the goodwill they were intended to build with foreign companies and investors.

Best for all? Out-of-court settlement
An Apple victory may mollify Western companies. It will also likely draw the ire of a more nationalist section of the population here that may view it as an example of China serving foreign interests before those of its own companies.

As unlikely as it may seem that a decision in Apple’s favor could lead to any mass resentment towards the government, in this sensitive time leading up to China’s leadership transition later this year, the Party is hyper-attuned to perceived public discontent.

So in the meantime, China’s government is quietly pushing through the court’s judges their dream solution to this dispute: out-of-court settlement. At the end of the hearing on Wednesday, the judge apparently gently urged Apple and Proview to consider a private settlement.

The financial motivations are there for both parties to come to the bargaining table, but Apple’s participation will either require a dramatic change of heart by the company which has refused to come to the table so far or a more pessimistic analysis of their chances in court.

Either way, you can bet the Apple CEO Tim Cook is thinking twice about his bold earlier statement last month that the company “has more money than it needs.”

Customers test out Apple iPads in the company's flagship store in Beijing's Sanlitun area on Wednesday. A Chinese tech firm, Proview claims it still owns the iPad trademark In China and will seek a ban on exports of Apple Inc's computer tablets from China, which could deal a blow to the U.S. technology giant's sales worldwide.

BEIJING – “This is the user manual and spec sheets for the IPAD,” said Ma Dongxiao, a patent lawyer in Beijing. In his hands he held a simple black and white pamphlet that laid out the technical aspects of his client’s product.

Absent from the front page was the familiar Apple logo we have come to expect. Rather, he held just a simple description in English for a boxy wireless device shaped like an old TV that was ponderously dubbed a “Professional Color LCD Monitor.”

Simple as the device might appear, it is the linchpin in a new phase of Shenzhen-based tech company Proview’s latest attack on Apple: A restraining order filed this month in a Shanghai court demanding Apple cease using the iPad name in China.

Just days after the euphoria of a $500 stock valuation, Apple has been dealt a series of significant legal blows in China that casts doubt on the legality of the tech giant’s control of the iPad trademark here on the mainland.

And the worst might be yet to come.

The legal issue at hand for Apple is simple enough: Does the Cupertino-based company own the “iPad” trademark in China? Or does it belong to Proview (Shenzhen), a subsidiary of Hong Kong-based Proview International Holdings Ltd. – at one time one of the largest manufacturers of computer displays in the world.

NBC/ITN

The cover of Shenzhen-based tech company Proview's owner's manual for their IPAD device, called a "Professional Color LCD Monitor."

Murky trademark deal
Proview began trademarking the term, “IPAD,” in China and other countries back in 2000. The company coined the name for a handheld device it claims was the actual start of what later would be dubbed “tablet computing.”

The project never came to fruition, though, and the name sat unused until 2009 – a year before the debut of the iPad we know today. That’s when Apple allegedly swooped in and paid a Proview subsidiary in Taiwan $55,000 for the trademark rights in ten countries, including they claim, China.

Not so, says Proview in Shenzhen, which argued that it – not the subsidiary in Taiwan – had registered the iPad name in China and thus controlled its trademark on the mainland.

In 2010, Proview took Apple to court in Shenzhen and won a decision last December that ruled Apple had incorrectly purchased the China trademark from the Taiwan-based subsidiary, resulting in a legally non-binding agreement. 

An appeal filed last month by Apple in a Guangdong provincial court was similarly rejected, paving the way for Proview to file a slew of trademark violation complaints across China with local Industrial and Commercial Administrative Bureaus. In 20 cities across four provinces, these departments began enforcing the decision, confiscating iPads from sellers and exposing Apple to fines up to five times the profit from iPad sales.

Online retailers are also taking note of the complaints, with Amazon China and Suning.com, a Chinese e-commerce site, also pulling iPads off their websites.

Undeterred, Apple has appealed the ruling to a higher Guangdong court. Carolyn Wu, a spokesman for Apple in China, told the Wall Street Journal Tuesday, “We bought Proview’s world-wide rights to the iPad trademark in 10 different countries several years ago… Proview refuses to honor their agreement with Apple in China.”

More suits to come
Talking about the upcoming Shanghai suit for which Ma says arguments will begin next week, Chinese legal experts are already arguing that Apple faces long odds of winning. As one lawyer put it, Apple’s negotiating with Proview’s Taiwanese subsidiary is “like negotiating with a son and expecting the father to go along with what was agreed upon.”

NBC/ITN

The user manual for Proview's  IPAD shows off its boxy wireless device shaped like an old TV. Proview claims it has the rights to the trademark "IPAD" in China , locking it in a legal battle with U.S.-based tech giant Apple.

With Proview’s ownership of the iPad trademark already established in the Shenzhen courts, it seems doubtful that the Shanghai court will side in favor of Apple and effectively overturn the appeals court in Guangdong.

Late last year, China became Apple’s second largest market after the United States. A decision against Apple that results in the ceasing of mainland iPad sales would be catastrophic for the company, which reportedly sold 15.43 million iPads in the last quarter of 2011 alone.

Even more troubling is another complaint Proview plans to file by the end of this month to China’s customs authorities that would ban the export and import of the new iPad 3. Almost all of the 30 million iPads sold last year are assembled outside the U.S., mostly in China. A successful injunction against Apple on exports of its iPad 3 would effectively make its rumored early March rollout date a pipe dream, putting a significant dent in the company’s profits.

Payday ahead for Proview?
All of these lawsuits, injunctions and complaints beg the question, what is Proview’s end game?

After all, Proview can seemingly look ahead confidently to the upcoming customs complaint and Shanghai lawsuit knowing that the Chinese courts have ruled in their favor in regards to ownership of the iPad trademark. Barring some new, compelling evidence from Apple, it will be extremely difficult for Apple to overturn two decisions in favor of Proview.

Bobby Yip / Reuters

A man walks on a bridge in front of the derelict office of Proview Technology in China's southern city of Shenzhen on Wednesday.

So what does Proview want?

The lawyer, Ma, played coy in answering that question and simply said he hoped that the two parties would be able to settle their disputes out of court. Indeed, a settlement between Apple and Proview is increasingly looking like an expensive proposition for the American tech company and a financial windfall for the cash-strapped Proview.

However, rumors of Proview seeking a $1.6 billion dollar payout may seem almost reasonable to Apple if Proview’s multiple suits successfully pass through Chinese courts and an embargo on shipments of iPad 3s is enacted. Although, it’s important to remember that Apple reportedly has $97.6 billion in cash reserves, so a $1.6 billion payout wouldn’t exactly break their bank.

Despite the long legal odds against Apple, and Proview seemingly sitting in the driver’s seat, the chances of such a doomsday scenario occurring seem distant as both sides appear even more poised for a settlement.

After all, while China’s expansive, albeit limitedly enforced, intellectual property laws currently favor Proview, it seems doubtful that a Chinese ruling blocking the shipment of iPad to countries where Apple legally owns the trademark would hold up in a complaint among the bodies that regulate international trade.

Furthermore, during these trying economic times globally, it would simply be foolhardy for China’s Customs Bureau – and by extension, the ruling Communist Party – to invite the swift international condemnation that would inevitably follow any blocking of Apple exports.

Ultimately, as Stan Abrams of the China Hearsay blog put it, Proview’s best strategy would seemingly be to wreak enough legal havoc for Apple so that the disruption of exports, while not an inevitability, would be a big enough threat to bring them to the settlement table.

Whatever decisions are made in the next few weeks, Apple will surely pay dearly for its first significant blunder since its entry into the China market.

BEIJING — Walk by the Apple shop in Beijing’s Sanlitun neighborhood any day and you begin to have an inkling of how popular this brand has become in China in just a couple of years.

Roughly 40,000 visitors a day enter Apple’s shops in Beijing and Shanghai — four times as many as in any of the Apple shops in the United States.

But such popularity can attract imitation that Apple might not view as the sincerest form of flattery.

An American living in Kunming, the capital of Yunnan Province in China’s remote southwest corner, came across a fake Apple shop.

That’s right.

An entire fake Apple shop.

“They looked like Apple products.  It looked like an Apple store.  It had the classic Apple store winding staircase and weird upstairs sitting area.  The employees were even wearing those blue t-shirts with the chunky Apple name tags around their necks,” writes the blogger.

But upon closer inspection, our intrepid fellow American realized, “A beautiful ripoff — a brilliant one — the best ripoff store we had ever seen (and we see them every day).  But some things were just not right: the stairs were poorly made.  The walls hadn’t been painted properly.  Apple never writes “Apple Store” on its signs — it just puts up the glowing, iconic fruit.”

Now it wasn’t clear to the blogger whether the products were fake, too, but they looked real enough.

But here’s the real kicker: Some of the staff appeared to believe they were really working for Apple.

We checked with Apple, which confirmed it does not have a self-standing retail outlet in Kunming, but it does have a reseller.  However, that reseller is nowhere near the "fake" shop mentioned in the blog.

Huge fan base
As with many American companies, China is a highly lucrative market for Apple. The company’s chief financial officer was quoted earlier this year as saying, of all the Apple outlets in the world, the China stores clocks on average the highest traffic and highest revenue.

On Tuesday, the Cupertino-based company posted record quarterly earnings, with China sales leaping a record 250 percent since last year and comprising a third of all Apple sales.

While Macs are popular with the trendy and design-oriented set in Beijing and Shanghai, the iPhone and iPad have become ubiquitous among well-heeled youth and business types in all major Chinese cities.

Courtesy Bird Abroad

It looks like an Apple shop. Feels like an Apple shop. But it's not!

The sleek, stylish products have garnered such a huge fan base in China that quirky testimonies to its popularity are legion:

The release of the white iPhone earlier this year set off a violent frenzy in the Beijing store.  That same outlet is also where customers are routinely approached on the premises by resellers or scalpers trying to hawk iPads and iPhones acquired elsewhere or, more commonly, overseas (where the products cost much less than they do in China).

In fact, the practice of buying iPads and iPhones outside China to bring back into the mainland — for resale or for personal use — is so widespread that Chinese customs agents began imposing a 20 percent import tax on any travelers found with such items in their possession.

During Apple’s earnings call on Tuesday, Chief Operating Officer Tim Cook said China was “very key” to the company's results.  He was also quoted as saying Apple hadn’t “learned to play perfectly” in the China market.

But it would seem that some enterprising Chinese know very well how to play in the Apple market.