Does Apple's future in China relate to the Sinovel–AMSC dispute? Maybe. As a long term holder of AMSC, I have monitored this situation for several years. It is actually worse than you describe, but the ultimate outcome may be better than expected.
Sinovel stole proprietary information from AMSC by intentionally paying an AMSC employee in Austria to forward some critical documents containing software code to Sinovel agents. The employee was apprehended, brought to trial in Austria, convicted and jailed. Thereupon AMSC filed several actions in China to recover losses on several counts: Sinovel, after obtaining the critical information, cancelled existing orders for inverters that would allow wind turbine generators to be attached to the grid. They even cancelled orders for equipment that already had been shipped to Sinovel and never paid a dime in compensation. Sinovel began making its own inverters that looked and worked quite similarly to those they had originally bought from AMSC.
Local Chinese courts initially dismissed actions brought by AMSC. Eventually higher courts partially reversed the lower courts in China, allowing at least some of the AMSC complaints to be heard. After more than a year following the higher court rulings, there appears to be no resolution of any of the issues raised by AMSC, including illegal disclosure of proprietary information, violations of copyrights, and patent infringement. The actions of Sinovel were so blatant that the U.S. Dept. of Justice filed a suit in Wisconsin, where Sinovel owned some business related assets.
The difficulties imposed by Chinese culture on innovation and the resulting need to acquire new technology from outside sources do not trump international laws regarding trade agreements. China risks running afoul of the World Trade Organization, of which it is a member, if it continues to flout internationally agreed upon rules. The WTO can take retaliatory action, prohibiting its members from buying equipment made in China or placing high tariffs on such exports. These rules would also apply to attempts to copy Apple products and sell them illegally on world markets. I don't think the Chinese government is ready to let this happen, knowing that you can only go so far before you really get other countries upset enough to retaliate. China currently is experiencing lower exports because of a stalled world economy, leading to job losses in China and higher attendant expenses. They don't need to create a situation making it even worse for their exports.
That's why I think we are getting to a point where China at least offers a settlement to AMSC (probably only a fraction of AMSC losses of over $1 billion). Similarly, it would not be unheard of for firms like Foxconn to begin building factories elsewhere, such as in Vietnam, to manufacture iPhones. Nor would it be unheard of for other firms, such as Qualcomm, to begin curtailing their research investments in China (valuable especially to increase China's growing presence in wireless communications) and increase their investments in places like India. China's leaders no doubt understand the risks they take by not complying with the letter and spirit of international trade, among other things.
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