Local vendor’s fear of Nokia patents make China delay approval of Nokia-MS deal.

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A report from China suggests that China is exercising unprecedented caution in approving MS-Nokia deal. Usually such acquisitions are approved after a 30-day one-phase investigation in China, but in case of MS-Nokia, it has entered into second phase of investigation.

Such acquisitions usually get approval from China’s Ministry of Commerce after a 30-day first-phase investigation.

But currently, the deal has not been approved yet and is undergoing a second-phase anti-trust investigation, though regulators from some other countries and regions including the US have given the nod already, the report said, citing unnamed sources familiar with the matter.

Sources of Beijing-based newspaper, The Economic Observer have attributed this delay to apprehensions of many local vendors like ZTE, Lenovo and Xiaomi who fear that after this deal gets approved, they need to shell higher royalty to Nokia.

Nokia has already dropped hints during its Q3 earnings call that they will be more aggressive in protecting their IPR and would like to monetize 90% of their patent portfolio which has not been licensed yet.

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In case of China the report says Nokia has entered in licensing agreements with only few of the local vendors and can now go for tapping all of them and even charge higher patent fees.

In the past, Nokia adopted a loose system for patent protection in China and only charged a few of the country’s phone makers patent fees, but now it is likely to sign official patent licensing contracts with all domestic users or even charge them higher, according to The Economic Observer.

Currently, the company’s patent fees are generally 2 percent of a device’s selling price, said the report.

Interestingly, The Economic Observer has predicted that in 2014 Nokia could gain $1.1 billion in patent income from the Chinese mobile phone market, which may generate $55.5 billion in sales volumes next year.

Thanks Tom for the Tip. Cheers!!

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