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The official website of Apple Inc. published an apology letter to Chinese consumers from its CEO Tim Cook Monday night. The CEO answered critics that called Apple's attitude "arrogant" and admitted that poor communication was to blame. He said the company would rethink its warranty policy for Apple products in China. This is the right step for Apple, and deserves credit from Chinese consumers and the media.
After China Central Television accused Apple of offering discriminatory after-sales services in China, the company responded indifferently to consumers' complaints. China's Apple fans then launched an attack on CCTV, which made the situation worse. The company's apology letter has eased the situation, softening the tense relationship between Apple and the Chinese market.
As the world's leading high-tech enterprise, Apple can adjust its attitude in a timely manner, showing its professionalism and flexibility. Its reaction is worth respect compared with other American companies. CCTV also deserves our respect and encouragement for daring to criticize a business giant like Apple.
China's market economy has experienced soaring development, while its rules are not mature enough and laws not so sound. Some international companies have not behaved well in China, and even treated Chinese customers differently to customers in other countries.
The blame should not only lie in foreign companies, but also China's business environment. Having said that, the supervision by Chinese media is absolutely justified. Making sure the Chinese market is more regulated and Chinese law binding to both Chinese and foreign companies will benefit global investors, including companies such as Apple, which relies more and more on the Chinese market.
Cook stresses poor communication in his letter. Communication is an effective way to reduce misunderstanding, however this seemingly easy approach often meets obstacles when it comes to implementation. Business interests and different values could all be the reason.
Some Apple fans launched an offensive against CCTV. They should reflect on the fact that CCTV is trying to defend their rights. But the issue has been interpreted through a highly ideological lens. Apple, as a company, is deified by its fans. But no company can escape the supervision of public opinion. It also raised questions about Chinese mainstream media and why normal criticism against a company could backfire in such a way. The Apple incident was settled quickly, and should bring maturity to Chinese society.
Apple issues apology following attacks in China
The attacks focused on Apple's repair policy. In China, Apple prefers to replace parts instead of offering new phones, which would extend service warranties.
BEIJING (AP) — Apple issued an apology to Chinese consumers Monday after government media attacked its repair policies for two weeks in a campaign that reeked of economic nationalism.
A statement Apple posted in Chinese to its website on Monday said the complaints had prompted "deep reflection" and persuaded the company of the need to revamp its repair policies, boost communication with Chinese consumers and strengthen oversight of authorized resellers.
State broadcaster CCTV and the ruling party's flagship newspaper, People's Daily, had led the charge against the iconic American company. They accused Apple of arrogance, greed and "throwing its weight around" and portrayed it as just the latest Western company to exploit the Chinese consumer.
The attacks started backfiring almost as soon as they began and were mocked by the increasingly sophisticated Chinese consumers who revere Apple and its products. State-run media also inadvertently revived complaints over shoddy service by Chinese companies.
Nonetheless, Apple responded with an apology from CEO Tim Cook.
"We've come to understand through this process that because of our poor communication, some have come to feel that Apple's attitude is arrogant and that we don't care about or value feedback from the consumer," Cook's Chinese statement said, as translated by The Associated Press. "For the concerns and misunderstandings passed on to the consumer, we express our sincere apologies."
Although Apple enjoys strong support from Chinese consumers, the vehemence of the attacks and the importance of the Chinese market appeared to have persuaded the company to smooth its relations with Chinese consumers and authorities.
The People's Daily newspaper ran an editorial last Wednesday headlined "Strike down Apple's incomparable arrogance."
"Here we have the Western person's sense of superiority making mischief," the newspaper wrote. "If there's no risk in offending the Chinese consumer, and it also makes for lower overheads, then why not?"
Chinese observers accused People's Daily of gross hypocrisy and pointed out that the newspaper had maintained a stony silence when Chinese companies were implicated over food safety, pollution and other scandals. Meanwhile, CCTV was shamed when it was revealed that celebrities had been recruited to blast the company on Weibo, China's version of Twitter, in what had been billed as a grassroots campaign.
"The public responded in two ways to this incident," popular commentator Shi Shusi wrote on his Weibo account. "One group supports this criticism but quite a number of people felt that there are state monopolies which have severely violated customer's rights, but which are not being exposed."
Popular business magazine Caijing said its readers identified a long list of abusers, including state banks that lend to those with political connections while stiffing ordinary savers with low rates on deposits; a government oil company that sets gas prices and other rates as it sees fit; and state telecom providers notorious for their lack of customer service.
"If media is going to go after Apple, let's hope they spare some thought for those big Chinese communications companies and other monopolies, the ones that enrich special interests in the name of being publicly owned," Cai Tongqi, a lawyer from the eastern province of Jiangsu, wrote on Weibo.
Consumers thus far seem unfazed by the state media's attacks on Apple.
Perusing the wares at an Apple reseller in Beijing's tony China World mall, recent college graduate Zeng Lu said she considered the controversy a sign of the Chinese consumer's growing maturity.
"It's great to see Chinese consumers standing up for their rights, but it's ridiculous for the People's Daily to get involved," Zeng said. "They should be criticizing state companies instead."
Apple's popularity flies in the face of China's ardent attempts to push its own brands and develop internationally competitive companies. The company also has resisted trends to enter joint ventures and move research and development to China. It also ignores big state media such as CCTV and People's Daily. Apple relies on Chinese factories, though, to make iPads, iPhones and other popular products.
Despite the government's pressures, sales of Apple products in the region, which includes Taiwan and Hong Kong, grew 67 percent to $6.8 billion in the first three months of 2013, compared with the same period a year earlier, according to the company. Apple sold 2 million iPhone 5s during the first weekend it was available in China, in December.
The region is Apple's third largest market, accounting for 13 percent of all sales last year. More than 17,000 outlets sell its products in mainland China, a figure that includes 11 Apple stores and 400 premium resellers. In January, Cook said he expects China to replace North America as its largest source of revenue in the foreseeable future.
The attacks on Apple center on complaints over Apple's repair policies in China — specifically its practice of only replacing faulty parts rather than providing new iPhones, as it does in other markets. Critics say that allows Apple to avoid having to extend its service warranty by another year. Until Monday, the Cupertino, California-based company had kept silent apart from issuing a statement March 23 explaining its repair policy and pledging its deep respect for the Chinese consumer.
Yet consumers and analysts say the complaints hardly justify Beijing's campaign of vilification. Such nationalist outbursts are not uncommon, although previous campaigns against foreign companies have often been tied to perceived national slights, as often befalls Japanese firms. Google was attacked after the company announced in March 2010 that it would cease censoring its search responses inside China. Beijing accused Google of being an arm of American "information imperialism."
Beijing is also angry over Washington's effort to exclude Chinese high-tech firms including Huawei and ZTE from the U.S. market. A spending bill signed by President Barack Obama two weeks ago includes a clause barring NASA, the National Science Foundation and the Justice and Commerce Departments from contracting with firms tied to the Chinese government.
Washington and Beijing have also sparred over more recent hacking attacks, including a highly influential report by cybersecurity firm Mandiant that tied Chinese hacking to a unit of the People's Liberation Army based in Shanghai.
Apple, however, may have been singled out simply because it is "the biggest open target," said Jim McGregor, senior counselor at consultancy APCO Worldwide.
"We're still seeing a lot of things wrapped up in economic nationalism," McGregor said.
Even before Monday's apology, he had predicted Apple would make some sort of show of contrition to get its relations with the Chinese authorities back on track.
Duncan Clark, managing director of BDA China Ltd., a Beijing research firm, said the assault probably stems from a combination of factors, including the failure of Chinese companies to make breakthroughs in high-end consumer electronics.
"There's a general sense of frustration that China can't move further up the value chain," Clark said.
Apple's Apology To China: Mission Accomplished
Apple's formal apology yesterday to the people of China may not be enough to dissuade China's government from its continued attacks on the company. But if the immediate response is any guide, it should be enough to let Apple keep building out its business in the world's largest mobile computing market.
Following a damning and highly visible attack by state-owned China Central Television that accused Apple of "arrogance" for allegedly providing shoddy service to its Chinese customers, CEO Tim Cook publicly apologized.
According to Bloomberg, Apple's apology is a rather common "rite of passage" for large foreign businesses in China.
Corporate mea culpas have become a rite of passage for international companies criticized by China Central Television, including Volkswagen AG, Carrefour SA (CA) and Yum! Brands Inc (YUM).
The network beamed its program on Apple to more than 1 billion people just hours after Li Keqiang, who has pledged to root out consumer abuses, was named premier. The state-run People’s Daily followed with more than a dozen articles at a time when China struggles to cope with poisonous food, air pollution, government corruption and thousands of dead pigs floating in Shanghai’s drinking water.
The importance of the Chinese market to Apple is hard to understate:
While the iPhone has only a small share of the Chinese smartphone market, Apple has been moving aggressively into the country. In the last fiscal quarter alone, Apple generated $6.83 billion in revenues from the Chinese market (including Hong Kong and Taiwan). China is currently Apple's second largest market by revenue, though CEO Tim Cook has predicted that China will become Apple’s number one market soon.
Everyone Hates Apple... Until They Don't
Apple needed to defuse this situation as best it could. In addition to Tim Cook's apology, Apple pledged to improve its customer support policies, better train its official Apple resellers in the country and to enhance warranty policies for the iPhone 4 and 4S.
Moreover, Cook's apology was noticeably personal:
In the process of studying the issues, we recognize that some people may have viewed our lack of communication as arrogant, or as a sign that we didn’t care about or value their feedback. We sincerely apologize to our customers for any concern or confusion we may have caused.
This may be enough to satisfy Apple's customers and potential customers in China, and could limit anger and complaints about the company across popular social media sites as Weibo. As Reuters noted, shortly after the apology, another official Chinese newspaper, the Global Times, remarked that Apple's reaction is "worth respect compared with other American companies."
Perhaps, though Bloomberg notes that the many attacks on Apple from official Chinese government outlets were "more severe" than in the cases of other foreign companies.
Cook, who has visited the country twice already during his short tenure as Apple CEO, will likely make additional visits to smooth official feathers. He will no doubt also remind the government of Apple's contribution to the Chinese economy. During his last visit to China, for example, Cook singled out for praise the many Chinese partners and manufacturers that Apple relies on to manufacture its products for sale around the world.
Tim Cook, PR Man
Cook's apology is a wise move. Apple needed to let the public know that the company was committed to the China market and that it treats its China customers the same way it treats others — by, for instance, offering new replacement phones instead of refurbished models.
The timing of the apology was also critical. Apple could not afford to lose the narrative. According to CNN, even after the many negative stories by state-run media, Apple's customers and admirers within the country are still unsure what to make of the situation.
Many Chinese are wondering what the episode was really all about: Government payback against the popular American company? Apple's arrogance? Or was it legitimate criticism of Apple's service in China?
CNN also noted that reactions to the original CCTV broadcast were "mixed on social media." While many sided with the government, others thought "state media was overreaching."
From critics to cheerleaders: Apple CEO’s apology instantly sways China’s state media
What a difference a day makes. After being forced to issue a public apology for Apple’s Maps debacle late last year, Apple (AAPL) CEO Tim Cook on Monday issued an apology to Chinese consumers for what the state media deemed to be unfair local warranty policies that differed from Apple’s policies elsewhere. As reported by Reuters on Tuesday, Cook’s plea appears to have worked — the once critical government-run Chinese newspaper Global Times has issued a followup to earlier attacks stating that Apple is ”worth respect compared with other American companies.” The Foreign Ministry also reportedly praised Apple for “conscientiously” responding to the media-driven outcry.
Earlier reports out of China stated that Apple was intentionally avoiding warranty replacements for iPhones and Mac computers in order to dodge local laws that would require the company to issue a new full warranty on the replacement products. While Cook did not admit to any wrongdoing in his apology, he did suggest that Apple engineers in China were perhaps fixing devices with new parts in some situations where warranty replacements would have been issued elsewhere.
iSorry equals iForgiven? Chinese state media like Apple’s apology
iSorry equals iForgiven. Perhaps.
In a column with an unsubtle title, “For Apple business, must stay business,” Chinese-government-controlled Global Times praised Apple for responding to Chinese state media criticism of its warranty policies with Tim Cook’s apology letter, posted yesterday.
But the column ended with an equally unsubtle finale:
“It will be wise for Apple not to entangle itself into political debates.”
In another editorial on the same site, Global Times said that Apple deserves respect.
“As the world’s leading high-tech enterprise, Apple can adjust its attitude in a timely manner, showing its professionalism and flexibility. Its reaction is worth respect compared with other American companies,” the op-ed column said, while also managing to be remarkably candid in acknowledging that there are still issues for international companies doing business in China.
“China’s market economy has experienced soaring development, while its rules are not mature enough and laws not so sound. … The blame should not only lie in foreign companies, but also China’s business environment.”
This is good news for Apple, as China is its second largest market, and it’s a critical growing economy where Apple needs to succeed if it wants to do well globally. CEO Tim Cook’s quick response — only his second official company apology since taking the office — is a measure of how important the country is to Apple revenues.
Interestingly, the articles acknowledge a political tinge to the recent spanking Apple has been taking in China, saying that Chinese networking and mobile companies Huawei and ZTE “have long been restricted in the US markets under security and other accusations.” Just this January, Los Alamos National Laboratory tossed out Huawei network switches under suspicion that China’s military had infiltrated the company and installed backdoors into its equipment. And in December, the U.S. Congress Intelligence Committee said that Chinese networking equipment could not be trusted.
At the time, China had issued a vague threat, saying the U.S. should “do more that is beneficial to Sino-American economic and trade ties, rather than the contrary.”
However, point made, China may have been pacified by Apple’s apology. But it suggests that Apple stay on its toes:
Apple has won respect from Chinese consumers with its perseverance in developing leading technologies and styles. But the company is not impeccable. Like its continuing stride in exploring for technological breakthroughs, the company also needs to keep working hard to raise its service quality.
Apple’s apology in China a rite of passage for foreign brands
Apple Inc. Chief Executive Officer Tim Cook apologized to Chinese consumers after two weeks of being lambasted by state-run media for arrogance and poor customer service. The company’s offense? It failed to replace the back covers of iPhones after repairing electronics inside.
Corporate mea culpas have become a rite of passage for international companies criticized by China Central Television, including Volkswagen AG, Carrefour SA and Yum! Brands Inc.
The network beamed its program on Apple to more than 1 billion people just hours after Li Keqiang, who has pledged to root out consumer abuses, was named premier. The state-run People’s Daily followed with more than a dozen articles at a time when China struggles to cope with poisonous food, air pollution, government corruption and thousands of dead pigs floating in Shanghai’s drinking water.
The state media has been picking on foreign companies really too much lately
“The state media has been picking on foreign companies really too much lately,” said Shaun Rein, managing director of China Market Research Group in Shanghai. “The government should ensure that companies treat Chinese consumers fairly. They also have to make sure when they do it that it’s clear it’s for the protection of consumers rather than where it’s becoming to seem a political issue.”
Government Supervision
The attacks on Apple come five months after sales of Japanese-brand cars plummeted due to a territorial dispute over uninhabited islands.
After the March 15 report on CCTV, China’s commerce market watchdog pledged to strengthen regulations concerning infringements of customer’s rights. The State Administration for Industry and Commerce asked local authorities to increase their supervision of clauses in Apple’s warranty policies.
An official in the administration’s news office who declined to be identified wouldn’t comment on whether Apple’s warranty policies broke any laws.
“It is completely normal for the Apple company to apologize to Chinese consumers, and I think such action is commendable,” Hong Lei, a spokesman for China’s Foreign Ministry, said during a briefing in Beijing today.
In a change, Apple will now offer full replacements of iPhone 4 and 4S models, and the warranty will be reset to one year at that point, Cook said in a letter posted on the company’s Chinese website. Previously, the company provided new parts attached to the back of the customer’s existing iPhone, and didn’t extend the warranty.
Cook Apology
Samsung Electronics Co., the world’s largest maker of smartphones, repairs or replaces individual parts and will reset the warranty if it replaces the entire device within the initial one-year period, said Chris Jung, a Seoul-based spokesman.
Apple also vowed to improve training, customer service and monitoring of stores authorized to sell its products in China. The stock fell 3.1% yesterday, its biggest decline since Jan. 24.
“In the process of studying the issues, we recognize that some people may have viewed our lack of communication as arrogant, or as a sign that we didn’t care about or value their feedback,” Cook said. “We sincerely apologize to our customers for any concern or confusion we may have caused.”
Yin Wen, producer of the CCTV show, said the network wasn’t told by the government to target Apple, and the reason why People’s Daily, the official newspaper of the ruling Chinese Communist Party, published several follow-up articles on the issue was because “Apple has stirred public anger.”
Pollution ‘Irrelevant’
China is Apple’s biggest market outside the U.S., accounting for US$22.8-billion in sales in fiscal 2012. The Cupertino, California-based company sold more than 2 million iPhone 5 models the first weekend they went on sale there.
“We don’t differentiate between foreign and Chinese enterprises when picking which companies to expose,” Yin said. “We picked Apple because we received a lot of consumer complaints, so we sent reporters to investigate the issue.”
Yin said the show’s focus is consumer protection, so issues such as pollution are “irrelevant.”
Since the day of the broadcast, the People’s Daily website has published about the same number of articles on Apple as it has on the pigs found in Shanghai’s Huangpu River.
Apple needed to address the situation because the intensity of scrutiny from state media was more severe than in the cases of other foreign brands, said Mark Natkin, managing director of Marbridge Consulting Ltd., a market research firm in Beijing.
“There’s a larger issue when other state media jump on,” Natkin said. “It’s worth noting this criticism is coming at a time when several well-known Chinese electronics companies are having increasing difficulty accessing the U.S. market.”
Huawei, ZTE
The U.S. government should block acquisitions or mergers by Huawei Technologies Co. and ZTE Corp., China’s two largest phone-equipment makers, a congressional panel said a report in October. The companies’ equipment can provide an opening for Chinese intelligence services to use U.S. telecommunications networks for spying, according to the report.
The CCTV show last month also targeted Volkswagen AG, saying customers reported abnormal vibrations, loss of power and sudden acceleration in models fitted with a direct-shift gearbox. Europe’s largest automaker subsequently announced a recall of 380,000 cars.
That may cost the company more than $600-million, based on estimates from research firm LMC Automotive.
Carrefour, Yum
Last year, Carrefour apologized and shut an outlet in central Henan province after CCTV reported it altered labels for meat production dates. Yum, owner of the KFC food chain, apologized in January after the state broadcaster said a supplier provided chicken meat with too much antibiotics.
Apple’s attempt to placate China consumers will be costly because extending the warranty period by a year may triple calls for service and force the company to hire more people, said Nathan Washburn, a professor of business strategy at Thunderbird School of Global Management now teaching at Peking University.
Worst of all for Apple, the apology and increased costs for still may not get the company off the hook, Rein said.
“No matter what Apple does, the state media is going to continue to criticize them,” Rein said. “They are in the cross hairs and the government wants to make an example of them for whatever reason — whether that’s about censorship on iTunes, about trying to support the domestic telecom sector, or trying to divert attention away from the real problems in the country like pollution.”