Belfast Telegraph

Friday 22 August 2014

Apple apology to Chinese consumers

Technology giant Apple saw its profits drop for the first time in a decade
An elderly man watches tutorial videos after he bought a new iPad at an Apple Store in Beijing (AP)

Apple has apologised to Chinese consumers after government media attacked its repair policies for two weeks in a campaign that reeked of economic nationalism.

A statement Apple posted in Chinese on its website 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 authorised resellers.

State broadcaster CCTV and the ruling party's flagship newspaper, People's Daily, had led the charge against the 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 quickly backfired, though, 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," Mr 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 emerged 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.

Apple's popularity flies in the face of China's ardent attempts to push its own brands and develop internationally competitive companies. The company has also 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% to 6.8 billion dollars (£4.46 billion) in the first three months of 2013, compared with the same period a year earlier, according to the company. Apple sold two 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% 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, Mr Cook said he expects China to replace North America as its largest source of revenue in the foreseeable future.

The attacks on Apple centre 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 on March 23 explaining its repair policy and pledging its deep respect for the Chinese consumer.

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