Article in Companies, General, Tech Industry, Fueled News, iPhone, iPad categories.
The Chinese Government’s Not So Secret War on Apple
It began with a music video. Singing something that sounded like a Chinese version of “Born to Run” by Bruce Springsteen and dashing through the…
It began with a music video. Singing something that sounded like a Chinese version of “Born to Run” by Bruce Springsteen and dashing through the streets of Bejing, a group of men and women descended upon the studios of the state-owned China Central Television company, CCTV. They donned black shirts and orange ties, did a dance routine, and then soberly began a series of reports exposing the shadier side of well-known products. This is 3.15, an annual consumer protection show run by CCTV. On the Ides of March, which is also national Consumer Protection Day in China, Apple found itself in the crosshairs.
The accusations against Apple involve the one-year warranty service to Chinese customers. Chinese law states that warranties must be at least two years. Further, the exposè claims that Apple returned to Chinese consumers a refurbished iPhone with the old back cover instead of replacing the defective phone with a new one. An old story about a Chinese student who sold a kidney to buy an iPad was also mentioned. Apple made this unsatisfying statement- “Apple's Chinese warranty is more or less the same in the US and all over the world.”
Next came a conspiracy theory. Chinese celebrity Peter Ho posted a lambaste on Weibo, the Chinese version of Twitter. After criticizing Apple and accusing the company of bullying its customers, Mr. Ho added an odd line; “Need to send out at about 8:20 pm.” The line was quickly deleted, and Mr. Ho made a statement about his account being hacked and reported to the police. The hashtag #postat820 was censored as the so called “820 Party” started making accusations that the government was paying celebrities to bash Apple.
The ire is not limited to CCTV or social media. The People's Daily, official mouthpiece of the Communist party, has also taken up the whip. According to the paper, Apple is a greedy, dishonest, and especially arrogant. It would seem Apple is beset on all sides by the Chinese government, both directly and also from the shadows.
All the anger churned up by Chinese media has not settled exactly where the Chinese media wanted it to. Much of it has landed directly back on them. Apple has a huge loyal customer base in China, and they are frustrated with the attacks. One citizen on Weibo said, "Do you wish to transfer our focus? Get the ordinary people to curse and blame useless things? There's toxic air, toxic water and tainted milk. We are not fools!”
According to the financial magazine Caijing, which asked followers which companies most deserve to be 'smashed,' Apple did not list higher than many state-owned companies, including People's Daily.
This current spat with the Chinese media isn't the only China trouble Tim Cook has on his plate. Apple is also embroiled in a lawsuit with the Chinese company Zhizhen, who claims that Apple infringed on their “instant messaging chat bot system” copyright: Siri.
While Siri was developed in 2007, the “Xiao i Robot” was developed in 2004. The lawsuit is reminiscent of another suit last year by the Chinese company Proview Technology, who took $60 million from the company in order to settle a dispute about the name 'iPad.' While the Siri suit is most likely unrelated to China's media onslaught, it helps to color just how hostile the landscape is, especially to Apple. In the U.S., it’s most likely that these cases would have been dismissed out of hand.
It can't be understated how important China is to Apple. Not only does China make most of Apple's products, but Cook also expects it to overtake the US as the largest market for Apple products. The market has grown by 67 percent since last year but has not expanded as much as hoped. Of the 25 retail stores expected to have opened by 2011 in China, only 8 actually have. Samsung remains the smartphone leader in China, mostly because it has a larger array of products.
It's fairly clear now that an emergent Apple is not an outcome favorable to the Chinese government, who probably would like to see its market full of domestic smartphones, tablets and Samsung products. The state-owned telecommunication company, China Mobile, promotes Samsung. Cook has been negotiating for years to get the company to carry the iPhone. If the media war that the government is fueling against Apple is transparent and ineffective, the hostility to the company can’t be ignored. There’s still a fear that Apple will go the way of HP, which was subject to a Chinese media firestorm back in 2010.
Apple hasn’t ignored it. On April 1st, Cook issued an apology for the warranty issues and noted that Apple has the upmost respect for China and that Chinese customers were “central to our thoughts.” China approves. The foreign ministry says Apple has acted “conscientiously,” and the Chinese Global Times lauds Apples actions as “worthy of respect compared to other American companies.”
Does that mean that this is the end of hostilities? Maybe. But not everyone is happy. Says Zhou Jiangong, the editor-in-chief for Forbes China, “Cook’s apology is not only a failure in the company’s public relations, but more importantly, it reflects the weakening position of Apple’s brand and innovation capacity. Apple still provides good products, but does not create demand by innovation anymore, like what it did before.”