Apple crumbles

Sorry seems to be the hardest word…

What started out with a broadside from CCTV (see WiC186) about deficiencies in Apple’s warranty policy soon turned into a media storm that extended well beyond the original complaint. “Apple Pursuit Lures 20,000 Students Into ‘Usury’” screamed one headline in Xinhua, with the claim that thousands of students were in hock to high-interest loans after buying Apple products in Wuhan. Other newspapers demanded “strengthened supervision” of the foreign tech firm. But this was a crisis that could have been avoided, said the Global Times. The problem was Apple’s response to the original CCTV exposé, especially a “detached tone” that “could easily be seen as proof of arrogance”.

Apple’s final apology was still less than fulsome, David Wertime told China File, as the company focused on a failure to communicate rather than its original conduct. Nor was it lost on some of China’s more suspicious commentators that the apology was published on April 1, or April Fools’ Day.

Apple’s real error was the failure to respond to a deteriorating situation, the South China Morning Post argued. It must rue its decision not to follow the example of Volkswagen, which was also targeted on the CCTV programme for selling cars with faulty gearboxes, and promptly recalled nearly 400,000 vehicles.

So this was a row about consumer rights?

The People’s Daily said so, adopting the role of consumer champion. “What is the reason for Apple repeatedly dodging the dissatisfaction of its customer ‘gods’ and becoming a unyielding bone on the road of consumer rights protection?” it demanded. Three days later another editorial under the headline “Strike Down Apple’s Incomparable Arrogance” turned much more nationalistic in tone. “Here we have the Western person’s sense of superiority making mischief,” it harrumphed. “If there’s no risk in offending the Chinese consumer, and it also makes for lower overheads, then why not?”

Visiting an Apple store in Shanghai last week, Adam Minter saw little sign of consumer anger. He told Bloomberg that Apple’s apology seemed to suggest something similar by stressing that 90% of its customers were satisfied with its repair services. But Minter also thought that Apple bosses had made a critical mistake in forgetting that they need to keep the government happy too. Duncan Clark at BDA, an advisory firm told the BBC that Beijing wants its citizens to be more patriotic in their consumer choices. Foreign brands that buck the government’s control-freakery are in the cross hairs.

Has Apple’s reputation in China been tarnished?

The worship of Steve Jobs’ meant that Apple had been “deified” but its aura had been fading for a while, Mei Xinyu, a researcher at the Ministry of Commerce, told the Global Times. Sina agreed that Apple is no longer the same media and investor darling and that – apart from further innovation – the only thing that will save it is “getting China right”. The People’s Daily went further in warning that any exit from the Chinese market would mean huge losses. “Tim Cook obviously doesn’t want to see this day coming,” it proclaimed, demanding that Apple do more to understand China and its consumers.

This was a fight that Apple couldn’t win, said Reuters, even if much of the internet opinion in China was largely in its favour. The Chinese market is crucial to Apple’s future, and not just because of its size, said Haydn Shaughnessy in Forbes magazine. That’s because it is going to be one of the key battlegrounds with Samsung and the Android operating system. So, a lesson learned for the folks in Cupertino? “Apple remains a company like no other,” the Daily Telegraph noted, “maybe one of the few that can meet China halfway, which is more than Google managed. But even it is not above evolution.”

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