Apple Apologizes Over China Warranty Policy

After a series of attacks by over the past several weeks, on Monday issued an apology letter signed by Chief Executive that promised to improve its customer service and warranty policies in China. From The Wall Street Journal:

Mr. Cook said in the letter that the company deeply reflected on recent “feedback” on its warranty policies and apologized for misunderstandings created by poor communication with consumers.

“We are aware that a lack of communications…led to the perception that Apple is arrogant and doesn’t care or attach enough importance to consumer feedback,” Mr. Cook said, according to the letter. “We express our sincere apologies for any concerns or misunderstandings this gave consumers.”

In the letter, Mr. Cook said the company would amend its warranty policies for the iPhone 4 and 4S, streamline its customer feedback, give further training to Apple authorized resellers on warranty policy, and more clearly post its warranty policy on its website. He added that about 90% of consumers had been satisfied with its earlier repair policy.

Cook’s apology comes nearly three weeks after an annual CCTV program about consumer safety and rights criticized Apple for charging Chinese customers a fee to replace the back cover of iPhones, a service offered free of charge in other countries. Apple did not respond at the time, and other state media organizations stepped up their coverage of the issue. A number of celebrities chimed in on as well, though netizens suspected that some had done so at the request of . Then, last week, China’s quality inspection regulator said it would tighten its oversight on the company.

Reuters noted that Cook’s letter “highlights the importance of the market for Apple,” given that revenue from China, Taiwan and Hong Kong grew 60 percent in the first quarter this year. Apple may have played it smart by apologizing, according to observers who spoke with The New York Times:

Bill Bishop, a Beijing technology analyst and publisher of the online newsletter Sinocism China, said it was difficult to know what prompted the investigation by the state media, but he noted that Apple’s explosive growth in China might have outpaced the company’s ability to fully train and prepare its work force and management team to deal with the challenges of the Chinese market.

“Whatever the merits of the case, Apple’s not going to win here,” Mr. Bishop said in an interview Monday. “Apple can’t fight this.”

Anna Han, an associate professor of law at Santa Clara University, said Mr. Cook’s letter of apology was a smart tactic and a “very Chinese thing to do.” She compared it with public apologies that plaintiffs will sometimes ask for from defendants in Chinese courts. That action, combined with the change in its warranty policy, “sort of takes the wind out of the government’s sails,” said Ms. Han, who advises American companies doing business in China.

“It says, ‘We’re accused of something and we’re doing something about it.’ ”

In his weekly China Insider column for The New York Times, which was published before Cook’s letter was issued, Sinocism’s Bill Bishop reiterated his stance that “Apple cannot win this fight”:

Apple looks to have a serious government and public relations problem that will require a much more proactive and forthright response than what the company has done so far. Dribbling out a petulant apology akin to its response to the problems with the 2010 iPhone 4 antenna will not work in China.

The standard response by a foreign company in China facing this kind of onslaught is to make public and private apologies, emphasize its commitment and contributions to China and dispatch senior executives from headquarters to make the rounds of the relevant Chinese government entities. Apple may also have to begin a new service for China, one it may also be able to sell to other foreign enterprises. It’s name? The iKowtow.

Investors have reason to be concerned. Between this brouhaha, the increased competition from Samsung and other high-end Android phones and the crackdown on corruption that is denting the gifting culture, Apple’s results in China for its current quarter may be disappointing, even though this is the first full quarter in which the iPhone 5 has been on sale in China.

The state-run claimed in a Tuesday editorial that the apology “benefits all sides:”

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.

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