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article imageOp-Ed: Apple apologizes for ‘arrogance’ but China wants more supervision

By Paul Wallis     Apr 1, 2013 in World
Sydney - Chinese State Administration for Industry and Commerce is telling “local industry and commerce authorities” to “enhance legal supervision” of Apple, The new initiative comes despite a public apology from Apple.
This comes on top of a true media catfight over consumer complaints over Aplle warranties:
The New York Times sets the scene:
…People’s Daily, the official mouthpiece of the Communist Party, published a series of editorials and articles, including one paper titled “Defeat Apple’s Incomparable Arrogance.”
Apple’s problem began on International Consumers’ Day, when China’s biggest state-run television network, as is its tradition, broadcast an investigative report on how companies operating in China cheat or mistreat consumers. This year, on March 15, one of the targets was Apple.
China Central Television criticized the American company’s after-sales iPhone customer service in China because it gave only a one-year warranty, while in China the law is two years. It also said that phone owners had to pay about $90 to replace a faulty back cover.
Apple’s apology came in the midst of a true frenzy of criticism. The warranty problems and customer service issues have been a big deal on Weibo, China’s version of Twitter. While some complaints seem to have been made by celebrities, including the unintentional posting of text telling the poster when to post, the problems are real enough.
China is one of Apple’s biggest markets. The flak has direct impact on dollar values for Apple, and the official hostility is a real commercial issue.
China’s commerce market watchdogs have called for tightened supervision of Apple Inc’s disputed warranty policy in response to customers’ complaints that the iPhone-maker adopted differential policies for repair and return services in China.
(“Differential policies” is a tactful reference to a legal no-no around the world, iffy guarantees or warranties that don’t comply with statutes. Terms of warranty are legally binding, so ambiguity or failure to deliver on terms of warranty is a serious legal issue. If you’re selling $20 billion worth of product in a market, it’s a big problem.)
Consumers who asked for replacement of iPhones due to quality defects during the warranty period always found that their renewed iPhones still kept the old back cover, the program said.
In addition, the guarantee period was not extended to another year as stipulated in China's after-sale regulation but remained the same as with the former unit. Under Chinese law, replaced mobile phones should be covered by another one-year guarantee period after the replacement.
…Or to put it another way, Apple screwed up royally with by overlooking the two year period to start with. The El Cheapo back cover issue is a grey area, because the old back covers may not be covered (love the syntax of this sentence) by warranty requirements.
Apple has apologized, understandably, having no real way around the issues. Xinhua wasn’t impressed, calling it "typical official reply full of empty talk." The market position is something new. China does hit foreign companies for various reasons on a regular basis, usually shoddy quality, but not usually for legal issues.
According to Xinhua, Apple sales went up by 67% in the first quarter of 2013. It looks like China’s working to create a framework for managing big foreign companies with large Chinese consumer markets. This is understandable policy, and using directly applicable consumer laws is also no major mystery.
The question is whether Apple can respond effectively. According to an Apple spokesperson quoted in The New York Times, one theory is that Apple has been a bit overwhelmed by the volumes of sales:
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.
Rather disappointingly, Apple doesn’t have any info related to the Chinese issues on its US Media page. The need is to be visibly doing something, not talking about doing something. Admitting guilt is one thing, fixing the problem, which could be systemic, related to overall warranty management, is another.
Actually, this is a shared problem. The Chinese input into Apple manufacturing is well-known. Quality issues affect both parties. Global consumers will be interested to see how Apple manages this issue. iPhone warranty issues aren’t confined to China. A previous generation iPhone was the main source of consumer complaints in Australia a few years ago.
The question for Apple, China and consumers alike is has the overall problem been fixed, yes or no?
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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