Apple apologizes to China over warranty policies

Analysts speculate Chinese authorities could be involved in attacks by state-run media on the company

Apple CEO Tim Cook apologized to Chinese consumers over concerns about its warranty policies after government-run media attacked the company for its customer service.

Since mid-March, the state-controlled media has criticized Apple for alleged unfairness in its warranty policies, even calling the company "arrogant" for failing to address the problems. But on Monday, Apple's CEO said in a statement posted online that the company would improve its customer service in China.

"We have become aware that our external communication was not enough and misled observers into thinking that Apple had an arrogant attitude," Cook said. "For any concerns or misunderstanding we brought to our customers, we express our sincere apologies."

Apple will now replace a faulty iPhone 4 or iPhone 4S under warranty with a new handset. Previously, the company would only replace the phone's internal components, and leave the original back cover in place. In addition, Apple will restart the one-year warranty on faulty iPhone 4 and iPhone 4S devices that are replaced.

The changes cover key areas in Apple's warranty policy that the state-run media had attacked as unfair and dishonest in recent weeks. On March 15, China's CCTV network claimed Apple's overseas customers were given entirely new handsets when their iPhones were found to be faulty. But in China, Apple only repaired the phone's internal components, rather than replace the handset entirely, CCTV alleged.

CCTV regularly airs segments critical of companies, with McDonalds, Carrefour and Chinese search giant Baidu also receiving flak in the past. But the attacks against Apple have quickly escalated, with other state-run publications joining in. The reports led Chinese regulators to tighten scrutiny of Apple's customer service.

The constant attention to Apple in the local media has some analysts speculating that China's higher authorities could be involved, and want to send a message.

"The fact that they are getting so heavily criticized from so many directions probably indicates that this is something more than just a misperception over their warranty policy," said Mark Natkin, managing director for Beijing-based Marbridge Consulting. "It's also coming at a time when a number of Chinese manufacturers are having difficulties with access to the U.S. market."

Huawei Technologies and ZTE have both seen their business prospects in the U.S. dwindle over their alleged ties to the Chinese government. Last year, a U.S. congressional committee accused the two companies of being a security risk, and recommended that U.S. firm should buy from other vendors. A new funding law in the U.S. is expected to further constrain purchases of information technology systems coming from the country.

"China likes to keep it clear that having access to this market is a privilege," Natkin added. "And at any time a company forgets or disregards that, it can create some conflict."

It's also not the first time Apple has faced a public relations battle in the country. A year ago, the company found itself locked in a legal battle over the iPad trademark in China. The case gained widespread media attention, and threatened to block Apple's tablet sales in the country. The company later agreed to pay US$60 million to buy the trademark from a little-known Chinese display maker.

Apple's apologies are rare. But China has become the company's second largest market, where its suppliers also manufacture the iPhone, the iPad and Mac products.

Since becoming Apple's CEO, Cook has made two visits to China, and met with government officials, including Li Keqiang, now the premier of the country. In his Monday apology, Cook said the company still had much to learn in China with regards to its operations and communications.

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Michael Kan

IDG News Service
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