Apple CEO Tim Cook Apologizes for China Service
Apple Inc (AAPL). Chief Executive Officer Tim Cook
apologized for the company’s iPhone warranty and repair policies in
China after receiving criticism from state-run media over customer
service in its second-largest market.
The Oriental Pearl Tower, right,
stands behind the Apple Inc. logo displayed at one of the company's
stores in the Pudong area of Shanghai. Photographer: Tomohiro
Ohsumi/Bloomberg
April 2 (Bloomberg) -- Ashok
Kumar, an analyst at Maxim Group LLC, talks about Apple Inc.'s business
outlook in developing markets.
Apple Chief Executive Officer Tim Cook apologized for the company’s
iPhone warranty and repair policies in China after receiving criticism
from state-run media over customer service in its second-largest market.
Kumar also discusses the patent dispute with Samsung Electronics Co. He
speaks with Susan Li on Bloomberg Television's "First Up." (Source:
Bloomberg)
The Apple Inc. logo is displayed
at the company's store in the Wangfujing area of Beijing, China, on
March 12, 2013. Photographer: Tomohiro Ohsumi/Bloomberg
“We recognize that we have much
to learn about operating and communicating in China, but we want to
assure everyone that we bring the same deep commitment and passion to
China as we do to any other part of the world,” said Tim Cook, chief
executive officer of Apple Inc. Photographer: David Paul
Morris/Bloomberg
Apple, in a change in
practice, will offer full replacements of older iPhones experiencing
problems, Cook said in a letter posted on the company’s Chinese website.
Apple also vowed to improve training, customer service and monitoring
of stores authorized to sell its products in China. The stock fell 3.1
percent yesterday, its biggest decline since Jan. 24.
“In the
process of studying the issues, we recognize that some people may have
viewed our lack of communication as arrogant, or as a sign that we
didn’t care about or value their feedback,” Cook said. “We sincerely
apologize to our customers for any concern or confusion we may have
caused.”
The letter underscores China’s
importance to Apple, whose stock has fallen in the past six months amid
concerns about slowing sales and profit growth. The country, which is
Apple’s biggest market after the U.S., accounted for $22.8 billion in
sales in fiscal 2012, and the company sold more than 2 million iPhone 5
models in the first weekend it went on sale there.
“We have tremendous respect for China,” Cook said. “Our customers here will always be central to our thoughts.”
Apple (AAPL)
fell to $428.91 at the close in New York yesterday. The shares have
dropped 19 percent this year, compared with a 9.5 percent gain for the
Standard & Poor’s 500 Index.
‘Apple’s Arrogance’
The
apology follows criticism from Chinese media outlets of Apple’s
customer service and warranty policies. State broadcaster China Central
Television criticized the company’s practices on Consumer Rights Day.
The People’s Daily, the official newspaper of the Chinese Communist
Party, followed with articles, including a March 27 commentary that said
“Destroy Apple’s ‘Incomparable’ Arrogance.’” The central government
also said it planned to increase scrutiny of contracts with electronics
makers, the official Xinhua News Agency reported.
“I want to say
that it is completely normal for the Apple company to apologize to
Chinese consumers, and I think such act is commendable,” Hong Lei, a
spokesman for China’s Foreign Ministry, said during a briefing in
Beijing today.
‘Deep Commitment’
The negative reports
focused on complaints that Apple repaired broken iPhones instead of
replacing them and that warranties weren’t sufficiently long. While
Apple said 90 percent of customers had been satisfied by fixes it had
been making, the company also said it would replace those handsets with
new ones and offer extended warranties.
“We recognize that we
have much to learn about operating and communicating in China, but we
want to assure everyone that we bring the same deep commitment and
passion to China as we do to any other part of the world,” Cook said.
The
same CCTV report also targeted Volkswagen AG, saying customers reported
abnormal vibrations, loss of power and sudden acceleration in models
fitted with a direct-shift gearbox. Europe’s largest automaker subsequently announced a recall.
Last year, France’s
Carrefour SA shut an outlet in central China after CCTV reported it had
falsely labeled meat sold at the store. The world’s second-largest
retailer sold regular chicken as premium for higher prices, according to
the report.
“State media has been picking on foreign companies really too much lately,” said Shaun Rein, managing director of China Market Research Group in Shanghai. “This isn’t good for foreign investment.”
HP’s Lesson
While
Apple’s sales have been growing in China, it still lags behind
smartphone competitors in the country, where the average consumer earns
less than $600 a month.
The company is in sixth place, according to market researcher IDC, trailing competitors including Samsung Electronics Co. and Lenovo Group Ltd. (992),
which offer devices in a range of styles and prices. The iPhone also
isn’t being sold by the country’s largest wireless carrier, China Mobile Ltd. (941)
“At
a minimum, these attacks put a wrench into Apple’s ability to strike a
deal with China Mobile to open opportunities further in China,” Glen
Yeung, an analyst at Citigroup Global Markets Inc., wrote in a research
report. He has a neutral rating on the shares with a $480 target price.
Apple is trying to avoid the fate of Hewlett-Packard Co. (HPQ),
which saw its share of the personal computer market drop by 50 percent
in China after it was the subject of media criticism, according to
Yeung. If Apple’s market share fell by that much, it could result in
$13.1 billion in lost sales, Yeung said.
Jobs Apology
Cook’s
letter marks his second public effort to make amends with customers. He
also apologized for the company’s mapping software in September after
it was faulted for misguided directions and inaccurate landmark
locations.
Apple has apologized for policies related to the
iPhone before. Following the first iPhone release in 2007, co-founder
Steve Jobs offered users rebates and an apology because early customers complained about a price cut two months after it went on sale.
In
2010, Jobs apologized and gave out free cases to customers because of
antenna defects for the iPhone 4. After Consumer Reports and other
publications showed the device would lose its signal if held a certain
way, Jobs called a rare press conference to explain the issue.
Government of Pakistan’s binding of not issuing any new LDI license
based on the sale-purchase agreement with Etisalat – under the sale of
26 percent shares of PTCL – got expired on March 22nd, 2013, after which
Pakistan Telecommunication Authority is free to auction new LDI
licenses now.
Pakistan
Telecommunication Company Limited (PTCL) has announced discounts for
its potential new customers buying EVO Cloud and Nitro Cloud devices.
