Apple’s CEO Tim Cook was forced by the Chinese Communist Party to apologize for bad consumer warranty service but the microblogs in China are full of people defending the company–and blaming the government. They are asking why the government is not going after domestic companies who are making fraudulent and sometimes dangerous goods. So what’s going on?
An insightful piece in my favorite business newspaper, the Financial Times, suggested that forces within the government singled Apple out to send a message to other Western companies that they had to “kowtow” and pay tribute to the government and cooperate. The CCTV, the China Central Television station, run by the government has an annual show on March 15, timed for the world consumer rights day, which focusses on foreign companies in China. Foreign companies spend a lot of money on advertising on the show, according to the FT piece, and those that do not are often the target of investigation.
Apple made many mistakes during this warranty crisis in not addressing the issue early and loudly. After it was highlighted on March 15 on the CCTV show (along with Volkswagen), Apple failed to issue a big public apology. VW did. The deeper problem for Apple is not understanding the political culture it is operating in. China is Apple’s second biggest market and could grow to its largest, but not if the company angers the powers in Beijing. Apple has been under criticism for poor labor practices in the factories that make its iPads and iPhones. They are owned and run by Foxconn, a Taiwanese assembly company, but Apple is held responsible. The warranty episode follows several years of suicides at the plants.
There is a certain irony to the Apple incident. More than any single company, it was Apple that taught China how to build and export high-quality electronic goods to the world. Before Apple came on the scene, China was known for poor-quality goods (and still is in many market areas). But the demands of Steve Jobs and Apple for perfection, pushed China to raise the bar on quality-control. No good deed goes unpunished.