Apologetic Apple backs down in warranty row

Apple boosts warranties on iPhones sold in China and admits it has "much to learn"

Reuters Barry Collins
2 Apr 2013

Apple chief executive Tim Cook has apologised to Chinese consumers and altered iPhone warranty policies in the country, after more than two weeks of condemnation in the state-run media about its after-sales service.

From China Central Television to the People's Daily newspaper, government-controlled media outlets bashed the world's largest technology corporation for its "arrogance," protesting among other things that its current one-year service warranty was far shorter than in other markets.

Apple, which initially dismissed those criticisms, has promised to overhaul its consumer practices. Cook has previously said the world's second-largest economy is a crucial market for the company.

"We are aware that owing to insufficient external communication, some consider Apple's attitude to be arrogant, inattentive or indifferent to consumer feedback," Cook said in a letter written in Chinese on the company's local website. "We express our sincere apologies for causing consumers any misgivings or misunderstanding."

Cook's apology, unusual though not as rare as during his predecessor Steve Jobs' tenure, highlights the importance of the market for Apple. The country is typically the brightest spot in Apple's quarterly financial statements. Revenue from Greater China - which includes Taiwan and Hong Kong - totaled $7.3 billion in its fiscal first quarter, up 60% from a year ago.

Cook said in the lengthy letter that Apple has "much to learn about operating and communicating in China."

China has long been a prime market for Western corporations hoping to capitalise on its growing economic power and increasingly affluent middle-class. Still, companies face many pitfalls operating in the country.

Unfairly targeted?

The targeting of Apple may be part of a policy that China has adopted to favor homegrown companies, said Robert Atkinson, president of the Information Technology and Information Foundation. "This does seem to be part of a growing strategy by the Chinese government to criticise and single out for unfair treatment leading foreign companies in China," he said.

And it is happening as the US government calls out China "on its egregious economic and trade practices, including cyberattacks," he added.

Apple has been expanding in presence in China slowly but steadily, especially through increasing its retail footprint. Its iPhones, iPods and computers are considered aspirational products in China, especially among the country's growing middle class.

Criticism of Apple began on March 15 with the broadcast of an annual show on CCTV about consumer safety and rights, which has become an annual ritual targeting foreign, along with Chinese consumer firms.
The program assailed Apple for its after-sales service, including Apple's failure to offer new replacement iPhones with a one-year warranty in the case of major repairs.

Now, Apple will offer full replacements of the iPhone 4 and 4S instead of major repairs, adding a one-year warranty starting from the date of replacement. That appears to be a more generous offer than the standard UK iPhone warranty, which includes both repairs and replacements among the options open to Apple if the handset develops a fault within the first year.

Apple will also provide simpler and clearer explanations of warranties on its Chinese website and allow customers to offer feedback directly, Cook said. The company will also provide refresher training to service providers to explain the new warranty policy, he added.

The iPhone 5, the latest model, already carries a similar warranty to the new iPhone 4 and 4S coverage.

Apple's apology may increase the pressure on the company to improve its European warranty marketing, too. EU officials have attacked Apple for not providing consumers with clear enough information about their warranty rights.

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