Beijing’s recent campaign to bash iPhone maker Apple (Nasdaq: AAPL) is starting to border on the bizarre, with the official Communist Party newspaper the People’s Daily launching the latest assault on the world’s biggest tech company. I’ve lived in China for quite a while now, and have seen occasional attacks on major foreign names in the official Chinese media, including my own former employer Reuters. But most of those attacks are related to specific incidents, and usually lasted a week or 2 at the most before the issue was quietly retired.
By comparison, this recent series of attacks on Apple seems a bit more sustained, and doesn’t really appear to have a particular incident at its core. If anything, Apple seemed finally to be moving in the right direction in China when media reported early this year that the company was in talks to open its first Chinese research and development center. (previous post)
I’ll return to the earlier R&D reports shortly, but first let’s take a look at the latest news that has the People’s Daily publishing a new editorial highly critical of the US tech giant. (English article) I’ll admit I haven’t read the editorial myself, but media reports say it lambasts Apple with a headline that reads: “Let’s Strike Away Apple’s Unparalleled Arrogance.” The editorial goes on to criticize Apple for a number of faults, including greed and dishonesty. But its biggest grievance is Apple’s “swaggering arrogance.”
The editorial appears to be tied to another report critical of Apple that ran on March 15 on CCTV, China’s biggest broadcaster and also a mouthpiece of the Communist Party. That report ran on China’s national consumer day, and attacked Apple for engaging in practices that cheated some customers out of extensions to their warranties after problems occurred with their iPhones. (previous post) To be fair, Apple wasn’t alone in being targeted for attack by CCTV, which ran a long series of reports criticizing a wide range of other domestic and foreign companies for similar deceptive practices.
But Apple was clearly the lead story of the series of reports that day. I previously commented that CCTV’s grievances against Apple were relatively minor and only affected a small number of iPhone buyers, and that the company was most likely targeted by overeager editors intent on finding any problem at all at Apple. Many Chinese netizens also came to Apple’s defense; but perhaps most embarrassing, a number of netizens uncovered evidence that CCTV had actually paid celebrities to criticize Apple on their microblogs after the TV report was broadcast, in its own deceptive move to show the impact of its reporting. (previous post)
Against that backdrop, perhaps one could view this latest assault on Apple as the People’s Daily’s attempt to defend a sister publication following all the controversy. Whatever the reason, the assault certainly doesn’t bode very well for Apple, which counts China as one of its top global markets.
In many ways, I don’t feel particularly sympathetic to Apple in this case even though I do think this latest attack seems rather unjustified. The “arrogance” that the People’s Daily criticizes is part of Apple’s corporate culture, which sees it rarely grant interviews or provide information to outsiders about its upcoming product plans. But despite that aloofness, Apple is still hugely successful because it does the most important thing that companies should do: making high quality products that people want to buy.
As for the allegations of greed and dishonesty, those also seem a bit unjustified. Making profits is the main objective of any private company, be it Chinese or western. So Apple can hardly be faulted for wanting to earn as much money as it can from the Chinese or any other market. As to dishonesty, every company of that size probably engages in such “dishonest” practices of some sort, not deliberately but because it’s inevitable that in such a large company some employees somewhere will do something that deviates from official policy.
So the bigger questions become: What is motivating these attacks, how long are they like to last, and what are the bigger implications for Apple in China? In answer to the first question, the latest attacks seem to be motivated at least partly by the CCTV controversy, as well as Beijing’s general dissatisfaction that Apple isn’t investing enough in China in tandem with its rapid sales growth.
Apple could help to improve its image if and when it does finalize any plans for an R&D center in China, as it never formally announced anything after the original media reports. Setting up such a center would be a hugely prestigious gain for China, and might help to quiet some of the company’s critics. In the meantime, I expect this current round of criticism will probably end soon, with perhaps 1 or 2 more negative editorials in the People’s Daily or other major publications.
Meantime, the sentiment that sparked the editorials is likely to remain until Apple shows more good will toward China with actions like a new R&D center or other investments. Accordingly, Apple should look for more ways to invest in China, and equally important, it needs to abandon its culture of secrecy by publicizing those efforts. If it fails to modify its game plan, it stands the very real prospect of facing repeated assaults in the official Chinese media, which will hurt its image, its reputation and ultimately its sales in China.
Bottom line: The latest assault on Apple by Chinese media is motivated by several factors, including frustration that the company isn’t investing more in China.
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This article was first published in the online edition of the South China Morning Post at www.scmp.com.