China takes aim at Apple. Why?

The state-owned Chinese media have gone into full William Tell mode this week, taking aim at Apple in a string of angry and critical articles accusing the US giant of multiple sins.

The question is, why?

China’s Central TV (CCTV) launched the campaign two weeks ago, on International Consumers’ Day, with a report blasting Apple for treating its Chinese after-sales customers worse than their counterparts elsewhere in the world.

The government-run TV station has been beating that drum repeatedly this week in follow-up pieces, and the ruling Communist Party’s official organ, the People’s Daily, has also taken up the cudgels, charging Apple with “unparalleled arrogance.” 

On Thursday the paper – the government’s main mouthpiece – devoted half a page to a clutch of negative articles setting out accusations that Apple violates Chinese law on warranties. One reported on a patent infringement suit lodged against Apple in a Shanghai court, another recounted a People’s Daily reporter’s failure to secure an interview with an Apple executive in California, and yet another explained how Apple avoids taxes around the world. The paper lifted that last article from The New York Times.

Apple's response?

Apple may not have helped its cause with its initial response to the CCTV report. The company issued a brief statement, ignoring the complaints leveled against it and striking a self-congratulatory tone. 

The statement said that Apple "makes outstanding products ... and offers incredible user experience. Our team is always making an effort to exceed customers' expectations."  The company replaced that statement a week later with a more conciliatory message to its customers. 

“Apple is very inflexible about PR at a corporate level,” says Bill Bishop, a tech industry analyst in Beijing. “In general they are not very good at doing contrition.”

But that hardly explains the sustained vitriolic tone of the official campaign against Apple, which is prompting observers here to wonder what could possibly be behind it.

Nobody who is prepared to talk about it has a clue. Chinese and foreign analysts say that in the absence of any indications as to where the decision to launch the campaign came from, all they can do is guess.

Tit for tat?

One idea is that Apple has not spoken to the right officials in the right places in China. But that doesn’t seem to have stopped the company from making China its second largest market. And anyway, Apple CEO Tim Cook met Li Keqiang when he visited Beijing last year. Mr. Li is now the prime minister. You cannot be much better connected than that. 

Another theory is that the campaign is retribution for America’s treatment of Chinese flagship telecoms companies. Last year, the US House of Representatives Intelligence Committee issued a report urging US telecom companies to avoid doing business with Huawei and ZTE because it said that the two firms were subject to Chinese government influence and thus a potential threat to US security. 

The report effectively froze Huawei’s and ZTE’s business in the US.

The payback theory “sounds more plausible” than other explanations, suggests Mark Natkin, director of Marbridge Consulting, a telecoms and IT consultancy in Beijing.

“Just enough time has elapsed” since the House report “that they can avoid it looking like tit for tat,” Mr. Natkin says. “But they can make it plain that if you want to make things difficult for our companies, we can do the same for yours.”

Others speculate that state-owned telecom operators have dragooned the state-owned press into battle against Apple. In this view, China Telecom and China Unicom are trying to squeeze more revenue out of the deals they have signed with Apple, and are using the media for a political campaign.

That’s the view of Franz Yao, an independent IT industry observer and blogger. “I can’t prove that the telecoms firms are using CCTV and People’s Daily to attack Apple,” he acknowledges. “But in China, state-run companies have close ties to state-run media.”

A secondary aim of the campaign, suggests Mr. Yao, may be to tarnish Apple’s reputation as part of a government bid to weaken the hold that foreign firms have on the Chinese smartphone market, and make more room for local manufacturers.

But none of those local firms can yet compete with Apple’s high-end phones (nor with Samsung’s, for that matter.) 

In the end, says Xiang Ligang, president of the CCTime IT consulting firm, “it was probably Apple’s pretty hardline response [to criticism] that attracted more media attention.” 

Volkswagen, the German automaker, was also targeted in the CCTV program two weeks ago, accused of selling vehicles with faulty transmissions.

The company quickly announced that it would recall 384,181 cars to fix the problem. No Chinese newspaper nor TV station has since breathed a word about the issue.