Apple CEO Tim Cook Apologizes, Will Change Warranty Practice in China
Apple CEO Tim Cook posted a public letter in Chinese on Apple's website apologizing to consumers for replacing damaged phones and computers with refurbished ones without updating the warranty, as is Apple's practice elsewhere in the world. The screw-up was not as bad as Apple's lack of response for weeks after it was revealed, which lead to further attacks for their "arrogance." The apology is a savvy business move because Apple has been subject to weeks of attacks by the state media. Apple's apology will go a long way toward bettering Apple's image in China, where the government has already responded positively.
The apology comes two weeks after state TV company CCTV lambasted Apple for the practice on its day-long annual consumer protection special on International Consumers' Day. Because it falls on the ides of March, the popular special has the nickname "315." The special provoked outrage on Weibo, China's version of Twitter, with many users calling for a boycott. That day, one celebrity ended an anti-Apple post with the words "Post around 8:20," when several other celebrities posted anti-Apple messages, leading to speculation that CCTV had paid them to post.
Following the 315 expose, the official communist newspaper The People's Daily ran negative articles about Apple for days on end, including one titled, "Defeat Apple’s Incomparable Arrogance."
Apple's profit margins have recently declined to pre-iPhone levels. China is now Apple's second largest market, with sales of $20 billion — 13% of Apple's total. Last year, China only made up 9%.
In the apology, Cook wrote,
"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. We sincerely apologize to our customers for any concern or confusion we may have caused... Henceforth, 1) all repairs in China will be made using new (not refurbished) parts and 2) the repaired phones will get new 1-year warranties from the date of repair... We appreciate the feedback that we've received, and we have a tremendous respect for China. Our customers here will always be central to our thoughts."
The letter also says the iPads and computers will receive two year warranties on major parts. The official Chinese consumer advocacy groups had demanded that iPads be classified as computers, and others had called for a public apology. A spokesman for the Foreign Ministry said they "approve of what Apple said."
It appears that this is actually a step up from the warranty policy in the U.S., which is the same as the old policy in China. Refurbished replacements and using the original warranty were part of the official policy. However, the European Union's consumer protection laws mandate two years of of warranty protection against defective hardware. In the CCTV special, the customers had bought their phones and computers through resellers, but Apple guarantees products bought from resellers with the same warranty.
This is Cook's second apology as Apple's CEO. He previously apologized for rolling out Apple Maps with a host of problems, such as misplaced towns. During Steve Jobs' tenure as CEO, Apple gave customers a rebate when the original iPhone's price was dropped $200 just weeks after being released, and it gave customers a free case when the iPhone 4's antenna experienced issues.