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Why Did Apple Apologize to Chinese Consumers and What Does It Mean?

A ChinaFile Conversation

Jeremy Goldkorn:

On March 22, before the foreign media or Apple themselves seemed to have grasped the seriousness of the CCTV attacks on the Californian behemoth, I wrote a post on Danwei.com that concluded:

“The signs are clear that regulators and establishment media would both be happy for foreign mobile phone handsets and operating systems to lose market share. This should be remembered by anyone betting on Apple as a China play, including CEO Tim Cook who earlier this year told Xinhua News Agency that he believes China will become Apple’s largest market.”

The second sentence explains why Apple needed to apologize: China is the major part of their growth plans, and they need to do everything they can to stop hostile attitudes towards their company and products from the Chinese government and official media. I don’t think Chinese consumers are very upset about the problems CCTV exposed, but the government could very easily make Apple’s China dreams impossible to realize

If Apple does not act contrite, there are thousands of other issues that CCTV or other state actors could attack them on, starting with the apps and content on their iTunes store: To this day the iTunes is the greatest Trojan horse of foreign content that any foreign media or tech company has managed to sneak into the People’s Republic without serious scrutiny.

Despite the apology, I expect Apple will continue to meet hostility from official organs in the coming years - their government and public relations teams are going to have to earn their keep.

Responses

Whilst the current row over Apple’s warranty policy may well owe more to the government’s and Apple competitors’ desire to curb the company’s success in the Chinese market, the charges of arrogance are not completely unfounded: there is history here.

When in 2011, a consortium of Chinese civil society organizations exposed appalling labor and environmental conditions in the factories that made iPads and iPhones, following a seven month investigation, Apple refused to acknowledge the reports or to respond to the charges.  Chinese civil society activists had been trying to raise these issues with Apple since 2010, without response. The attitude at Apple central seemed to be that any criticism was down to jealous competitors and that the company was too big to worry either about its workers or its environmental impact.  It is, of course, quite possible that a different conversation was going on inside the company, but as far as the public was concerned, Apple stuck to the line that it did not disclose who its suppliers were, allegedly for commercial reasons. As one Chinese activist put it, if a factory is making iPhones, it would seem to be a reasonable bet that it was an Apple supplier. Still, Apple would not budge:

  The investigators claim that, despite the information provided by the NGOs on environmental problems at as many as 27 suspected Apple suppliers, the U.S. firm did not respond to a single pollution incident in its 2011 Supplier Responsibility Report. Its only nod to questions from environmental groups was to admit that Wintek, where workers suffered n-hexane poisoning when cleaning iPhone touch-screens, was a supplier.

Apple’s attitude was reminiscent of the Nike response, long ago, to the revelations of child exploitation in their supply chain: this basically said that these were not their factories and they did not accept responsibility for what happened inside them. Nike paid a heavy price in reputational terms for that, and they have since had to work hard to rebuild their image. Apple did not seem to have noticed that standards of disclosure had risen since then. As the Chinese activists noted:

The latest NGO report accuses Apple of failing to respond openly to questions and … while this type of behavior used to be standard among international companies …   practices have changed as greater transparency in China has increased access to environmental data. Many companies now use that information to prevent pollution from their global manufacturing base.  

Non-disclosure remained Apple’s policy until the death of Steve Jobs.  Since then, Tim Cook has taken a more open position and an invitation to Chinese NGO in October 2011 to discuss Apple’s factory conditions was a breakthrough.  But it came more than a decade after most multinationals realised that refusing to discuss conditions and abuses in their supply chains was unacceptable, unethical and finally, bad for business as it calls into question the social license to operate.  It had taken Apple the best part of two years to respond.  In the current, different dispute, Apple may find it has fewer friends that it might have had, if it had woken up earlier.

By all indications, Apple’s apology is enough to satisfy most Chinese consumers, even if the letter is less than perfectly sincere. It’s also undoubtedly the right move for the company to make, because the apology’s target audience is in fact wider than the consumers to which it is formally addressed.

As with so many events in contemporary China, the country’s social Web gives the best available gauge of what citizens—and, in this case, consumers—think of all the high-level wrangling. For analytical purposes here, it does not hurt that there is substantial overlap between Apple consumers and heavy Internet users; a recent search for “Apple” on Sina Weibo, a major micro-blogging platform, calls up 297 million recent mentions. Most of those are not about fruit.

Chinese state media seemed to land the first punch it took at Apple in mid-March, when a widely-watched consumer protection television show on CCTV accused Apple of discriminating against Chinese customers, and Web users responded by calling for a boycott of the company. But the campaign faltered quickly thereafter when one prominent Web commenter accidentally revealed that his own Apple critique had been pre-written, and the time of its posting pre-ordained. Chinese social media users are a cynical and usually savvy group, and once they sensed they were being manipulated, the media offensive against Apple lost some of its momentum.

That is partly why Apple was able to issue an apology that was less than fulsome. On one hand, the apology letter focused on the company’s failure to communicate, not its conduct, and it wasn’t lost on some of the more nationalistic commentators that the apology was published on April 1, as April Fool’s Day is widely “celebrated” in China. On the other hand, China is a target-rich environment for crusaders against corporate malfeasance, and Apple’s relatively minor infractions register lightly among more pressing concerns like food safety. In addition, the government has recently thought out loud about requiring red-hot social network Weixin to charge a potentially ruinous fee, which has struck many as a shameless effort to protect the government-owned telecom companies against even domestic competition. These rumbles reinforce the perception that the playing field in China tilts toward state-owned enterprises, making it harder to demonize Apple with a straight face.

But in issuing its apology, Apple nonetheless made the right decision for its shareholders. China and the U.S. stand alone as Apple’s two major markets, and while China is still far behind the U.S. in terms of Apple’s net sales, the growth of Chinese revenue has been explosive. Apple cannot afford to fight a war on multiple fronts—legal, regulatory, and media—with a determined Chinese government. And while Apple may have emerged from this latest P.R. battle bruised but standing, Chinese authorities could likely win a P.R. war of attrition. A constant drumbeat of state media criticism, keyed to play up nationalist sentiment against an “arrogant” American company, would inevitably dull the sheen that still distinguishes Apple products.

A public apology is one way that Apple can begin to bury the hatchet, at least with the public. But while Apple’s letter is addressed to consumers, it also speaks to Chinese authorities, who surely want something more than just words and tweaks to Apple’s warranty program. In all likelihood, Apple is working furiously behind the scenes to ascertain what decision-makers really want, and to determine whether Apple is willing and able to provide it. The apology signals that Apple is serious about finding common ground.

One of the great successes of American businesses has been their triumph in creating so many global brands of great notoriety, even distinction. Despite certain signs of Chinese schadenfreude over symptoms of American decline, Chinese still find themselves slavishly worshipful when it comes to these foreign brands. However, this kind of worship almost always comes with an obverse side, a certain unease, even jealousy, that foreign brands exercise such seductive power over proud Chinese. After all, it suggests the old charge of “running under the skirts of foreigners,” which is part of the very complex historical relationship of China with the West and the past.

Apple was absolutely right to do what it did. From both a business and a moral perspective it was right to have both apologized and remedied its mistaken policy: Cop to the failure quickly, rectify the problem, and move on. But that is hardly the end of it. What so super-charges transgressions like Apple’s with such emotional energy in China is precisely the devotional way Chinese approach foreign brands like Apple. But, just as it has sought “wealth and power” (fuqiang) historically in other realms, China now also ardently seeks brands of its own as hallmarks that the nation has arrived on these other new, long-promised shores of true global equity.

So, right or wrong, companies like Apple—whose stores are almost the equivalent of American Embassies in China—get caught up in this deeply complex attraction-repulsion mechanism between China and the West. It makes negotiating any such shoals, where questions of equal treatment arise, infinitely delicate and difficult. Apple may not quite realize it, but the historical aquifers that irrigate any such dispute with an iconic foreign company, are seemingly inexhaustible. Once an issue that involves unfair treatment arises, they gather into them all of these other complicated historical feelings that long have had a life of their own.

Jeremy Goldkorn is the Founder and Director of Danwei, a research firm that tracks Chinese media and Internet. Danwei has been publishing a popular website about Chinese media since 2003. After...
Isabel Hilton is a London-based international journalist and broadcaster. She studied at the Beijing Foreign Language and Culture University and at Fudan University in Shanghai before taking up a...
David Wertime is the co-founder of Tea Leaf Nation, an English-language web site that analyzes Chinese media. Founded in December 2011, Tea Leaf Nation was acquired in September 2013 by the...
Orville Schell is the Arthur Ross Director of the Center on U.S.-China Relations at the Asia Society in New York. He is a former professor and Dean at the University of California, Berkeley Graduate...
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China: What’s Going Right?

MICHAEL ZHAO, JAMES FALLOWS & others

Michael Zhao:On a recent trip to China, meeting mostly with former colleagues at the Chinese Academy of Sciences, I got a dose of optimism and hope for one aspect of the motherland. In terms of science, or laying down a solid foundation for better science to come, things are...

Blog

05.14.13

Why Can’t China Make Its Food Safe?—Or Can It?

ALEX WANG, JOHN C. BALZANO & others

The month my wife and I moved to Beijing in 2004, I saw a bag of oatmeal at our local grocery store prominently labeled: “NOT POLLUTED!” How funny that this would be a selling point, we thought.But 7 years later as we prepared to return to the US, what was once a joke had...

Blog

05.10.13

What’s China’s Game in the Middle East?

RACHEL BEITARIE, MASSOUD HAYOUN & others

Rachel Beitarie:Xi Jinping’s four point proposal for a Palestinian-Israeli peace agreement is interesting not so much for its content, as for its source. While China has maintained the appearance of being involved in Middle East politics for years, its top leaders, so far,...

Blog

05.07.13

Why Is a 1995 Poisoning Case the Top Topic on Chinese...

RACHEL LU, ANDREW J. NATHAN & others

With a population base of 1.3 billion people, China has no shortage of strange and gruesome crimes, but the attempted murder of Zhu Ling by thallium poisoning in 1995 is burning up China’s social media long after the trails have gone cold. Zhu, a brilliant and beautiful...

Blog

05.02.13

Does Promoting “Core Interests” Do China More Harm...

THE EDITORS, STEPHANIE T. KLEINE-AHLBRANDT & others

On April 30, as tensions around China’s claims to territories in the South- and East China Seas continued to simmer, we began what proved to be a popular ChinaFile Conversation, asking the question, What's Really at the Core of China’s ‘Core Interests’? The participants...

Blog

04.30.13

What’s Really at the Core of China’s “Core...

SHAI OSTER, ANDREW J. NATHAN & others

Shai Oster:It’s Pilates diplomacy—work on your core. China’s diplomats keep talking about China’s core interests and it’s a growing list. In 2011, China included its political system and social stability as core interests. This year, it has added a vast chunk of the...

Blog

04.25.13

Hollywood in China—What’s the Price of Admission?

JONATHAN LANDRETH, YING ZHU & others

Last week, DreamWorks Animation (DWA), the Hollywood studio behind the worldwide blockbuster Kung Fu Panda films, announced that it will cooperate with the China Film Group (CFG) on an animated feature called Tibet Code, an adventure story based on a series of recent Chinese...

Blog

04.23.13

How Would You Spend (the Next) $300 Million on U.S.-...

ORVILLE SCHELL & MICHAEL KULMA

Orville Schell:When Stephen A. Schwarzman announced his new $300 million program aimed at sending foreign scholars to Tsinghua University in Beijing the way Rhodes Scholarship, set up by the businessman and statesman Cecil Rhodes in 1902 began sending American scholars to Oxford...

Blog

04.18.13

How Fast Is China’s Slowdown Coming, and What Should...

PATRICK CHOVANEC, BARRY NAUGHTON & others

Slower Chinese GDP growth is not a bad thing if it’s happening for the right reasons. But it’s not happening for the right reasons.Instead of reining in credit to try to curb over-investment, Chinese authorities have allowed a renewed explosion in credit in an effort to fuel...

Blog

04.16.13

Why is China Still Messing with the Foreign Press?

ANDREW J. NATHAN, ISABEL HILTON & others

To those raised in the Marxist tradition, nothing in the media happens by accident.  In China, the flagship newspapers are still the “throat and tongue” of the ruling party, and their work is directed by the Party’s Propaganda Department.  That’s the first...

Blog

04.11.13

Why Is Chinese Soft Power Such a Hard Sell?

JEREMY GOLDKORN, DONALD CLARKE & others

Jeremy Goldkorn:Chairman Mao Zedong said that power comes out of the barrel of a gun, and he knew a thing or two about power, both hard and soft. If you have enough guns, you have respect. Money is the same: if you have enough cash, you can buy guns, and respect.Israel and Saudi...

Blog

04.03.13

Bird Flu Fears: Should We Trust Beijing This Time?

DAVID WERTIME, YANZHONG HUANG & others

David Wertime:A new strain of avian flu called H7N9 has infected at least seven humans and killed three in provinces near the Chinese metropolis of Shanghai, with the first death occurring on March 4. Meanwhile, in the last month, about 16,000 pigs, 1,000 ducks, and a few swans...

Blog

03.28.13

Will China’s Renminbi Replace the Dollar as the World...

PATRICK CHOVANEC, DAMIEN MA & others

Patrick Chovanec:This week’s news that Brazil and China have signed a $30 billion currency swap agreement gave a renewed boost to excited chatter over the rising influence of China’s currency, the renminbi (RMB). The belief, in many quarters, is that the renminbi is well on...

Blog

03.26.13

Can China Transform Africa?

JEREMY GOLDKORN, ISABEL HILTON & others

Jeremy Goldkorn:The question is all wrong. China is already transforming Africa, the question is how China is transforming Africa, not whether it can. From the “China shops”—small stores selling cheap clothing, bags, and kitchenware—that have become ubiquitous in Southern...

Blog

03.19.13

China’s New Leaders Say They Want to Fight Corruption...

ANDREW J. NATHAN & OUYANG BIN

In his first press conference after taking office as China's new premier, Li Keqiang declared that one of his top priorities would be to fight corruption, because “Corruption and the reputation of our government are as incompatible as fire and water.” This put Li on message...

Blog

03.15.13

Is the One Child Policy Finished—And Was It a Failure...

DORINDA ELLIOTT, ALEXA OLESEN & others

Dorinda Elliott:China’s recent decision to phase out the agency that oversees the one-child policy has raised questions about whether the policy itself will be dropped—and whether it was a success or a failure.Aside from the burdens only children feel when it comes...

Blog

03.13.13

China’s Post 1980’s Generation—Are the Kids All...

SUN YUNFAN, ORVILLE SCHELL & others

This week, the ChinaFile Conversation is a call for reactions to an article about China's current generation gap, written by James Palmer, a Beijing-based historian, author, and Global Times editor. The article, first published by Aeon in the U.K., “The Balinghou: Chinese...

Blog

03.08.13

Will China’s Property Market Crash, and So What If It...

DORINDA ELLIOTT & BILL BISHOP

Dorinda Elliott:At this week’s National People’s Congress, outgoing Premier Wen Jiabao proclaimed that the government kept housing prices from rising too fast. Really? I wonder what my 28-year-old Shanghainese friend Robert thinks about that. He and his fiancée could never...

Blog

03.06.13

Are Proposed Sanctions on North Korea a Hopeful Sign...

ORVILLE SCHELL, SUSAN SHIRK & others

Orville Schell:What may end up being most significant about the new draft resolution in the U.N. Security Council to impose stricter sanctions on North Korea, which China seems willing to sign, may not be what it amounts to in terms of denuclearizing the DPRK, but what it...

Blog

03.01.13

Is America’s Door Really Open to China’s Investment...

DANIEL H. ROSEN, ORVILLE SCHELL & others

Daniel Rosen:There have not been many new topics in U.S.-China economic relations over the past decade: the trade balance, offshoring of jobs, Chinese holding of U.S. government debt, whether China’s currency is undervalued and intellectual property protection problems have...

Blog

02.27.13

How Long Can China Keep Pollution Data a State Secret?

ELIZABETH ECONOMY, ORVILLE SCHELL & others

Elizabeth Economy:The environment is center stage once again in China. A Chinese lawyer has requested the findings of a national survey on soil pollution from the Ministry of Environmental Protection and been denied on the grounds that the information is a state secret. (The...

Blog

02.22.13

Will Investment in China Grow or Shrink?

DONALD CLARKE & DAVID SCHLESINGER

Donald Clarke:I don’t have the answer as to whether investment in China will grow or shrink, but I do have a few suggestions for how to think about the question. First, we have to clarify why we want to know the answer to this question: what do we think it will tell us? This...

Blog

02.20.13

Cyber Attacks—What’s the Best Response?

JONATHAN LANDRETH, JAMES FALLOWS & others

Jonathan Landreth:With regular ChinaFile Conversation contributor Elizabeth Economy on the road, I turned to her colleague Adam Segal, Maurice R. Greenberg Senior Fellow for China Studies at the Council on Foreign Relations in New York. Segal said that “the time for naming and...

Blog

02.15.13

U.S.-China Tensions: What Must Kerry Do?

DORINDA ELLIOTT, ELIZABETH ECONOMY & others

Dorinda Elliott:On a recent trip to China, I heard a lot of scary talk of potential war over the disputed Diaoyu Islands—this from both senior intellectual types and also just regular people, from an elderly calligraphy expert to a middle-aged history professor. People seemed...

Blog

02.13.13

North Korea: How Much More Will China Take and How...

WINSTON LORD, TAI MING CHEUNG & others

China is increasingly frustrated with North Korea and may even see more clearly that its actions only serve to increase allied unity, stimulate Japanese militarism and accelerate missile defense. For all these reasons the U.S. should lean on Beijing to—at last—not only help...

Blog

02.08.13

Rich, Poor and Chinese—Does Anyone Trust Beijing to...

ANDREW J. NATHAN, SUSAN SHIRK & others

Andrew Nathan:The new Chinese leadership under Xi Jinping seems to be making some bold opening moves with its attacks on corruption and the announcement on February 5 of plans to reduce the polarization of incomes.  Does this mean Xi is leading China in new directions? ...

Blog

02.06.13

Airpocalypse Now: China’s Tipping Point?

ALEX WANG, ORVILLE SCHELL & others

The recent run of air pollution in China, we now know, has been worse than the air quality in airport smoking lounges. At its worst, Beijing air quality has approached levels only seen in the United States during wildfires.All of the comparisons to London, Los Angeles, and New...

Blog

02.01.13

China’s Cyberattacks — At What Cost?

JAMES FALLOWS, DONALD CLARKE & others

James Fallows: Here are some initial reactions on the latest hacking news.We call this the “latest” news because I don’t think anyone, in China or outside, is actually surprised. In my own experience in China, which is limited compared with many of yours, I’ve seen the...

Blog

01.30.13

China, Japan and the Islands: What Do the Tensions Mean...

ORVILLE SCHELL, JOHN DELURY & others

How did the Diaoyu, Spratly, and Paracel islands come to replace Taiwan as the main source of tension for maritime Asia? And how are we to explain the fact that China’s foreign policy toward its Asian neighbors has now morphed from such slogans as: “Keep our heads down, and...

DISCUSSION

Media

01.21.96

Jackie Chan, American Action Hero?

JAIME WOLF

Whenever Jackie Chan leaves Hong Kong to make a public appearance in Shanghai, Taipei or Tokyo, or in Kuala Lumpur, Singapore or Seoul, hundreds—sometimes thousands—of his fans gather in a frenzy of adoration. Last June, Chan, the martial artist, comic actor and stunt man who...

Sinica Podcast

06.04.10

Suicides, Strikes, and Labor Unrest in China

KAISER KUO, JEREMY GOLDKORN & others

A spate of suicides leaves ten dead at the Shenzhen campus of Foxconn, the giant electronics manufacturer that makes many of the world’s most popular consumer electronics. A rare strike paralyzes production at Honda Motors, shutting down all of the company’s manufacturing...

Making It Big in China

JONATHAN MIRSKY

Jianying Zha describes China as “way too big a cow for anyone to tackle in full.” Therefore, Ms. Zha says, she omits “the rural life, the small-town stories, the migrants working in huge manufacturing plants…continued poverty in parts of interior rural China, surging...