Business

Asia Briefing: Attack on foreign brands draws varied response

A woman uses an Apple iPhone in Wuhan, China. China’s economic expansion accelerated to 7.8% in the third quarter from a year earlier, reversing a slowdown that had put the government at risk of missing its 7.5% growth target for 2013. Photograph: Tomohiro Ohsumi/Bloomberg

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Clifford Coonan
Tue Oct 29 2013 - 01:00

Recent months have seen a series of broadsides against foreign brands on China's state broadcaster China Central Television (CCTV) and other outlets, accusing companies like Starbucks, Samsung and Apple of mistreating Chinese consumers.

In March, CCTV took aim at Apple, saying its warranty standards and its customer service in China were far inferior to those in the United States. There was also an investigation into price-fixing and anti-competitive conduct which targeted overseas companies, including five international dairy firms such as Danone, which were hit with record fines in August.

Meanwhile, overseas pharmaceutical companies are being investigated as part of a wider anti-corruption crackdown in China.

Earlier this month, CCTV's Economic Half-Hour programme reported that Samsung's Galaxy S and Note handsets crashed as many as 30 times a day and the chips needed to be upgraded.

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CCTV has also accused Starbucks of ripping off Chinese consumers, saying that a tall size latte costs 27 yuan (€3.22) or $4.40 in Beijing, while the same costs about a dollar less in Chicago.

The reaction has been mixed from the big brands – some have bowed, fearful of losing their stake in the world’s fastest-growing significant consumer market.

Apple chief executive Tim Cook chose to issue a public apology to Chinese consumers in April after the report, which basically accused the company of arrogance and poor customer service.

Starbucks has come out fighting, denying that it rips off Chinese coffee fans and saying it makes no more profit per cup than in the United States.

Starbucks spokesman Jim Olson said it was "inaccurate" to suggest margins were higher in China than the US and that higher prices reflected higher local costs for employee training and sourcing.

Samsung, the world’s largest maker of mobile phones, promised to provide free maintenance, according to Chinese rules, for the seven models included in the CCTV report. Samsung will not want to antagonise China, which accounted for 14 per cent of Samsung’s consolidated sales last year, compared with 29 per cent for the Americas and 25 per cent for Europe, Bloomberg data shows.

Some analysts see the attack as part of a broader strategy of trying to boost domestic firms, as local companies are an essential element of efforts to keep economic growth on track.

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