China’s state media is waging PR war on Apple, and the company’s growth could be at stake

March 25, 2013
March 25, 2013

When it comes to public relations, Apple is notoriously tough: stonewalling reporters, obsessively stage-managing the roll-out of new products, even calling in the cops when necessary. But the image-conscious tech firm may have finally met a worthy opponent in the Chinese Communist Party.

China’s state-sponsored PR offensive against Apple is now in its second week, in a campaign that began with CCTV’s call for a boycott against the company for allegedly discriminatory customer support policies. The hits kept coming on Friday with allegations that the desire for Apple’s consumer gadgets is forcing students to take out usurious consumer loans.  A March 22 report (original Chinese here and English language version here) by China’s official Xinhua news agency was headlined “depending on high interest lenders to buy Apple,” and claimed that university students in the city of Wuhan were taking out loans at over 40% annual interest to buy Apple products.

The assault continued on Friday, when the state-run People’s Daily ran a front-page follow-up to the CCTV report. Inside the paper, a cartoon of a man with an Apple logo for a head was shown emitting speech bubbles with the Chinese word ‘kong’ (空), meaning “empty” or “vacuous.” This was a mockery of Apple’s PR response,  accusing Apple of “self praise,” “avoiding interviews” and of “ducking the issues.” (Here is an English language summary of Apple’s statement.)

The Chinese state-control media obviously commands a massive audience and is practiced at stoking jingoistic consumer outrage, as seen with the massive demonstrations against Japanese companies last year during a flare-up in the dispute over contested islands in the East China Sea. That’s not to say China’s PR mavens are omnipotent: many Sina Weibo users jeered CCTV after its ham-handed attempt to orchestrate an outcry was exposed.

The negative PR is starting to have some effect on users of Chinese twitter-like micro-blogging site Sina Weibo, who were previously cynical about the anti-Apple propaganda.

This Weibo user (Chinese, registration required) said in a March 25 post: “Who gives Apple the right to discriminate against Chinese consumers? And why do so many multinational companies treat Chinese consumers like this while at the same time making huge profits [from us]?”

Another said: “I have never seen a company as shameful as Apple…These after-sales service double standards will trigger widespread suspicion and dissappointment.”

The consequences of a prolonged negative PR campaign against Apple could be financially unpleasant for the company, which logged nearly $6 billion in sales in greater China last year. Apple CEO Tim Cook has said that he expects China to eventually become the company’s biggest market.

Why is China taking aim at Apple? It is far from the only Western firm to be targeted; the same CCTV program took aim at Volkswagen. McDonald’s, Carrefour, and Yum Brands have received similar treatment in the past. But Apple may be drawing special ire, in part because China’s leadership has expressed displeasure that the company’s booming smartphone market is dominated by foreign firms.

Apple’s complicated supply chain relationship with Foxconn may also play a role. Nearly half of Apple’s suppliers are in mainland China. Products like the iPhone and iPad are manufactured in giant factories that have drawn negative attention to the plight of Chinese workers, but the profit-generating innovation takes place up the value chain and across the Pacific Ocean in California. China’s huge manufacturing base has failed thus far to create the kind of gadget-lust inducing products that are the particular domain of companies like Apple.

How will this fight end? China’s leadership is unlikely to lose its desire to see domestic technology firms chip away at Apple’s dominance in hardware and product design, but the sheer size of Apple’s presence in China’s economy means it won’t be going away, either. Perhaps the Apple-China feud is not a war but a trade dispute, one that could be resolved through the language of business: The well-informed blog Tea Leaf Nation suggested that the attacks might magically disappear if Apple bought advertising space on CCTV and other state-owned media.

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