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The Chinese Government is Running A Smear Campaign Against Apple

BY Julia Wetherell | Monday, March 25 2013

Apple is luring students into high-interest loans: screenshot from a news story from Xinhua/The China Daily last week.

Foxconn, the corporation that operates massive manufacturing plants for American-branded gadgets in China, reported a 16 percent profit increase for 2012 today, raising hopes that working conditions and wages will see more improvement for 1.2 million employees.  Apple, proprietor of iPhones and iPads and perhaps Foxconn’s best-known client internationally, has been at the center of a Chinese media firestorm over the past two weeks.  Yet the focus of accusations against Apple hasn’t been the people working the factory floors.  State media has now taken up arms against the company’s mistreatment of Chinese consumers.

A multi-pronged campaign against Apple’s customer support practices in China began earlier this month, when official state broadcaster CCTV ran a muck-racking exposé about the warranty policy for iPhones in Chinese stores on March 15, International Consumer Rights Day.  In an annual special on corporate misbehavior that also pointed fingers at Volkwagen, broadcasters claimed Chinese customers seeking to replace broken iPhones are given used devices that have been recycled and refurbished. This practice is discriminatory, the program argued, since, for Apple customers in the United States and Europe, the phones are simply given replacement parts, or traded wholesale for new devices.

The story trended massively on China’s microblogging networks.  Yet the social media buzz was soured – and amplified – when evidence surfaced that celebrity users commenting on Apple’s practices on services like Sina Weibo may have been prompted to do so by government officials.  On March 16, a day after the broadcast aired, Tea Leaf Nation reported that a popular Taiwanese-American actor might have inadvertently included posting instructions from an unknown party in an update condemning Apple’s Chinese warranty policy. 

“As an Apple fan, I’m hurt,” read part of Peter Ho’s post [in Chinese].  Yet the end of the update read, “Post around 8:20.”  A convergence of similar posts from celebrity users, uploaded with an all-too-coincidental timestamp, led netizens to believe that their messages may have been orchestrated by governmental authorities. #PostAround820 began trending shortly thereafter, as an emblem of the possible government plant. 

The state media continued to drum up anti-Apple sentiment last week.  On March 22 a report from Xinhua [English-language version from the China Daily], China’s official press agency, implicated the company in a student debt crisis, with claims that many young people are taking on high-interest loans to purchase Apple products. 

Apple, one of the most high-profile corporations to outsource manufacturing to China, has had its fair share of image crises due to the conditions inside of Foxconn’s plants, and the wildfire spread of social media buzz about the mistreatment of workers – even in cases where those claims turn out to be exaggerated, like Mike Daisey’s retracted This American Life monologue

Yet the rise of the middle class in China shows that the government now wields a double-edged sword against American corporations aiming to capitalize on millions of potential consumers. Similar corporate watchdog campaigns against McDonald’s and French supermarket giant Carrefour resulted in huge sales losses in China last year.  In the tech sector, as Chinese-designed mobile devices begin to take off, these smear tactics may be an effort to cut down the competition posed by Apple.  As the distance between manufacturers and consumers narrows in China, American companies are going to have to learn to adapt to what may become one of their largest customer bases.  

Personal Democracy Media is grateful to the Omidyar Network for its generous support of techPresident's WeGov section.