Apple revises warranty terms

By He Wei in Shanghai, YU WEI and LIU BAIJIA in New York (China Daily) Updated: 2013-04-03 02:09

An Apple Inc store in Wangfujing Street, Beijing. China has become one of Apple's major sources of income, with sales last year reaching $23.8 billion, 15 percent of its worldwide revenue. [Photo/China Daily]

'CEO's apology underlines how important China is to tech giant'

An apology and a string of warranty policy adjustments made by Apple Inc in China underscore the growing importance of what has become the company's second-largest market.

Apple's softened stance also suggests the Chinese market is now considered "too big to fail", said market watchers.

In a statement issued on the company's Chinese website on Monday, chief executive officer Tim Cook vowed to revamp its repair and warranty terms and apologized for any misunderstandings stemming from poor communication with customers.

Glen Yeung, an analyst at Citigroup Inc, said that if the negative publicity leads to a reduction of half of Apple's market share in China — as happened to United States-based Hewlett-Packard Co after a notebook computer recall in 2010 — the cost to Apple could be as high as $13.1 billion.

Multinational companies often face difficulties in adjusting to, and complying with, local regulations. In a market as huge as Apple's is in China, the risk from compliance lapses can be significant, according to Jason Dedrick, a researcher at Syracuse University's School of Information Studies.

China has become one of Apple's major sources of income, with sales last year totaling $23.8 billion, which was 15 percent of the company's total global revenue.

It's not worthwhile for Apple to risk losing a market that boasts one of its brightest business spots, where damage could be paramount if not handled properly, said Wang Zhiyuan, head of the customer service department at Shandong province's consumers' association.

Wang's organization, together with five other provincial counterparts, published a series of reports late last year, saying that some of Apple's terms in its customer agreements "reduce or exempt Apple's compensation liability and limit consumers' rights".

"Some clauses are severe violations of customers' rights. This dampens Apple's brand image and is a serious public-relations issue," he said.

In Apple's statement, Cook said he wanted to express his "sincere apologies" for causing consumers any problems.

"In the last two weeks, we reflected deeply about the suggestions and feedback regarding Apple's maintenance and repair policies," Cook said in the statement. "We realize that due to insufficient external communication, people consider Apple's attitude as arrogant, inattentive or indifferent to the consumers' feedback."