Apple Falls Victim In Anti-Foreign Campaign
As if its China troubles weren’t bad enough following a weak earnings report, global tech giant Apple (Nasdaq: AAPL) is now coming under political fire from central bureaucrats in Beijing for failing to deliver promised donations after an earthquake earlier this year. Frankly speaking, I don’t have a lot of sympathy for Apple or any of the other firms that get this kind of criticism, since I find their quickness to announce donations after any major disaster somewhat insincere and largely a publicity ploy. But the fact that yet another foreign firm is coming under attack from central government sources this month certainly adds to my previous assertions that Beijing has recently embarked on a drive to discredit foreign firms and divert attention from other domestic problems.
Apple has become a particularly easy target in China due to its high profile and popularity of its products among local consumers. Shortcomings in the company’s after-sales program were exposed earlier this year by CCTV, the nation’s leading broadcaster that is considered a leading mouthpiece of the central government. The People’s Daily, the official newspaper of the Communist Party, later joined that attack by criticizing Apple for its arrogance, prompting the company to issue a rare apology to Chinese consumers. (previous post)
Now the People’s Daily is back on the attack, this time criticizing Apple for its unwillingness to confirm that it actually delivered the 50 million yuan ($8.2 million) in aid that it promised after a magnitude 7.0 earthquake hit Sichuan province in April. (English article) In all fairness, the article did note that Apple delivered 26,000 hygenic kits after the disaster, and it also criticized domestic car maker Geely (HKEx: 175) for also failing to confirm the delivery of all of its promised aid.
This kind of eagerness to donate after major disasters has become all too common in China, with companies often racing to outbid each other to see who can be the most generous. Companies love the free publicity they get from such announcements, unlike other charitable work that may get little or no attention. I personally suspect that most companies fail to deliver all of their promised aid, partly because it’s difficult to find reliable channels to disperse such donations. But those companies also know that no one is likely to check to see if they kept their promise, and thus they don’t worry too much if they can’t distribute the entire amount they pledged.
Against that backdrop, I actually need to commend the People’s Daily for exposing the hypocrisy behind such donation announcements. But at the same time, the fact that Apple is leading the list of potential hypocrites seems just slightly unfair, as I expect that most of the companies that made big pledges after the earthquake also probably failed to deliver all of the promised money. This latest attack will further undermine Apple in China, following the earlier attacks and the company’s own disclosure earlier this week that its China sales dropped sharply in its latest reporting quarter. (English article)
This criticism of Apple is just the latest in a growing string of similar attacks against foreign firms that have suddenly jumped into the headlines this month. That string began with the disclosure of probes against foreign drug and milk powder makers over allegations of price fixing. (previous post). British drug maker GlaxoSmithKline (London: GSK) has also been hogging the headlines these last 2 weeks as it is investigated for bribery. Fast food operators KFC and McDonalds (NYSE: MCD) have also come under attack for offering substandard water in their ice cubes, and now we have this attack on Apple. I previously said the earlier string of attacks boded poorly for foreign companies in China for the next few months, and this latest criticism indicates these firms could still be looking at a long summer ahead.
Bottom line: Apple has become the latest foreign firm to come under fire in a recent campaign against multinationals, with more attacks likely throughout the summer.
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