Apple, Walmart Fight Back
Global sector leaders Apple (Nasdaq: AAPL) and Walmart (NYSE: WMT) have finally broken their silence with PR counter blitzes, after getting pummeled by the Chinese media for weeks in a series of local scandals. Before I go any further, I’d like to personally give myself the award for my inability to read the news, as I previously said the 2 crises now facing these 2 firms in China looked like non-news that would quickly subside. Clearly I was wrong.What all of this shows is that big foreign multinationals are some of the easiest and most attractive targets for scandal-hungry Chinese media. In all fairness, these major global companies are also attractive targets for local media looking for any negative news in their home markets; but that said, I do suspect that many of these “scandals” being uncovered in China are at least partly politically motivated and involve relatively small issues, most of which would receive little or no media attention in the west.
Let’s look first at Apple, whose latest China woes date back to mid March when CCTV, the TV broadcaster considered a government mouthpiece, first aired a report criticizing the US tech giant for shirking some of its after-sales responsibilities. The scandal looked relatively minor to me, involving techniques that deprived a small number of customers of the full length of their product warranties.
Of course, history will show that I was completely wrong in this case, as Chinese media quickly added their voices to the criticism in what seemed like a show of support for CCTV. That storm reached a climax last week when the People’s Daily newspaper, the true mouthpiece of the Communist Party, issued a scathing editorial criticizing Apple for its “swaggering arrogance.” (previous post)
After 3 weeks of near silence during the media frenzy, Apple is finally fighting back by doing what it should have done long ago, namely issue an apology. (English article; Chinese article) In this case the long-overdue apology came directly from CEO Tim Cook, who also detailed plans to correct the situation in China. Any multinational that has done business in China knows this kind of apology and corrective action is mandatory and should come immediately after even the smallest scandal. Now it seems that Apple is finally learning the lesson, perhaps making the company appear just a bit humbler.
Meantime, the case with Walmart is slightly different as there’s no real “scandal” involved. In this instance, Chinese media have feasted on the fact that the world’s biggest retailer has closed a number of stores recently in the cities of Shanghai, Shenzhen and Zhengzhou. The resulting stories have all commented on how Walmart and other big foreign retailers are stumbling in China as they struggle to compete with local competitors. In fact, the local retailers are struggling also, and the big culprit behind many of the woes is the rapid rise of e-commerce in China. (previous post)
Like Apple, Walmart is finally fighting back with a rare series of media interviews aimed to show how the company is still expanding in China. (English article) The articles themselves are rather dull, pointing out that Walmart plans to open 30 new stores this year and spend 500 million yuan to upgrade 50 existing ones. But clearly the aim is to show the company is still committed to China, and that any store closures are part of a routine periodic business adjustment. Such adjustments are indeed a routine part of any business, and would perhaps result in some short news stories in the west. But this is China, where all media are owned by the state, and many of the usual western reporting rules don’t apply.
Bottom line: Apple and Walmart are finally fighting back against negative publicity in the Chinese media which is becoming increasingly common.
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