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Apple's CEO Apologizes for Warranty Policies

Apple's CEO Apologizes, Tim Cook issued an apology letter signed by Chief Executive Tim Cook that vowed to revamp aspects of its customer-service policies in China after more than two weeks of pointed attacks by government-run media.

The apology, in the form of a letter written in Chinese and posted to Apple's Chinese website Monday, underscores the increasing importance of the Chinese consumer in what has become the company's second-largest market.

Apple CEO Tim Cook released a letter vowing to provide better consumer service in China. WSJ’s Li Yuan tells Mariko Sanchanta how Chinese social media users are reacting to the apology.

Apple issued an apology letter signed by chief executive Tim Cook that vowed to revamp aspects of its customer-service policies in China after more than two weeks of pointed attacks by government-run media. Jessica Lessin reports. Photo: Getty Images.

A Chinese man walks past an advertisement for an IPhone outside an Apple reseller in Beijing on March 18, 2013. Apple was recently targeted over its consumer-service practices in China during a state television broadcast focusing on consumer rights, allegedly claiming the US company treated its Chinese customers differently than in other countries when it came to product service and warranties.
Mr. Cook said in the letter that the company deeply reflected on recent "feedback" on its warranty policies and apologized for misunderstandings created by poor communication with consumers.

"We are aware that a lack of communications...led to the perception that Apple is arrogant and doesn't care or attach enough importance to consumer feedback," Mr. Cook said, according to the letter. "We express our sincere apologies for any concerns or misunderstandings this gave consumers."

Apple has been the target of criticism in China's state-run media since the middle of last month. China's powerful national broadcaster, China Central Television, and The People's Daily—the official mouthpiece of the Chinese Communist Party—have accused Apple of skirting warranty periods, adopting customer-service policies that discriminate against Chinese customers, and formulating an inadequate and arrogant response to the reports.

In the letter, Mr. Cook said the company would amend its warranty policies for the iPhone 4 and 4S, streamline its customer feedback, give further training to Apple authorized resellers on warranty policy, and more clearly post its warranty policy on its website. He added that about 90% of consumers had been satisfied with its earlier repair policy.

Long important as a manufacturing base, China has become a crucial consumer market for Apple as well. Last year the company's sales in China hit $23.8 billion, representing 15% of Apple's total revenue and up more than $10 billion from 2011. It is also now the world's biggest smartphone market by some counts and a place where Apple increasingly competes with rival Samsung Electronics Co. 005930.SE +0.86%

The company has come under scrutiny in China in recent years, first after a spate of suicides at major assembly contractor Hon Hai Precision Industry Co., 2317.TW +0.36% also known as Foxconn, and then after a messy trademark dispute over the rights to the iPad name.

Mr. Cook visited the country publicly last year and then again in January to meet with government officials and give interviews with local media. During the tour, Mr. Cook said he expected China to eventually become Apple's largest market and that the company would open more retail stores in the country.

Chinese media have amped up criticism of foreign companies, including Germany's Volkswagen AG VOW3.XE +1.68% and the KFC chain of U.S.-based Yum Brands Inc. YUM -2.29% While some have seen sales hits, industry observers say the rhetoric is unlikely to have a major impact on Apple's iPhone sales in the country as the handset remains a fashionable status symbol.

CEO Tim Cook said Apple had reflected on recent 'feedback' in China.

Nonetheless, the sharp criticism of Apple has led analysts to worry the Chinese government may take further regulatory steps aimed at foreign handset manufacturers like Apple. Recently the government has been readying a new law to regulate mobile applications and increase testing of smartphones in the country.

In their criticisms, both CCTV and the People's Daily said that Apple didn't offer customers new phones if they brought in damaged or defective phones, unlike in other countries. They also said Apple didn't give consumers a new one-year warranty after their phone was fixed.
Apple employees polish the monitors of Mac Pro desktop computers at one of the company's stores in Beijing.
According to Mr. Cook's letter, Apple will extend warranties on repaired models of the iPhone 4 and 4S to one year for any phone repaired after April 1, 2012. The company will also now replace any broken iPhone 4 or 4S with a new phone, as opposed to its previous practice of replacing all the parts of the phone except the back cover.

Last week a Chinese regulator said that it would heighten supervision over Apple and other electronics companies' consumer-rights practices, in the first public signal from the government that it would take concrete steps in response to the media reports. The government didn't clarify how it would increase oversight on the industry.

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