Samsung Apologizes After China State TV Criticizes Handsets

Samsung Electronics Co. apologized to Chinese consumers after the national broadcaster criticized the company for making handsets that allegedly malfunction because of faulty memory chips.

Samsung, the world’s largest maker of mobile phones, pledged to provide free maintenance, according to Chinese rules, for the seven models included in China Central Television’s report, according to a statement posted on Samsung’s China website and dated yesterday. The warranty for handsets produced before Nov. 30, 2012, will be extended one year, it said.

CCTV’s “Economic Half-Hour” program reported this week that Samsung’s Galaxy S and Note series handsets crash as many as 30 times a day and the chips need to be upgraded. The Suwon, South Korea-based company joins Apple Inc., Danone, Volkswagen AG and Starbucks Corp. in being accused by China’s state media of mistreating consumers in the world’s second-biggest economy.

“The Chinese government is trying to bring consumer sights back to domestic companies because they know it’s necessary to foster local companies to ensure stable economic growth,” said Lee Jin Woo, a fund manager at Seoul-based KTB Asset Management Co. in Seoul. “Samsung has read their mind well enough to keep a low profile to appear consumer-friendly.”

Declining Shares

Samsung “sincerely apologizes” to Chinese consumers for inconveniences caused by the company’s “management problems,” Asia’s biggest technology company said in the statement. The company also welcomes media scrutiny, it said.

Samsung shares are sustaining a four-day losing streak, declining 0.6 percent to 1,434,000 won as of 10:37 a.m. in Seoul trading, while the benchmark Kospi index rose 1.7 percent.

Apple Chief Executive Officer Tim Cook also issued a public apology to Chinese consumers in April after state media lambasted the company for arrogance and poor customer service.

China accounted for 14 percent of Samsung’s consolidated sales last year, compared with 29 percent for the Americas and 25 percent for Europe, according to data compiled by Bloomberg.

Samsung’s leading share of China’s smartphone market in the second quarter outpaced the largest local handset makers in the next five spots: Lenovo; China Wireless Technologies Ltd.’s Coolpad; ZTE Corp.; Huawei Technologies Co.; and Xiaomi Corp., according to Canalys.

(Updates with analyst comment in fourth paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE