Is the Chinese State Media Out to Knock Apple Down?

By Sterling Wong  MAR 25, 2013 8:55 AM

Plus, China Unicom, China Telecom, and PetroChina all reported earnings last week.

 


China Watch: Top Business News From the World's Second Largest Economy

Two weeks ago, state-run China Central Television (CCTV) ran a corporate exposé program, called 3.15, that slammed Apple (NASDAQ:AAPL).
 
According to the broadcaster, Apple charges its Chinese customers a fee to replace back covers of faulty iPhones, whereas the service is offered for free elsewhere.
 
This segment on Apple quickly became a much-discussed topic on China’s social networks with many chiming in to criticize Apple for its alleged discriminatory practices.
 
One critic, according to the South China Morning Post, was Zheng Yuanjie, a popular Chinese children’s literature author, who posted this message to his nearly 5 million followers on Sina’s (NASDAQ:SINA) Twitter-like micro-blogging service Weibo:

Chinese customers choose Apple not just for its technology, but also for its thoughtfulness, justice, care, and value. I am shocked to hear Apple adopts double standards with Chinese customers and those in developed countries. After spending the same and an even greater amount of money, they receive a lower standard of service in return. I hope the missing part on Apple’s logo isn’t their conscience.

The tide began to turn against CCTV, however, when Hong Kong actor Peter Ho, with 5.3 million Weibo followers, posted this message at around 8:26 p.m. in China on Weibo: “Apple plays so many tricks with their customer service? I feel hurt as an Apple fan. Have you done right by [Steve] Jobs? Have you done right by boys who sell their kidneys [to buy iPhones], this is an example of big-name shops bullying customers. To publish around 8:20 p.m. (emphasis added)”

Sharp Chinese netizens quickly noticed the notorious final line of Ho’s message, and theorized that Ho, along with Zheng and many others, could be part of a concerted CCTV public relations effort to slam Apple and that he had forgotten to delete the last line in a message that he probably copied from other sources.

At around 10 p.m., Ho deleted the above message and posted: “Now it’s me in person. Someone stole my Weibo account and posted the previous Weibo. Will someone tell me what’s going on? This is ridiculous!”
 
But Weibo users did not buy Ho’s explanation. “Stop pretending,” one user commented, “I guess CCTV will now ask for a refund, huh?”
 
“CCTV has been working really hard to try to get Apple to buy their advertising,” said another, according to Offbeat China.

A leading Weibo social commentator who goes by a fake name that would be translated as "Notebook" summarized the situation with his post: “3.15 has been a weapon to strike down competitors. It uses dirty tricks, bribes big shots from all sectors on Weibo, assigns them tasks of posting content on Weibo at around 8:20 to work with CCTV in a concentrated fire on the target CCTV presets. It makes people sick.” This post was retweeted more than 20,000 times in ten hours.

Besides questioning the veracity of CCTV’s criticism of Apple, many Weibo users also slammed the broadcaster for coming down so harshly on Apple while ignoring the shortcomings of domestic companies.

““The 3.15 consumer rights show is much more disgusting than the companies it [has] exposed. At least Apple still offers post-sale customer service. How about those victims of Sanlu’s toxic baby powder? Has anyone taken care of them?” said Notebook.
 
Check out Offbeat China and Ministry of Tofu for more Weibo reactions to CCTV’s Apple exposé. Here is the week’s other business news from China:

Sina
 
If you were curious about how often Tencent (HKG:0700) and Sina censor posts on their micro-blogging platforms, former Google (NASDAQ:GOOG) China head Kaifu Lee has helpfully provided a chart of his experience with censorship on Tencent Weibo and Sina Weibo.



 
According to Lee, he had the most posts deleted in recent weeks because he had been talking about the story of the almost 15,000 dead pigs found in the Huangpu River, which is a source of drinking water for Shanghai. Lee had also been discussing a Chinese parliament session about leadership succession.
 
In February, Lee was temporarily banned from Sina and Tencent’s Weibo sites for three days after he pointed out flaws in Jike, a state-run search engine.
 
China Unicom (NYSE:CHU)
 
China’s second largest wireless carrier stated that 2012 profit jumped 68%, thanks to its ability to generate revenue from 3G services. The first Chinese carrier to offer the iPhone, China Unicom earned 7.1 billion yuan ($1.1 billion) in 2012, compared to 4.3 billion yuan in 2011.
 
Revenue for last year jumped 19% to 249 billion yuan ($40 billion). A big part of the increase came from 3G services revenue, which rose over 80% to some 60 billion yuan.
 
China Unicom said it gained 20% more wireless subscribers in 2012, and now has a total of 239.3 million, with about 75% of them on 3G subscriptions.
 
China Telecom (NYSE:CHA)
 
With help from the iPhone, China Telecom reported a fourth-quarter earnings beat. Net earnings actually dipped 17% to 2.36 billion yuan ($380 million) from 2.84 billion yuan a year ago, but that was higher than the consensus estimate of 2.04 billion yuan.
 
When it first started selling the iPhone in March 2012, China Telecom said that the Apple device would contribute to the company’s long-term growth, but hurt margins in the short-term. The company’s words have proved prescient, for China Telecom has reported three straight quarters of profit drops.
 
China Telecom will be happy with its iPhone-powered 3G subscription growth. The operator added 69 million 3G customers last year, which was a 43% jump.  While it only has 15% of China’s overall mobile market, China Telecom now holds a 30% share of 3G customers.
 
PetroChina (NYSE:PTR)
 
The world’s biggest publicly listed oil producer by volume saw net income fall 13% to 115.3 billion yuan ($18.6 billion) in 2012. Analysts had projected profit of 119.8 billion yuan. Revenue, however, improved 9.6% to 2.2 trillion yuan.
 
PetroChina said its profit drop despite a revenue increase was due to high natural gas import prices and the government's domestic fuel price controls, which eroded refining margins.
 
As a result of its domestic weakness, the state-owned company said it will look outside the mainland for growth.
 
“Over the next three years, we’ll expand our presence in overseas markets,” said PetroChina vice president Sun Longde at a press conference this week, according to Bloomberg. “Our target by the end of 2015 is to have 50% of our output come from overseas projects and by the end of 2020, 60%.” Overseas production accounts for 10% now, the company said.

Twitter: @sterlingwong
No positions in stocks mentioned.

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