After Apple, China Directs Its Ire at Microsoft

By Sterling Wong  APR 12, 2013 3:40 PM

Yum Brands, Intel, and Sony also make the news.

 


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

Last month, China’s state media slammed Apple (NASDAQ:AAPL) for its poor local customer service policies. The criticism eventually compelled CEO Tim Cook to issue a public apology to the company's Chinese customers and to pledge to improve its service standards.
 
It appears this week that after successfully extracting an apology from Apple, the Chinese media has set its sights on another tech giant: Microsoft (NASDAQ:MSFT).

(See also: Was It Necessary for Apple to Kowtow to China?)

The state-owned China National Radio admonished Microsoft’s after-sales service for its Surface tablet, saying that the warranty period for the Surface Pro is shorter than what is called for under China’s laws.

According to Bloomberg, China National Radio denied any link between its Microsoft critique and the previous stories about Apple. The station said that it started investigating Microsoft’s after-sales policies only after receiving complaints from listeners.
 
(See also: Is the Chinese State Media Out to Knock Apple Down?)
 
Microsoft will be hoping that the situation will not escalate like it did with Apple. It was China Central Television that first denounced Apple’s customer service in mid-March, but Chinese newspapers quickly piled on, with the People’s Daily publishing over a dozen articles on the subject.
 
It is therefore likely that we will see more criticism of Microsoft by the Chinese media in the coming weeks. For now, the Redmond, Washington-based company has yet to comment on the issue.
 
Bird Flu Will Hurt Sales Significantly, Says Yum Brands
 
It’s been a tough start to the year in China for Yum Brands (NYSE:YUM). Sales at Yum’s KFC stores in China dropped some 20% in the first two months of 2013 after a chicken supply scare late last year.
 
And now that a new round of the deadly avian flu has hit China, the company filed a report this week saying that the disease outbreak would have a “significant, negative impact” on KFC sales in April.
 
"KFC has got off to a very bad start this year, it's had a double whammy of incidents. But increasingly there's also much stiffer competition from local quick service restaurants firms," Frank Gibson, a Shanghai-based independent business consultant, told Reuters.
 
He continued, "Longer term it will be hard for them to maintain the growth they've experienced in the past, but this will be more due to a more complex and dynamic environment than necessarily due to the issues they faced in the first quarter of this year."
 
Earlier in the year, Yum lowered its 2013 per-share earnings forecast, citing poor results in China. The company is still continuing with its expansion plans in China. It is expected to open some 700 new restaurants in the mainland this year. Intel Partners With Baidu
 
Having seen rival ARM Holdings (NASDAQ:ARMH) gain market share in providing chips to mobile devices from Apple and Google (NASDAQ:GOOG), Intel (NASDAQ:INTC) has announced a partnership with search giant Baidu (NASDAQ:BIDU) in order to improve its standing in the burgeoning China market.
 
According to PCWorld, the two companies will be building a joint innovation lab, where Chinese software developers will be able to use Intel-powered desktops, mobile devices, and software tools to develop mobile software. Intel did not reveal how much it was spending on the lab.
 
As for Baidu, the company’s goal is to become a mobile services hub and therefore it wants developers to create apps that complement its search and mapping ecosystem.
 
China Bans Django Unchained From Out of Nowhere
 
Quentin Tarantino’s Oscar-winning Django Unchained, which is a film about a former slave who wreaks revenge on slave owners, was mysteriously yanked from Chinese cinemas on its premiere day this week, catching its international distributor, Sony (NYSE:SNE), entirely by surprise.
 
“We regret that Django Unchained has been removed from theaters and are working with the Chinese authorities to determine whether the film can be rescheduled,” said Sony Pictures in its statement.
 
Tarantino had earlier made minor cuts to the movie to get approval from Chinese censors.
 
“It’s well known that China is very arbitrary over the release of films with sexual and political content and also limits Hollywood film distribution to protect its own theatrical industry,” commented Nikki Finke of the trade publication Deadline Hollywood
 
With China now the second-biggest box office market after the US, Hollywood studios have been eager to cooperate with the Chinese in order to get their films screened. For example, Disney’s (NYSE:DIS) upcoming Iron Man 3 will be released with a special cut in China. Chinese audiences will get to see scenes featuring a top local actress.

Twitter: @sterlingwong
No positions in stocks mentioned.

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