Samsung Criticized by China State
Samsung Electronics Co. (005930), the biggest seller of smartphones in China, was criticized by the state-run national broadcaster for offering handsets that allegedly malfunction dozens of times a day because of faulty memory chips.
The Galaxy S and Note series handsets are crashing as many as 30 times a day and the chips need to be upgraded, according to China Central Television's 'Economic Half-Hour' program, which cited a mobile-phone repairman it didn't identify. Samsung said it's committed to the highest quality.
The world's biggest smartphone maker joins Apple Inc. (AAPL), Volkswagen AG and Starbucks Corp. (SBUX) in being scrutinized by state-run media for their operations in China, the second-largest economy. Samsung, the world's largest producer of handsets, sells at almost 5,000 locations in China and had 18 percent of the market in the June quarter, according to Canalys.
'It seems like China is bashing some big foreign brands in turns,' said Lee Do Hoon, an analyst at CIMB Group Holdings Bhd in Seoul. 'The reason behind all this may be because the Chinese government wants to protect the local companies.'
Samsung has identified the source of the problem as software and said customers can download a firmware patch or visit an authorized repair outlet for free service, CCTV reported.
China Sales
'We remain committed to providing the highest quality products and services,' Chenny Kim, a spokeswoman for Suwon, South Korea-based Samsung, told Bloomberg News today. 'Upon verification of these reports, including their technical aspects, we will respond accordingly.'
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 Group Ltd.; China Wireless Technologies Ltd.'s Coolpad; ZTE Corp.; Huawei Technologies Co.; and Xiaomi Corp., according to Canalys.
Apple Chief Executive Officer Tim Cook apologized to Chinese consumers earlier this year after two weeks of being lambasted by state-run media for arrogance and poor customer service.
Yum! Brands Inc. (YUM) and McDonald's Corp. (MCD) last year pledged to ensure the safety of food after CCTV reported they may have sold chicken that had been indiscriminately fed antibiotics and growth hormones.
To contact Bloomberg News staff for this story: Jungah Lee in Seoul at jlee1361@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net
To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net
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