Caixin
Jan 23, 2017 07:16 PM
BUSINESS & TECH

Samsung Report on Exploding Batteries Will Fail to Satisfy China’s Customers, Experts Say

(Beijing) — Samsung won’t be able to easily win back dissatisfied Chinese customers, who will see the company as lacking contrition for its exploding-battery problems last year and trying to blame suppliers, analysts and observers said on Monday.

The comments were a response to Samsung’s publishing the results of a lengthy investigation on Monday, nearly five months after a fiasco that began when some of its newly released Galaxy Note 7 smartphones across the globe began spontaneously overheating and catching fire.

While apologizing for the “unease and inconvenience” caused, the company shied away from taking direct blame, instead holding battery suppliers accountable for the batteries’ poor design and manufacturing defects. It said the demands of increasingly thin smartphones used by people for power-guzzling functions like watching videos were making battery design very challenging for suppliers.

“Samsung’s opening remarks made me bristle with anger,” a man surnamed Hui, who was one of the first Chinese victims of the explosions last September, told Caixin. “They rushed to blame suppliers without fully admitting their own mismanagement.”

“There was no real apology to consumers, nothing about the potential safety hazard they posed or their negligence when they shrugged off concerned Chinese consumers,” he added.

Customers in China, the world’s largest smartphone market, were more outraged than most of their global peers because Samsung initially excluded them from its worldwide recall of Note 7 devices last year. The South Korean conglomerate insisted the China version was safe since it used a different battery supplier.

Only after China’s quality-control regulators urged Samsung to call back the devices in mid-October after 20 separate cases of phone explosions in the country did the company finally concede. Samsung announced shortly afterward that it would permanently end production of the phones.

“The fact that the explosions were caused by battery defects comes as no surprise, but this does not mean that Samsung is free from blame,” said Jin Di, an analyst at IDC. “The company is responsible for the comprehensive design and function of its product. It should also take into account the consequences on the reputation of their suppliers as it points fingers.”

Even before the crisis, Samsung was already slipping quickly in the ultracompetitive China market. From its market-leading position in 2014, the company had slipped to No. 4 in 2015, and in last year’s third quarter was no longer even in the top five due to its failure to keep up with the latest trends.

In issuing its report on causes of the exploding batteries, Samsung said it “regretted” its failure to detect these problems prior to the phone’s launch, though its actual apology was much more muted.

“They didn’t even bow down in apology according to their custom,” Hui said. “They have been playing dumb, and the only way to make up for the harm they’ve caused me is to have them burn in court,” he added, noting that he has filed a lawsuit against the company in his hometown of Guangzhou.

IDC’s Jin said Samsung already missed its window of opportunity to show responsibility and sincerity with its lack of action last year. “Loyal users aside, consumers will hardly take promises of better quality seriously,” she said.

Samsung will announce its annual fiscal report on Tuesday, the first to include the entire duration of the scandal.

Contact reporter April Ma (fangjingma@caixin.com)

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