Chinese consumers say business practices affect purchases
HONG KONG -- Apple's efforts to improve working conditions at the factories that make its iPhones and iPads in China may resonate more with consumers in that fast-growing market than in the U.S.
That's because consumers in China and other emerging markets say they're more willing to support or boycott companies based on their business practices, a growing body of research shows.
In a survey last year of more than 10,000 consumers in 10 countries by Cone Communications and Echo Research, nearly three of four respondents in China said they were very likely to switch brands to one associated with a good cause, if there was an alternative in the same price range and of similar quality. That compares with half of respondents in the U.S. and about half of all respondents surveyed.
Meanwhile, 83% of respondents in China said they refused to buy a company's product when they learned that the company acted irresponsibly, compared with 50% in the U.S. and 56% overall.
A 2010 Edelman study of more than 7,000 consumers in 13 countries also showed that those in China, India, Brazil and Mexico were more likely than those in the U.S. to switch products to support certain causes. One key cause, labor rights, found support among 94% in China, compared with 76% in the U.S. and 79% overall.
The findings highlight one of the challenges of doing business in emerging markets.
But what consumers say and what they do can be two different things.
"I've done these surveys for years, and I hear the same thing," that a company's corporate responsibility might lead consumers to support or shun a product, says Tim Bajarin, president of Creative Strategies, a high-tech research firm in Campbell, Calif. In reality, "corporate responsibility is rarely factored into consumer buying decisions."
Despite problems in Apple's supply chain, its handheld devices and computers remain wildly popular in China. In the quarter ended Dec. 31, Apple's revenue rose to a record $46.3 billion, up 73% from the year before. Sales of iPhones, iPads and Macs all reached record highs. China is Apple's second-largest market after the U.S.
Apple enjoys strong brand loyalty, which means that it could take months or years of bad publicity before a significant number of consumers stop buying its products, says Mike Lawrence, chief reputation officer at Cone Communications.
The question is, will a product become "so controversial and demonized that consumers will feel guilty about using it?" asks Henk Campher, a senior vice president in the corporate responsibility practices at Edelman, a public relations firm. Yet, in the electronics industry, there isn't a product "positioned as the ethical alternative," which makes it less appealing for many consumers to switch from Apple products, he says.
An investigation by Washington, D.C.-based Fair Labor Association of Foxconn Technology Group, which assembles iPads and iPhones in China, found that factory employees worked long hours for low wages, and sometimes did so in unsafe conditions. Apple, which requested the audit, is supporting measures such as boosting wages and reducing employee working hours as a way of "improving lives and raising the bar for manufacturing companies everywhere," company spokeswoman Carolyn Wu said .
