News Analysis: Samsung's double standard in handling Note 7 recall

Samsung Electronics looked fast in responding to one of its biggest product quality crises at a glance, but the seemingly rapid response turned out to be a failure in terms of communicating with consumers and handling it fairly in every country.

When the South Korean tech behemoth announced a global recall of its new flagship Galaxy Note 7 smartphones for a fire hazard of batteries on Sept. 2, it indicated the company takes back all of about 2.5 million Note 7 phones shipped until the previous day.

The first response from some of South Korean media outlets was that such a daring action of recalling all of products sold for two weeks in 10 countries would help Samsung limit possible negative effects and restore its credibility rapidly.

The assessment proved to be wrong soon afterwards. Samsung failed to advise Note 7 users to turn off the fire-prone phones, though the company gave the advice belatedly. The failure resulted in further reports of exploding while charging or even in normal use. Many airlines banned to use the phones on flights.

Confused messages were given to South Korean consumers as Samsung said a software patch was to be released to limit the maximum charging capacity of Note 7 to 60 percent. It hinted that users can charge the phones without danger of catching fire.

Wittingly or unwittingly, Samsung provided a missed estimation data as it said only 24 out of every 1 million Note 7 phones have battery problem. According to the U.S. Consumer Product Safety Commission (CPSC), there were 92 reports of battery overheating only in the United States until last week, including 26 cases of burns and 55 involving property damage.

DOUBLE STANDARD

Samsung treated consumers with a double standard. According to a statement for U.S. consumers on its website, the company said it will provide 25 U.S. dollars of gift card for customers who exchange a Note 7 device. Such compensation was not to be given to South Korean consumers.

"I didn't even hear that Samsung offers any gift card in South Korea," said Bin Woon-chul, a South Korean office worker, told Xinhua on Friday.

He said South Korean companies have campaigned for products made by local manufacturers, which he dubbed patriotism marketing, adding that consumers here will no longer be deceived into blindly purchasing domestic products.

Unfair treatment wasn't limited to South Korean consumers. The Note 7 was launched in China on Sept. 1, but China was excluded from the recall list. During its Sept. 2 announcement, Samsung claimed a recall was unnecessary as the phones sold in China use different batteries from those sold elsewhere.

Samsung's claim on no need for recall in China was reversed last week. The company announced a Chinese recall of 1,858 Note 7 phones, which Samsung said were distributed before the official launch.

"The recalled phones were test devices having different batteries from those used in Note 7 sold after the Sept. 1 launch," a Samsung official told Xinhua on the phone. He said there is no problem with the phones sold in China.

A South Korean netizen said in a popular blog here that he can understand angry reaction from Chinese consumers, noting he cannot understand why China was excluded from the recall list though Samsung decided on a global recall of all devices shipped.

"Though Samsung said there is no problem with products sold in China, could it be a potent reason if you are Chinese consumers? Follow-up measures went wrong. China should have been included in the recall list, and Samsung should have taken all responsibility for device flaw (instead of pointing fingers at battery makers)," said the netizen.

The first case of Note 7 phones catching fire was reported in China last week. The two accounts of charred phones emerged on Chinese social media over the weekend and widely covered on Sunday by Chinese and South Korea news outlets.

This time too, Samsung was fast in response. Citing unnamed Samsung officials, South Korean media reported Monday that the charred phones were possibly damaged by an induction oven or a fan heater.

Asked to explain the Note 7 overheating in China, one Samsung official referred Xinhua to Samsung Electronics China website, in which the company said the heating problem was caused by "an external factor."

Shortly after the global launch of Note 7 phones on Aug. 19, videos and photos of blackened phones appeared on social media, and it took at least a week until Samsung finds a battery problem and announces a global recall.

In China, however, Samsung's response came just a day after media reports, raising questions about whether the company conducted a full investigation into products in question.

ABSENCE OF PUNITIVE MEASURES

Failure to properly deal with faulty products is not a problem of Samsung alone. Absence of punitive measures in South Korea may have created a corporate culture in which companies are induced to address products detrimental to consumers at ease.

"Public opinion is not good here in (South) Korea (on Samsung's recall and exchange program)," Lee Jieun, a coordinator of public interest law center at People's Solidarity for Participatory Democracy (PSPD), said in an interview on Thursday. She said there was a double standard in treating U.S. and South Korean consumers, angering Note 7 owners here.

Samsung failed to force mobile carriers and retail stores to stop selling Note 7 phones as its action was a voluntary recall. Consumers kept using their phones amid confused messages from Samsung.

It showed shortage of the company's recognition in the importance of product safety. What the company called a battery cell defect brought serious consequences such as burns and property damage. Photos in local media reports and social media showed blackened blanket and even a destroyed SUV caused by Note 7 fires.

"One of the reasons that companies here fail to protect consumers' safety is an absence of punitive tools like punitive damage and class action lawsuit systems," said Lee who described the systems as a tool to assign a clear, heavy responsibility to companies committing serious wrongdoings detrimental to consumers.

The punitive damage system allows courts to impose punitive damages far in excess of compensation on companies inflicting physical injury to consumers with defective products. The class action system enables the victory of legal action by some of victims to free the rest of the victims from filing a separate suit to receive equal damages.

Lawmakers of the main opposition Minjoo Party attempted to pass bills to severely punish companies for misconducts such as manufacturing error, sales malpractice, collusion and bombastic advertisements, but the attempt faced objections from the ruling Saenuri Party and business interest groups on concerns about increased burden on businesses.

The punitive damage system, Lee said, is urgently needed in South Korea as a preventive measure to stop catastrophic incidents involving hazardous consumer products from happening in the future, referring to humidifier disinfectants of Oxy Reckitt Benckiser.

Humidifier sterilizers, sold here by the Britain-based consumer goods company, claimed almost 800 lives and injured more than 3,000 consumers from the year of 2011 when the case began to come into focus to July 31 this year, according to Asian Citizen's Center for Environment and Health.

"It is more important to defend consumers' safety than to reduce corporate costs. All consumers have a basic right to be protected at least from hazardous products," said Lee.

Source : XINHUA