Managing Crisis Overseas: An Explorative Analysis of Apple’s Warranty Crisis Communication in China

Abstract

Guanxi, is defined as “durable social connections and networks a firm uses to exchange favors for organizational purpose” (Gu et al. 2008). Although guanxi has been found the dominant factor for business to succeed throughout China (Lovett et al. 1999), scholars have noticed that guanxi is less salient than strategies in improving performance after China joined in the World Trade Organization (Law et al. 2003). Scholars also found that guanxi won’t work in managing relationship with the public. Recently, Ye and Pang (2011) show how guanxi failed in helping a local company cope with its product-harm crisis. Thus the question comes, when building strong relationship with government no longer guarantee success in Chinese market, how and what multinational companies (MNCs) could do when facing crises in Chinese market? Most of current studies on crisis management suggest various managerial strategies when facing product-harm crisis (e.g. Cleeren et al. 2013). However, the extant literature lacks information on how MNCs communicate crisis to consumers despite of their strong guanxi with the government. The purpose of this study is to fill in the gap through analyzing the case of Apple ®’s warranty crisis in China suggest guidelines for MNCs in China in such a multi-media era. The study also urges for an integration of social media into current crisis management theory frameworks, such as Coombs’ Situational Crisis Communication Theory (2007), Attribution theory (Kelley and Michela 1980), Image Restoration Theory (Benoit 1995) in dealing with crisis in the context of international business.