Apple’s iPhone X has officially hit the store shelves in Samsung’s home country – a country where large corporations have close (and sometimes corrupt) ties with the government and regulators. The iPhone X is flying off the shelves in South Korea despite its high price tag. The anniversary iPhone costs $1,237 for the 64GB version and $1429 for the 256GB in Korea compared to the $999 starting price in the US. A new report claims that Korean regulators raided Apple offices just days before the iPhone X went on sale in the country.
FTC raids Apple offices over ‘unfair’ practices
London-based the Metro reports that the Korean Fair Trade Commission (FTC) raided Apple offices in Seoul to investigate into the Cupertino company’s business practices that have been criticized by Korean wireless carriers as well as consumers. The investigation was officially opened last year to find out whether Apple signed “unfair” contracts with local wireless carriers.
The latest raid is said to be part of the ongoing investigation. According to The Investor, the iPhone maker was accused of putting the burden of marketing expenses on telecom carriers such as the KT, SK Telecom, and LG Uplus. The report says Apple had also violated the laws that required smartphone vendors and wireless carriers to share the subsidies provided to customers.
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The FTC had also ordered the Apple offices in South Korea to revise all the unfair practices, including the “unfair” agreements with the after-sales service agencies. The Investor added that a group of lawmakers in the country was preparing a bill to ban Apple’s “unfair business activities.” According to the Metro, Apple Korea has already taken action to address most of the concerns.
A witch hunt
It’s not the first time the Korean regulators have targeted Apple and other foreign firms. The Korean government’s past actions against the iPhone maker have been described as a “witch hunt.” Back in 2015 when Apple captured a staggering 33% of the Korean smartphone market, the FTC had set up a task force to investigate whether foreign firms were hurting the domestic phone market.
In the past, Roger Kay of Endpoint Technologies has accused the Korean FTC of having a “protectionist agenda.” Other experts have pointed to the regulator’s “alarming behavior” that threatens international businesses operating in South Korea. The Korean government has close ties with corporate heavyweights. Earlier this year, Samsung heir Jay Y. Lee was sentenced to a five-year jail term after he was found guilty of bribery, embezzlement, and perjury to get political favors. Samsung had also bribed the former South Korea President Park Geun-hye.
The timing of the raid on Apple offices has raised questions about the intent of the FTC. Apple had reportedly allocated 150,000 units to South Korea when pre-orders began in the country last week. However, pre-orders sold out in less than 3 minutes. The total pre-orders have exceeded 300,000 units. On top of that, hundreds of customers could be seen lined up in front of retail stores as the iPhone X sales began on November 24.
Apple received record orders in South Korea despite the iPhone X being the most expensive iPhone in the country, with prices going up to $1,429 for the 256GB variant. Meanwhile, Samsung has launched a Galaxy Upgrade Program to get the iPhone users to switch to the Galaxy phones. The iPhone users will get to try a Galaxy S8 or Galaxy Note 8 for free for a month. After that, they can decide to keep using it or switch back to iPhone.
Apple partners violated laws in China
The Korean saga aside, Apple’s manufacturing partners have violated laws in China. It’s no secret that Apple is struggling to produce as many iPhone X units as it needs to meet the consumer demand. A report from the Financial Times says Foxconn had employed thousands of high-school students to assemble the iPhone X in China. The students, most of them between 17 and 19, were “routinely” required to work up to 11 hours a day.
One of the students interviewed by the Financial Times revealed that she was assembling about 1,200 iPhone X cameras per day. Foxconn violated China’s laws that allow students to work no more than 40 hours per week. Apple told media that the students were working “voluntarily.” They were also “compensated and provided benefits.” Apple said, though, that the students should not have worked overtime.
Later reports suggested that Foxconn has now stopped students from working more than eight hours per day in China, where the company has most of its manufacturing operations. Industry analysts estimate that Apple would be able to catch up with the iPhone X demand only in 2018.