Nikon to Fix Camera Flaws Cited by China TV Consumer Show

Nikon Corp. (7731) will stop selling a
digital camera model in China and offer free repairs, following
claims on Chinese state-run television that product defects
caused “black spots” on photographs.

The Tokyo-based company received a Chinese government order
today to stop selling its D600 cameras and asked dealers to halt
sales, Ryota Satake, a Nikon spokesman, said by phone. Nikon had
earlier said it would service the models even after warranties
expire, after China Central Television showed hidden-camera
footage of customers demanding refunds and exchanges while local
service staff blamed dust and smog for the spots.

Nikon’s alleged defects were highlighted in a March 15
broadcast marking World Consumer Rights Day, an annual program
in China that has previously targeted companies including Apple
Inc. and Volkswagen AG. The show last week also said that a
business owned by Gohigh Data Networks Technology Co. helped
plant software in mobile phones to collect private information
without users’ awareness.

“I’m sure some of the big Western multinationals are
breathing a collective sigh of relief that they weren’t
targeted,” Torsten Stocker, partner at consulting firm A.T.
Kearney
, said by phone yesterday.

The program, which is watched closely by foreign companies
and prompts some to prepare emergency response plans, “didn’t
go for as spectacular or as big a target as in previous years,”
Stocker said. “Maybe they are just trying to show that they are
looking at a broad range of companies, not just foreign
companies.”

Class-Action Suit

Nikon fell 1.7 percent to 1,730 yen at the close of trading
in Tokyo, extending this year’s decline to 14 percent.

Today’s order to halt sales came from the Shanghai
Administration for Industry and Commerce, Satake said. While
Nikon has already stopped direct sales of the D600, some dealers
still have the model in stock, and Nikon will recall them, he
said.

The Nikkei newspaper said March 10 that U.S. customers had
raised a class-action lawsuit against Nikon claiming D600
defects. Satake said the manufacturer is aware of the D600
camera issue and “aims to offer the same standard service for
customers all over the world.”

The company posted a statement on Feb. 26 saying it would
provide free service for the D600 after warranties run out,
including cleaning and a free exchange of parts. The Chinese
broadcast highlighted the statement as insufficient to address a
recurring defect in the camera.

Gohigh Halted

In response to the television show segment about the mobile
phone software that collects private information, Gohigh said it
hasn’t spreaded malicious software or collected users’ personal
information, according to a statement on its website.

Trading in the company’s shares was temporarily halted
today in Shenzhen.

State media increasingly play a role in advocating on
behalf of consumers as concern grows over China’s food and drug
safety. Milk tainted with melamine, a toxic chemical used to
make plastic and tan leather, was blamed for the deaths of at
least six babies in 2008, with tens of thousands of children
hospitalized. The government last year investigated companies
that paid doctors to drum up drug sales, and cracked down on
crime rings selling adulterated meat.

Cracking Down

A tougher consumer protection law, which increases
penalties for fraud and false advertising, took effect March 15.
It stipulates that most products sold online, through TV
marketing, by telephone and mail should be returnable within
seven days without the need to provide a reason, the official
Xinhua News Agency reported in October.

Last year’s CCTV “315 Gala” accused Apple of offering
Chinese consumers warranties that weren’t comparable to those
available in other markets. The company was then lambasted by
the People’s Daily newspaper for arrogance and poor customer
service
. The SAIC followed by calling on local authorities to
increase their supervision of clauses in Apple’s (AAPL) warranty
policies.

Apple later changed its policy to offer full replacements
of its iPhone 4 and 4S models and reset the warranty to one
year. Previously, the company provided new parts and didn’t
extend the warranty. Apple’s Chief Executive Officer Tim Cook
issued a public apology to Chinese consumers April 2.

Volkswagen, Europe’s largest automaker, announced a vehicle
recall after the show aired complaints from customers of
abnormal vibrations, loss of power and sudden acceleration in
models fitted with a direct-shift gearbox.

Local companies have also been targeted. Anhui Jianghuai
Automotive Co. recalled more than 100,000 vehicles after last
year’s program alleged it sold cars with rusted chassis. The
automaker’s shares slumped 10 percent, the most in more than
four years, in Shanghai on the next trading day.

To contact Bloomberg News staff for this story:
Bloomberg News in Beijing at
emailtv@bloomberg.net

To contact the editors responsible for this story:
John Liu at
jliu42@bloomberg.net
Terje Langeland, Dave McCombs

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