While Apple’s (NASDAQ:AAPL) brand is as different from Hewlett-Packard’s (NYSE:HPQ) as one technology company can be from another, the two device manufactures have a shared experience: being the target of a smear campaign conducted by the Chinese government. With the accusations of discriminatory customer service practices raining down from the People’s Daily — the Chinese Communist Party’s official mouthpiece — and state-run China Central Television for three straight weeks, Citigroup analyst Glen Yeung has turned to HP as a template for calculating the potential costs the state-sponsored propaganda campaign could have on Apple.
One cost is already clear; in his assessment, Yeung wrote in a note seen by Fortune that this negative publicity — regardless of whether it is deserved — adds another weight to Apple’s current burden, giving him further reason to reiterate the brokerage’s Neutral rating on the company’s stock.
Apple is not the first company to be targeted by such a campaign. Yum Brand’s (NYSE:YUM) experienced a 20 percent year-over-year drop in sales after Chinese television broadcast an investigative report about the poultry used by its KFC restaurants last December, and Toshiba (TOSBF.PK) fell out of its number one position in Chinese notebook sales after the media reported in 1999 that the manufacturer employed different policies for Chinese and American customers.