With many of its Galaxy Note 7 handsets reportedly catching on fire, Samsung Electronics conducted an internal investigation, which apparently revealed that batteries manufactured by its sister concern, Samsung SDI, was to be blamed for the critical flaw. The company, however, announced that the units meant for China were fully safe as they were carrying batteries from a Chinese firm called Amperex Technology Limited (ATL) instead of Samsung SDI. Even as the company announced a complete recall of all Galaxy Note 7 units sold around the world, it left out China from its ambit for that very reason. Only 1,858 devices that were imported into the country for testing purposes were recalled, leaving the rest untouched. However, reports in the Chinese media over the weekend suggested that multiple Galaxy Note 7 units in the country had caught on fire.
With several images of apparently burnt out Galaxy Note 7 handsets doing the rounds of the Chinese social media, Samsung Electronics and Amperex Technology, both came out and issued separate statements, saying that the fires were caused by "external heating" rather than overheated batteries. However, with more reports and graphic visuals of burnt out Galaxy Note 7 smartphones coming out of China on a daily basis, some observers are cautioning that the situation may create a "trust crisis" that could well prevent the South Korean company from reclaiming its position of predominance in the country. That's according to Canalys research director, Ms. Nicole Peng, who says that people in the country have already started doubting the trustworthiness of Samsung as a brand. According to her, the reports of Galaxy Note 7 fires will push buyers away from Samsung and towards brands such as Apple, Huawei and OPPO, all of which are locked in a severe tussle over market share in the country.
In fact, a recent study conducted by Guangdong-based consultancy iiMedia Research, found that around 37% of Samsung smartphone users in the country would rather buy Apple's iPhones next time around, while 26% said that they'll go with Huawei rather than stick with Samsung. With its market share in China falling from the highs of 21% in late 2013 to just 8% this year, Samsung Electronics can ill-afford any more missteps in the largest smartphone market in the world. However, the controversies surrounding the Galaxy Note 7 already means that demand for its premium devices are likely to be on the lower side, with the company likely to drop down to the 8th place among all smartphone vendors in the country. According to Ms. Peng, "It will take two flagship product updates for consumers to regain their confidence" in Samsung.