Potentially some tough times ahead for HP in China, at least in the short term. The problem: bad Nvidia graphics cards in some laptops. Sorry, gamers.

I assume that HP has a good relationship with a PR firm used to handling crisis management in China. The photo is from a 2009 Greenpeace protest against HP last year. I wonder if HP has already met with their consultants on this issue?

A couple of isolated tort cases would be unfortunate, but certainly no cause for alarm. However, there seems to be much more going on. The Financial Times has details today:

Chinese lawyers have filed a complaint on behalf of more than 170 consumers against Hewlett-Packard, requesting that the Chinese government order a recall of allegedly faulty notebook computers.

Uh oh. Some good news/bad news for HP here. The good news is that the complaint was not a lawsuit. The bad news is that it was a formal request sent to the General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ), asking the government to open an investigation, institute a recall of the laptops, and order HP to provide compensation.

This is probably a smart move on the part of the lawyers involved. Class action lawsuits are not really a formal process here, although the functional equivalent is possible. However, big lawsuits are frowned upon and not in keeping with a Harmonious Society. On the other hand, mediation led by a government agency can be quite acceptable, as long as you go through the right channels and have enough political support.

What makes this worse than your run-of-the-mill product liability/consumer law type of case is the backdrop of the Toyota dispute (my previous post on Toyota) hanging out there and the sensitivity towards non-reciprocal customer remedies. Ouch, the complaint alleges the same thing with this dispute:

“We have also noticed that HP in the US offered consumers extended warranty periods for even more models and compensated them for transport costs, but in China, it has not made a statement or offered services, and openly discriminated against Chinese consumers,” the complaint said.

Not good at all. How bad it will be for HP depends on a number of factors, including the total number of people involved (so far, rather small), whether there is political support for this action, the reaction of HP, and media interest.

As to the latter, I already noticed one article in Xinhua today (Chinese) about an enterprising young law student from Zhejiang who had laptop problems and went up against HP to get compensation. Poor kid buys a laptop made in Taiwan and, within the two-year warranty period he gets the black screen (黑屏) (of death) after the graphics card overheated. Bummer, no more World of Warcraft.

If the Chinese media is already starting to pen feature articles describing poor unfortunates who have suffered after their HP laptops have given up the ghost, then bad times might be ahead. The next bump in the road is March 15, International Consumer’s Day. Expect AQSIQ to announce some new campaigns at that time to show the higher-ups in the government that they are diligently protecting the interests of the people.

Update: China Daily is on the story too.