If you think Samsung has it bad now, can you imagine what would happen if those Galaxy Note 7s caught fire in China? Fortunately for the South Korean firm, that thought will remain just that — a thought — as it may have just averted what would have been its greatest crisis to date.
All around the world, reports of exploding Galaxy Note 7 handsets have gone viral, causing all sorts of damage to Samsung. Amid all this, the South Korean firm's reputation remained untainted in China, because the phone's batteries are supplied by Amperex Technology Ltd. (ATL), rather than Samsung SDI, and thus didn't catch fire unlike everywhere else.
However, that almost changed over the weekend — a development that could have cost Samsung its position in the world's largest mobile phone market if things had played out poorly.
It began when photos of charred Galaxy Note 7s purchased from JD.com went viral and was soon worsened when Chinese online financial magazine Caixin referenced the incident in one of its stories. The result was obvious: stores pulled the device off shelves and consumers flocked to get refunds.
For Samsung, this was disastrous; it was already putting out fires in other parts of world and it could not afford to have another one start in a market where it is already facing increasing competition from local companies.
So, just like what it is doing with in other parts of the world, Samsung launched a probe (in conjunction with ATL) and to find what went wrong. The conclusion? The fire was caused by an external source and not a faulty battery.
In a statement on its Chinese website, Samsung said its investigation of the phone shows "the damage to this product was caused by external heating," without elaborating.
Similarly, ATL issued a similar statement, saying, "According to the burn marks on the sample, we surmise that the source of the heating comes from outside the battery, and it's very likely that there was an external factor causing the heating problem."
For Samsung, this result is everything it could have wished for — for the most part. Aside from the already-mentioned competition in the market, the fact that the source of the fire was determined to be an outside source means that both ATL's batteries are safe and that there is nothing inherently wrong with the Note 7 (for the time being). It's one thing to replace the battery, its another thing to be have to rebuild the phone from the ground-up.
If the results were different, this would have actually been the second time Samsung recalled the Note 7 in China. The first one came last week, when it announced a recall of 1,858 Note 7 phones. However, what makes these two cases different is that the recall affects phones distributed before general sales began.
That said, Samsung is still not out of the woods yet.
First, the potential of an exploding phone that retails for more than $800 in China is no laughing matter. Samsung already has to contend with plenty of competitors with safer, budget-friendly phones readily available; and the fact that various operators have halted sales for the Note 7 is bad news for them.
Second, there were two separate reports of phones catching fire, but Samsung was unable to obtain the second one to run tests on it. This means that, until it does, it will never be able to definitively say that the batteries in Galaxy Note 7s distributed in China are 100 percent safe.
