July 17, 2015 by ...
In the year 2000 people in southern China began to produce cell phones. Production was simple, all they had to do was assemble parts. This was made even easier when TDK introduced a chipset which comprehended the most important parts of a phone. This led to an onslaught of locals in the handset business.
Theses manufacturers were primarily divided into two camps-playful shanzhai and pure play knockoffs. For more explanation of the two go here-http://wp.me/p4RPJi-eF . Between the two, they literally numbered in the thousands.
As time went on the smaller players went bust and the best increased market share. They did this by either offering playful fake phones or one’s targeting a specific niche.
Prior to joining the WTO in late 2001, China was known as a knockoff king and sanctioned. In order to get at a piece of the huge American pie, China promised to quash piracy!
Of course nothing could be farther from the truth, as brands like China’s handset market and Xiaomi prove. These players had previously relegated themselves to sleazy sales channels, embarrassed and fearful at being penalized for their fraud.
Slowly but surely all that changed. With China’s economic growth came power. China figured it no longer had to maintain its law abiding image and shed it accordingly. Things got worse with the Olympics which merely gave China more cash, power and cred.
The communist party even considered IP theft and ‘Tweaking’ to be part of indigenous innovation for the PRC- more here http://wp.me/p4RPJi-kT . This turn of ideology meant ‘game on’ and China’s been on a larceny spree never before seen in the history of the world.
What this means
The moral of this moral-less story is that in China, theft pays. Xiaomi is merely five years old and is now the most valuable private tech firm even though 90% of their goods are knockoffs.
This is inline with the fact that although China has 155 smartphone makers who sell 1000 units per month, they still have no innovator. Now, just as 15 years ago, the market is clogged with but players meeting niche needs and major firms who knockoff global brands. Huawei, Lenovo and Xiaomi immediately come to mind.
The safe haven that the communist regime has provided them with fertile grounds in which to make cash. They then buy up foreign firms and their ideas as well. Their goal is to set the global standard, but their output tells the tale. Unfortunately for them, it’s not working. For the most part, Chinese producers are merely ‘Mi too’ players.