Chinese pirates are tech’s new innovators



The text below is from a 2010 article written for Wired Magazine:

“Psst! Want to pay £90 for a brand new, much enhanced iPhone with its own fold-out leather keyboard, built-in analogue TV set and slots for not one but two SIM cards? Or how about a shiny better-than-Nokia handset, containing an integrated heated coil that serves as your elegant cigarette lighter? Yup, if you want a cheap Vertu phone that incorporates Ferrari designs, or a pristine new iPad that runs Windows XP, our China contact, Tai-Pan, will sort you out. Just click on his website,, to survey the latest in not-quite-genuine brand-name electronics.

In the past few months, has showcased a MacBook Air clone that, at just £170, improves in many ways on Apple’s £1,200 original: for a start it has two USB ports whereas the original has just one, runs Windows software, and comes with an extra 40GB of storage and a desktop remote control. Then there’s the first tri-band phone with a high-resolution projector inside — on the market for months before LG got in on the act with its own Expo Projector Phone — and the tiny 10.1-inch netbook with built-in DVD player. But it’s phones where Tai-Pan comes into his own. Can’t decide between the iPhone’s elegant design and the open software powering Google’s Android operating system? No problem. Our man will suggest the APhone A6 — which combines both.

Tai-Pan, I should stress, is not some seedy knock-off merchant biding time before the anti-counterfeit police arrive to drag him away. He’s actually a Canadian-born IT executive called Timothy James Brown who came to Asia 13 years ago and became determined to document a local trend known as shanzhai. As Brown translates it, shanzhai comes from the Chinese characters for “mountain” and “fortress” or “bandit”. The term originally referred to copycat manufacturing of the type that Western companies dismiss as blatant fraud. But in current usage, as Brown explains, it means “a vendor who operates a business without observing the traditional rules or practices — often resulting in innovative and unusual products or business models”. Wrong, certainly, by western standards. Yet also a remarkable way to give consumers products that improve on the original.

Chinese manufacturers are notorious for knocking off Western brands for local consumption. Scroll around shopping websites such as Tao Bao, and you can quickly find HiPhones, SciPhones, Nckias, Samsings and even the BlockBerry, alongside an advert suggesting that it’s endorsed by President Obama (or should that be Oboma?) himself. This is, after all, the land of “Bucksstar Coffee”“Pizza Huh” and — my personal favourite — a Johnnie Walker whisky ripoff calling itself “Worker Black Labial”. It’s with consumer electronics, though, that the shanzhai industry comes into its own.

Yes, it’s illegal by our standards to place a trademarked brand on unlicensed products. And yes, there’s no quality control to protect the consumer, and certainly no warranty. But something extraordinary is happening amid the intense competition between tens of thousands of manufacturing plants in regions such as Shenzen. By reverse-engineering every new device from the likes of Apple or Sony, the shanzhai entrepreneurs are “improving” them in ways that please the consumer. And in doing so, they’re leading the way towards more creative and innovative products. It’s an open platform for grassroots innovation.

Why, for instance, should you be limited to one SIM-card slot in your mobile when you might want another for your travels? Shanzhai proved that there was consumer demand for two — and now firms such as Samsung and LG have followed. Why shouldn’t your phone have a high-zoom camera lens, or a built-in counterfeit money detector — or whatever unforeseen extras that tomorrow’s consumers will find compelling? The intense competition between shanzhai manufacturers means they move quickly, respond to local tastes, and keep improving products to prevent fickle customers defecting. Rather than cheap knockoffs, I’d argue that shanzhai represents a radical new business innovation model which over time we’ll all benefit from — even if the big brands themselves lose out in the short term.

Think of it as an open-source movement for building better devices. The Chinese firms tend to swap information about what they make and often credit each other with improvements. “They are doing to hardware what the web did for rip/mix/burn or mashup compilations,” according to Andrew “Bunnie” Huang, a hardware engineer who famously was first to hack the Xbox. If the model were extended to cheap laptops, Huang says, “the shanzhai would easily accomplish what the One Laptop Per Child project failed to do” — produce decent educational laptops for under $100.

Maybe it’s intellectual property law that’s outdated here. Sure, Steve Jobs has every right to prevent you replacing your iPhone’s battery or watching Flash videos on your iPad. But if a bootstrapped Chinese startup is prepared to tinker with his products, taking risks to add value while cutting costs, why shouldn’t the market be the ultimate judge? Low-quality counterfeiters will quickly go to the wall — but the genuinely disruptive shanzhai manufacturers will emerge as strong, legitimate businesses.

Steve Jobs and his lawyers, of course, will not see it that way. Still, what goes around comes around. Back in February, shortly after he had announced the iPad, a tiny electronics firm in Shenzen claimed that Apple had stolen both the name and the design of its own tablet computer. “The iPad looks exactly the same,” claimed Wu Xiaolong, executive director of Shenzhen Great Loong Industrial, to a wall of silence from Apple. “We’re preparing a lawsuit.”

Don’t do it, Mr Wu. It just wouldn’t be fair play, would it?”


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