Chinese Shanzai phones vs Open Source phones
May 3rd, 2009 | Published in Mobile Communities, Mobile Devices, Mobile Marketing, Mobile Services, Statistics on Mobile Devices | 1 Comment
Shanzai or “Bandit” phones are part of an emerging trend in Chinese counterfeit. They look and behave just like the original brands. When a new model is released the copy gets to the market in a matter of days. Since is a completely illegal operation, the producers of these phones don’t pay any taxes making the Shanzai phones a third of the price of the original.
But, what if?
It is obvious that if Shanzai producers can copy a Blackberry or an iPhone, they most have some sort of technological mass production infrastructure in place, so why copying an existing phone when they could produce an open source phone of better quality like openmoko. Available for download, openmoko offers everything needed to be mass-produced: a Linux-based operating system for multi-touch screens, CAD files to produce the body and Schematics for electronic components placement.
Why is this important? We will be reaching 4 billion mobile phone users worldwide pretty soon. This is already impacting the world in many different ways. With cheaper and better technology available to more people, smartphones will become the standard faster than today’s pace. The only missing part needed is an open source carrier or a better wireless network to cheaply connect these phones to one another and we will be on our way of creating a totally new socio-economic model, with an even bigger impact than what the internet was during the dot com boom and today’s so called web 2.0
May 21st, 2009 at 3:00 PM (#)
I’m pretty sure many of these “Shanzhai” phones already use open source software for their phone for the simple reason that it is cost free and easily customizeable. Though Shanzhai phones and culture in general are enjoying in some circles a reputation for being about independent and rebellious against the establishment (Government regulations, Large Cell phone companies), the bottomline is the bottomline: Shanzhai is being done because of its potential for easy profits.
There is a dual viewpoint on this from many Shanzhai users.
They like the fact that such a phone 1) Is cheap and easily replaceable. 2) Looks similar to or even exactly like their famous brand inspirations . 3)Commonly has features that the original does not , like dual gsm sim capability.
But many of them suggest if they could afford the more expensive original, they would.
Shanzhai companies achieve swift production speeds and low manufacturing costs by exploiting an infrastructure that is there to support them and a market that is willing to buy.
Many cell phone making factores are willing to run extra shifts and are contacted by Shanzhai designers and contracted to do productions of their copied phones.
By not paying taxes, dealing with health, safety and regulatory commissions, Shanzhai makers can give a consumer a low price which is their main selling point.
Shanzhai are popular among lower income users because it gives them a high end looking product without the high price.
However, by avoiding the additional financial burden of taxes and regulations, the speed at which production can be done , the costs saved and passed to the consumer actually have a hidden (most of the time) cost of its own.
Typically, Shanzhai have inferior build quality to their original counterparts. They have a higher failure and lower quality control standard. In extreme cases, it can be life threatening, or even fatal. Two cases illustrate this.
Two Shanzai phones exploded , one injuring its owner, the other killing its. The first case was in China, the other, India.
Shanzhai phone users have a lot of happy owners, who apparently are willing to live with their quality / price tradeoff. An added side effect of this abundant supply of low priced Shanzhai is that many Chinese cell users upgrade more readily and rapidly then their Western counterparts.
Both the lower cost per unit and the probable higher failure rate may combine to facilitate this trend.
That actually helps the Shanzhai makers because a shorter turnaround time to an upgrade simply means that that’s one more Shanzhai phone to replace the older one.
Major Cell phone companies like Nokia and Samsung have been trying to persuade the Chinese government to take some kind of action. But even indigenous major Chinese cell phone makers like ZTE and Huawei are being affected by the Shanzhai. Individually, most Shanzhai companies are small, local almost mom and pop type operations, but cumulatively, the sheer numbers of these small companies acting together have had a big impact on the cell phone market share in China. Shanzhai phones are estimated to be 10-20 percent of the total of the worlds biggest cell phone market.
Because indigenous Chinese cell manufacturers must pay taxes, submit themselves to regulaton, are much larger and move slower in reacting to trends then the smaller, nimbler Shanzhai, they are at a disadvantage despite their established brand names.
Shanzhai have become popular even outside of China. Their eyecatching designs and low costs are make them big sellers to developing nations with markets similar to China. India being a good example.
Whatever the case may be Shanzhai makers are making not just phones but a hefty profit. And unless new rules, regulations, taxes or enforcement of some kind isn’t carried out by the Chinese authorities, they will continue.
I’m sure this economy has helped spur their sales too.