A cognitive discussion on Shanzhai: an emerging innovation model

Jiangning Zhao

Professor of Management, College of Business Administration, Catholic University of Korea , 43 Jibong-ro, Wonmi-gu, Bucheon-si, Gyeonggi-do, 420-743, Korea

Email: zjning@hotmail.com Tel.: 0082-2-2164-4229 Fax: 0082-2-2164-4229

Accepted 03 February 2012

Abstract

Imitation, Innovation and Catching up Technology have been major topics among others in the increasingly globalized economy, particularly in the developing countries. Shanzhai is a hot issue of debates on imitation and Intellectual Property Right (IPR). An ongoing argument focuses on the formation and condition that cultivates and nurtures the development of Shanzhai, as well as its transformation from small family-run business units into an industry, capable of competing with SOEs (State Owned Enterprises) and MNCs (Multi-National-Corporations). This study adopts Grounded Theory (GT) framework, delving into ten-year data (2001-2011), analyzing the pattern of Shanzhai development from its Origin to its transformation. This study proposes that Shanzhai is no longer the synonym of Imitation. Imitation has become obsolete to Shanzhai after MediaTech (MTK) launched its One Stop Integrated System (OSIS) Turnkey Solution in 2005. Shanzhai has emerged as an innovative industry featured with clustered relationship among firms, small but versatile in the form of organization. Together, they facilitate the process of establishing Shanzhai Innovation Model powered by three competitive advantages (Cost Saving Operations, Speed of Products to Markets, and Cheap Price but Good Enough Products for Low End Markets). Using GEM (Global Enterprises Monitoring), this study has invited three sample groups from University Faculties, Shanzhai Managers, and Shanzhai Employees, to test the competitive strengths of Shanzhai Clusters. The applicability of Shanzhai Innovation Model as a Catching-up Technology in other developing countries, is also discussed which is followed by recommendations for future research.  

Keywords: Shanzhai, Imitation, Innovation, Catch up, Competitive Advantages