Bootleg Unzipped (Part 2) - An industry of fakes

5/13/2012 11:37:43 AM

An industry of fakes

To give an idea of just how large the Shanzhai phone industry is, picture this: Gartner's data states that 1.15 billion cell phones were sold worldwide in 2007. And according to data provided by Chinese officials, 150 million Shanzhai cell phones were being sold in the same year. Put in perspective, Shanzhai cell phones make up more than one-tenth of the global sales, and we're just talking about the phones sold in China alone. An article by Financial Times in 2010 estimated Shanzhai phones to account for roughly 20% of the global 2G mobile market - this, against a market consisting of Nokia and Motorola.

Description: Shanzhai phones

The numbers here doesn't come as shocking if you would know how large the workforce behind Shanzhai is. Various documentaries and studies have gone in-depth and into these Shanzhai production lines to discover that it's much more than just a small venture. One particular documentary discovered, to their surprise, that what was initially perceived as a small production group in a small establishment was, in fact, a factory-sized manufacturing line. Staff members there even dressed in accordance to their work scope, aside from donning the appropriate anti-static scrubs for work. Living quarters are provided along with food, housing several workers per room.

We've only been talking about the bootleg industry from the cell phone/ smartphone perspective. Due to its similarity in hardware, software and functionality, the Shanzhai phone industry is incredibly competitive. Dividing profits between the manufacturing and retail sales, companies and individuals may earn a meagre RMB8 {RM4) from each phone sale. Shanzhai companies have thus undertaken different ventures into different technological segment, which include netbooks and tablets. These imitation trade even extended its portfolio to automobiles: actual counterfeit cars that look like popular models and could drive.

But how could these companies and manufacturers continue to churn out these copyright-infringing phones without a reaction from the arm of the law?

The fact is that companies like Nokia and Motorola have long urged the Chinese government to crack down on this industry, but like piracy, the efforts made were merely minor dents on an industry that thrives among the masses. It's an undeniably difficult battle: the government may conduct raids in the city of Shenzhen to nip the Shanzhai production at the bud, but these manufacturers themselves are large employers commanding high amounts of workers. Clamping down these factories may upset the Shanzhai industry, but it'll also mean the loss of jobs to hundreds and thousands of workers.

The legality issue is also called to question. Manufacturers and makers are capable of skirting through the gaps of copyright law, ensuring that knock-offs by looks, the actual features and functionality differ from the imitated brands enough to avoid copyright infringements. But, logically, even if you think the combined force of the world's top brands and developers could rain down a flood of copyright courtroom cases, the sheer number of Shanzhai makers (from the lower-rung groups to full-blown manufacturers) would mean more loss in legal fees that actual gain.

The bad and the good of it

The problems related to Shanzhai phones are the same across any cheaply-produced, laxly-manufactured products out there: the lack of proper testing and safety measures. With companies caring only to string as much products out there as possible, the devices lack proper testing methods and are potential time bombs waiting for one unfortunate moment of mishap.

You've heard the stories about exploding cell phones, and the cases are mostly attributed to Shanzhai devices.

Of course, there's also the part where it's may be crippling the genuine smartphone industry. While Shanzhai devices aren't directly in competition with premium products, it's the cheaper big-brand models that are taking a hit. In Nokia's financial report in 2008, sales of their N-series devices suffer a drop of 16.2% in the first quarter of the year -- 21 million sets have just gone down to 17.6 million. Analysis shows that the sales decline happens prominently in the China area.           

Sometimes, the quality of the replication may be so similar that several scamming tactics of selling Shanzhai products in premium prices have cropped up over the years. People would order what they've expected to be a full-priced iPhone 4S — only to discover a very well made clone.

But should Shanzhai phones really go?

The undeniable, but mostly unseen, fact is that these bootleg devices aren't merely cheap knock-offs of popular brands and products. Because the competition is fierce among one another -- not counting competition from the popular brands themselves -- Shanzhai manufacturers usually end up innovating their products in order to stay at the top of phone shelves.

Shanzhai phones have be known to include features that even popular brands have yet to implement. Dual-sim capability is a staple feature among most Shanzhai devices, something even the great iPhone doesn't have. Some Shanzhai phones had the audacity of featuring a retractable TV antenna — which works and adds to its charms. One hilarious infomercial feature a smartphone that can survive being run over by a car (and yes, it does).

The Shanzhai market is still, by and large, catered towards the middle-class, lower-income group, and it's actually way more than simply providing a trendy imitation for the customer's gratification. As these people demand more in practicality for their money's worth, the Shanzhai devices have to match these demands. The result is innovation matching the people's needs over creating a niche or market for themselves.

It's this sort of demand, combined with absolute creative freedom, that is the basis for technological innovation. The Shanzhai market has already opened up the opportunity for people to construct their own junkyard iPad. Who's to say that, in given time, that they couldn't create a product that even WE would yearn for?

In the midst of imitating other brands and their identity, Shanzhais -- these bootleg devices -- have actually crafted an identity of its own. While the world may flinch and frown at its blatant disregard for copyright or condemn its unsafe engineering, the fact is that these phones are already part of a culture, and very much a culture in itself. They're an industry, one with unending demands and growths. They're the People's Phones: true "Shanzhais", as they may call it -- Robin Hoods of the tech industry that steal the good names of the rich to be given to the poor.

Description: The breakdown of a bootleg phone – The iPhone TV (2008)

The breakdown of a bootleg phone – The iPhone TV (2008)

The types of Shanzai mobile phones

White Brand

Phones made by companies with a mobile phone license, with the license being purchased from a legal holder. The phones go through official testing, and are usually legally sold and exhibited.


Exact clones of branded phones, with the brand logo and model number accurately branded on the phone. Users may not know that they're counterfeits until they turn it on.


Imitated phones that look like branded phones, only with different logos printed on them. An iPhone clone by have a slightly different logo bearing the name "Pinguo" (Chinese for Apple).


Fake devices that have the brand logo printed on them even though the brand doesn't carry such a product. An example would a Nike-branded smartphone.

Indigenous Innovation

Knock-offs that narrow dodge copyright infringements by including different and attractive features, such as dual-SIM capabilities, TV functionality or donut-shaped motifs.


Phones that extract the main board of other leading branded phones to be placed into different shells, usually more attractive ones.

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