Assignment 3: Counterfeit Chinese Goods

Recently, there has been a report from the BBC news on the growth of fake goods from China:

“An EU report says 64% of fake or pirated goods seized in the 27-nation bloc last year came from China- a 10% increase from 2008”  (http://www.bbc.co.uk/news/world- europe- 10726125, 22nd July 2010).”

Clothing was the largest, with 27% seized, while illegal CDs, DVDs and electrical products showed a marked decline.

Furthermore, China seems to becoming a ‘copycat’ nation. China’s car manufacturer Shuanghuan is already selling cars that look incredibly like the BMW X5 SVU and the mercedes smart in China.  A Shuanghuan spokesperson says they don’t plan to show the cars in Frankfurt- contrary to reports going around in Germany (they were presented at the Shuanghuan motor show last year).  But China Automobile, a German importer, says it will show the cars in Frankfurt. ‘Anything can happen’ says one Mercedes official. There has been some debate on whether or not copying a car is legal. However, BMW and Mercedes have decided to persue with legal action.

Subsequently, this poses the question: is China a pure copycatter or a copycat innovator? In China, they don’t just copy individual products. They copy individual stores. They also have replicas of small British and Australian towns built in some areas. It is like they are desperate not to have their own individuality. In an article I read recently, the reporter expressed:

“We must not loose sight of the fact that businesses in China are also brilliant Copy Cat Innovators, which is a legitimate whole new ball-game altogether.  Interestingly, a new term has come about that actually defines this relatively new phenomena. It has been refered to as “Chinnovation”. Chinnovation (coined from China and innovation) means applying changes in technology and business strategy to develop new and better ways to create value for both the customer and the corporation.  Although this term can be applied in any market, there are eight unique characteristics distinct to China- the 8 R’s of Chinnovation- that summarise the most common traits of Chinese innovators, successful innovators usually demonstrate a combination or several R’s:  Revenue focus, Rapid movement, Requirements driven by customers, Reproduction of existing models and products, Rivals require innovation, Restrictions inspire innovation, Remix, Remix, Remix, and finally Raw materials and tangible and intangible.  There is even a book out there well worth reading called  “Chinnovation: How Chinese Innovators are changing the world.” In this book, you uncover how there is a rise in Chinese innovators and how they are paving the way in new innovative ways of thinking. The author, Another Yinglan Tan has documented this. He got rid of the myth that Chinese businesses are being ‘copycats’ and has produced examples of how they are crossing barriers to successful and profitable innovation.  In addition, some of his topics discussed include how Neil Shen, co-founder of CTRIP Capital China, see the opportunity for a Chinese travel site. Also, how Ray Zhang, CEO of Ehi scaled up one of the most innovative hybrid car-rental companies in China.  Plus, how Zhang Tao, CEO of Dianping inspired a site for restaurants and establish a continuous process of innovation.

Moreover, another prime example of “Chinnovation” is white electrical goods manufacturer,  Haier has copycat innovated on the washing machine to include features on washing vegetables to cater to the China market.  It is another Yinglan Tan’s opinion that it is unjust to categorise China as a counterfeit nation. He points out that if you look into the worlds technology, the US copied from the industrial Revolution in Europe and Japan copied from the advanced western countries. It was during this time that these two countries celebrated their highest turnover.

I created a survey asking people various questions relating to China’s products and China’s innovation. The main question was: What do you think of products made in China? The most common replies were: cheaply made, poorly made, electrical goods not working, fake, unreliable. These answers then made me review China as a business market. This is where I discovered that the growth of their business and entrepreneurial market is due to the knowledge Chinese entrepreneurs have of the domestic market, vast change to market changes and resourcefulness, but what are these secrets and how well do they uncover them?  Chinnovation marks the humble beginnings of entrepreneurial innovation and the back stories of some now well-established consumer goods firms from Mao’s cultural Revolution through to self made internet era to the middle kingdoms rapid growth.

Other research methods I found useful while exploring this topic were; a swot analysis (the strengths, weaknesses, opportunities and threats of the Made in China products market.) Also, a perceptual map of the quality of Chinese goods compared to those of other countries. Finally, I made up a few personas of people that would be most likely buy goods  that were made in China that didn’t know they were made there in the first place.

What are your opinions of Chinese manufacturing?

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