World Summit on Management Sciences
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Accepted Abstracts

The Inevitability of Overall China-Shanzhaization: Taking the Bumpy Path of Shanzhai Mobile Phone Industry as an Example

Jiangning Zhao*
Catholic University of Korea, South Korea

Citation: Zhao J (2020) The Inevitability of Overall China-Shanzhaization: Taking the Bumpy Path of Shanzhai Mobile Phone Industry as an Example. SciTech Management Sciences 2020. Thailand 

Received: March 16, 2020         Accepted: March 19, 2020         Published: March 20, 2020

Abstract

By defining the concept of Shanzhaization, this text is endeavored to elaborate the inevitable path of China-Shanzhaization, from the initiation of Shanzhai mobile phone industry to the entire China industry, political-social, economic, cultural, belief and value systems. Also elaborated in this text is the role of government in supporting and even instigating the rampantly expanded imitation-based Shanzhai Model. By implementing the ‘open-policy’, not only foreign capital resources, but also advanced foreign technological resources have been attracted, becoming the targets of imitations, liberating China firms from technological barriers, and expediting the expansion Shanzhai Model. By translating Deng Xiaoping’s ‘Cat-Theory’ into a national economic policy, namely, translating Deng’s ‘White cat, Black cat, catching the mouse is a good cat’ into ‘Do whatever takes to make money’, the imitation-based cost-saving production has been worshiped as a national motto of doing business. Official propaganda such as ‘Imitation is no shame’ and ‘As long as you have it, we can produce it too’, has been cultivating and encouraging a national pride of patriotism, and nurturing the vitality of Shanzhai Model.
 
Modular-Technology is identified as the stepping-stone for the survival and scaled Shanzhaization in mobile phones industry, and permeated into the entire electronics industry. Technology-Platform is identified as the driving force, facilitating the upgrade from 2G-modular to 3G-integrated technology, and promoting the transformation from vertical industry-chain operation to horizontal. The triple-foothold operator-based platform triggers the diversified process of Shanzhaization across industries. The theory of ‘Matthew Effect’ is employed to explain the inevitable formation of new monopoly pattern emerged in the process of Shanzhaization. The theory of ‘Disruptive Innovation’ is adopted to rationalize the impact of Shanzhai Model on the process of China-Shanzhaization. Case-studies are presented to elaborate the competitive advantages of Shanzhai Model.
 
Keywords:   Shanzhaization, Imitation, Industrialization, Government Policy, Modular Technology, Integrated Technology, Disruptive Innovation, Monopoly Pattern.