How China’s ‘copycat’ tech companies are now the ones to beat
Edward Tse and Marco Gervasi say the country, once derided as good only for producing fake products, is today producing leaders in innovation, becoming a model for others to follow
For the first time, Western tech models are being challenged by those from China. And people are beginning to recognise this development. Illustration: Craig Stephens
For a long time, Chinese companies have been known for copying market-proven products, brands and business models from the West and adapting them for the local market with only minor modifications. Such a phenomenon is known as shanzhai, a Chinese term that was originally used to describe a bandit stronghold outside government control. In today’s slang, it refers to businesses based on fake or pirated products.
Shanzhai has been prevalent in China in recent decades and this has earned China the reputation of being a “copycat nation”. Western media report that China’s preferential policies and regulations to restrict market access, such as the the “Great Firewall” in the internet industry, and the lack of intellectual property protection, give Chinese companies an unfair home advantage to create copies.
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Yet, the by-product of such protectionism has been the development of a unique innovation ecosystem. The innovation brought about by China – an evolutionary approach on a mass scale – is different from that in the West, and it is influencing both emerging and developed economies.
While shanzhai is common across a range of products and services, it is particularly prevalent in the internet sector. Chinese internet companies are often compared to their Western counterparts based on the similarity of their business models. For example, Baidu is known as the “Google of China”, Alibaba as the “eBay of China”, and Xiaomi as the “Apple of China”, just to name a few.
What is usually neglected in these comparisons is the underlying context in China that gave birth to these companies and how they have evolved. For example, though Alibaba adopted an eBay-like model in its early years, it has gone through so many changes that, today, its business model can best be described as a combination of the models of at least three internet titans – Google, eBay and Amazon. In fact, the success of many Chinese companies, across sectors, has depended on their ability to evolve and adapt foreign ideas for the mass market. This form of evolution, with continuous micro-innovations, is touching the lives of hundreds of millions.
A man uses his mobile phone in Beijing. Tencent launched WeChat in 2011. Since then, this simple instant messenger mobile application has evolved into a global “super app”, with 846 million monthly active users worldwide. Photo: EPA
Another example is Tencent, which launched WeChat in 2011, a simple instant messenger mobile application that gradually evolved into a global “super app”, with one-stop hybrid features of Western models such as WhatsApp, Facebook, Instagram, Skype, Uber, Tinder and others. Today, WeChat has 846 million monthly active users worldwide.
