Shanzhai

Shanzhai (“Bandit”) Mobile Phone Companies: The Guerrilla Warfare of Product development and Supply Chain Management. By: John Rediehs, Malini Seelan, Rama Paidi 1 Table of Contents Introduction Page. 2 Case Analysis Page. 2 Suggestion/Implementations Page. 4 Conclusion Page. 5 References Page. 6 2 Introduction Shanzhai (“Bandit Cell Phone”) is shaping the entire thought process of development, marketing, and technology in the largest cell phone market in the world. A market that has long been dominated by the corporate players like Nokia, Samsung, and Sony now face a tenacious domestic threat defined by a grassroots culture spreading within China. Shanzhai companies as they are referred to in this case study have gained a steady market share in the recent years on the big corporate players. By understanding their domestic market and their contract manufacturing history with the big players in the market, Shanzhai companies arose out of the culture to revolutionize the Chinese cell phone market. In this paper we will be analyzing several steps in the Shanzhai manufacturing process and business model. By highlighting several interesting and unique Shanzhai business strategies, we hope to gain the insight to apply these strategies elsewhere in the business world. Case Analysis Shanzhai companies are uniquely Chinese; they are a blended subculture of shameless counterfeiting, ruthless competition and social beliefs. Shanzhai companies tend to bend the rules or flat out ignore them in a pursuit to maximize profit, experimentation, and optimal output. In translation Shanzhai companies operate with surprising efficiency and at extremely low costs. With this ability to cut costs and offer similar products based off the corporate brands at a lower price, the Chinese market was prime for growth. Currently, the Chinese market has over 900 Million mobile phones users with over a billion individuals for market growth. Due to the geographic and socioeconomic situations in

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