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Knockoff Tech Selling Better Than the Original
An anonymous reader writes to mention an IT Wire story about the industrious Chinese industry centered around reproducing commercial products. These individuals have become so adept at forging based on the original that by the time the developer of the technology comes to market, the 'original' is seen as 'fake' by consumers. Other products, such as shoes, CDs, DVDs, and even expensive cars are available for much lower prices in certain Chinese markets. From the article: "Sell these products do, especially in Asia where the prices are low, few questions are asked and in many cases, the quality is actually pretty good. Samsung is said to have been so concerned by seeing its phones copied on the Chinese market that it tracked the distribution channels back to the source and discovered the electronics guys responsible for copying their latest products. After offering them a job with Samsung and a chance to go legitimate, they are reported to have declined the offer, saying that they were able to make more money by simply continuing in their pirate ways. What Samsung did next is not known."
The more you regulate a company, the worse its products become.
This is a downside to manufacturing in China. Even legitimate factories will order parts from a BOM and make illegit items after they fill your order. this is the risk in sending your IP to China to be made on the cheap.
... but if the knockoff alternatives lack the DRM that the authentic products contain, I'd probably consider purchasing the knockoff as well.
You know, the fact that China has managed to become the manufacturing center it has is rather astounding. They turn around and steal the technology of the companies who have decided to put plants there. Their system of law is simply unpredictable. By and large, companies who moved there should have known better. As irritated as outsourcing to India has been, in retrospect, we should have made a more concentrated effort in making India, rather than China, the mass-manufacturing center for the American market. India has a few things going for it that China probably never will. First and foremost, they have a republican (small r) system of government. They have benefitted from hundreds of years of English Common Law, which is arguably what makes Biz so seamless and efficient (relatively speaking) in the UK, US, and Canada. Finally, they don't seem to have an appetite for superpower status. We picked the wrong country to invest in. If I owned a manufacturing company, I'd get the heck out of China.
I fail to follow your reasoning here. I remember when I paid $240 for an 80mB disk. Today I can get 500gB for $240. How could anyone get a 6000-fold reduction in price without R&D? Any cost-cutting the bean counters do is irrelevant compared to what R&D will get.
If a technology company wants to prevail in the marketplace, what they need to do is to keep R&D so intense that the copycats will not be able do duplicate the performance of genuine products.
"Without value in IP, there is no economic reason to innovate"
While you can debate whether IP is an absolute right, human rights violation, or somewhere in between. Your statement that innovation will not happen without "value in IP" is verifiably false. Just look at the vast majority of human history.
Also known as a strawman argument.
Sure there is. Without innovation a company has no advantage over its competitors. To make a profit you have to either sell something different or produce the same thing more efficiently. Both of these require innovation.
Okay, so I find that my Super Duper Gizmo is duplicated and sold very cheaply by a company that didn't have to expend any money on research and development. I can no longer sell my original Gizmo, because someone has undercut me.
So I head back to the drawing board. I work with my customers, I do some market research, I find out what everyone wants and/or will want, I hire some top-notch people who know Gizmos, I go and develop Super Duper Gizmo Plus Plus. Mere seconds after my product hits the market, I've found that someone is already producing knockoffs and selling it at dirt cheap prices, prices that I cannot justify because I could never recoup my investment to develop the product.
Maybe my process is crap. So, I hit the drawing board again, splitting my costs between making Super Duper Gizmo 2007 Extreme, and improving my manufacturing and go-to-market capabilities. But guess what happens? I hit the market with Super Duper Gizmo 2007 Extreme, and seconds later, I find the exact same product, sold under a different name, for chump change, which I of course cannot match because of the money I spent developing my product.
Maybe I'm in the wrong game. I should just stick to manufacturing. That's the only place where I can actually make any money. Trying to make innovative products has proven to me to be a complete waste of money.
Now a whole lot of companies have moved to just copy and manufacture, or copy and add the smallest delta to a product where they can justify spending money to make a few pennies more than their competitors. In 2017, the only product anyone makes is Super Duper Gizmo 2017, which is merely the Super Duper Gizmo 2007 Extreme with a new paint job (colors are cheap to do), a different menu ordering (switching strings in the program is cheap to do), and square buttons instead of round buttons (changing the tooling to make square buttons is cheap to do).
Why innovate? Where is the incentive to innovate? I create a new product, it gets stolen from right under me. I improve my process, but can't add any new features to my product because I've spent it on the process, so now the product is stale, and no one wants it.
It's a no-win situation.
Sure they look very similar but fake? The phone isn't claiming to be an LG, or the game a PSP as far as I can see. It's a clone, not a fake. It's not like the phone and other tech manufacturers don't rip each other off mercilessly. Do you believe for a second that companies don't "reverse engineer" each other's products within minutes of them hitting the street? Before if they can find a way get away with it.
Really what they're pissed about is the fact that the chinese are just better at it than they are.
The solution? Release the stuff in China first, nobody wants to be seen to have a knock off. Hell, it has by far the biggest market so it even makes sense.
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