Reporting from Beijing, David Pierson wrote in the Los Angeles Times, “Xiong Mingjian is often crushed into a corner during his tedious subway commutes, but passing the time has been easy since he bought a nifty new cellphone. The 27-year-old store clerk surfs the Internet and taps away at games on his Motorola Defy, one of an increasing number of popular high-end mobile phones that are helping China shed its label as a knockoff haven. [Source: David Pierson, Los Angeles Times, October 4, 2011]
For years, copycat cellphones have thrived in a country famed for counterfeiting many things, such as Gucci handbags, Hollywood DVDs and, most recently, Apple retail stores. It's a market fed by shadowy factories turning out low-cost models bearing names such as BlockBerry and HiPhone 4. But Chinese bootleggers are now losing ground to the iPhones and other high-end gadgets they once copied. "People want the real thing," said Guo Feilong, a vendor at a massive electronics market in northwest Beijing where hundreds of closet-size stalls sell genuine and pirated phones. "Prices have gone down so much, why would anyone need to buy a fake?"
Factory orders for unlicensed phones, better known in China as shanzhai, or outlawed, phones, have been declining rapidly over the last few years, according to market researcher IHS iSuppli. Slightly more than 24 million shanzhai phones were ordered in China last year; that's down about half from the peak in 2007 when the devices accounted for 20 percent of all shipments. Today, shanzhai handsets represent just 7 percent of new factory orders for phones and could be half that within a few years. Meanwhile, smartphone sales are soaring. More than 131 million are in use in China, up from 52 million in 2009, according to Analysys International, a Beijing research firm. The average price has dropped below $300, putting them within reach of white-collar workers.
The trend bodes well for brands such as Apple, Finland's Nokia and South Korea's Samsung, which are battling Chinese makers to capture a greater share of the world's largest cellphone market. "We're looking at a billion [Chinese] cellphone users in the next couple of years," said David Wolf, chief executive of Wolf Group Asia, a Beijing consulting firm. "As important as North America and Europe has been for mobile devices, soon we'll see the tail wagging the dog. Chinese consumers will eventually dictate what the rest of the world will use."
Indeed, major parts manufacturers are developing their own smartphones for the Chinese market that will be significantly cheaper than current offerings. Apple reportedly is working on a lower-cost, mass-market Chinese iPhone; the company did not respond to requests for comment.
