Exploring innovation in Shanzhai: the case of mobile phones

Chinese innovation in low-cost, ‘good enough’ electronic products has been very active. Suchproducts may be copies of current branded goods that are positioned as straightforwardcounterfeits, knock-offs, or Shanzhai. In this paper, we argue that this simplistic analysis isinadequate to describe novel approaches to the production of new goods and that a newsystem of innovation is emerging. This novel innovation system has a distinct set of contextspecific actors and intra- and inter-firm structures that have aided the technology innovationsand the development of new business models. This paper employs a case study method anduses qualitative data to explore how innovations emerge in new mobile technologies and theinnovation system that supports their emergence. It examines the Shanzhai mobile phoneindustry as a case and provides a first attempt to map the innovation system that hasdeveloped. The results suggest that the distinctive characteristics of the Chinese innovationsystem contribute to the innovations around the product and the production processes. It further confirms the suitability of applying the innovation system approach to Shanzhaiphenomenon, and explores new forms of innovation dynamics. The paper concludes with aninitial agenda for further research in this area.