Nokian, Snog Ericsson, Aifung and the (almost)likes

Established mobile device manufacturers are battling with a formidable bunch of competitors: their products make it quicker to the market and at a cheaper price. So fast as being almost pre-emptive: the Aifung was already on the market 6 months before the IPhone’s introduction in the USA. Priced rather competitively (USD 270 compared to USD 300 for the original), it works – supreme outrage - on any network, and not only on AT&T’s. 

Imitators don’t stop there: some of them even offer additional functionalities to products that haven’t been released yet! Worst of all, it is hard to put a name and a hand on them – the only place you can find them is in the market or on the InternetAifungCounterfeit producers use the southern-China manufacturing base to churn out their products and if one of their operations was to be discovered and closed, they can relocate easily to one of the 400 factories who’ll gladly do the work.In the software business, annual loses due to piracy are estimated at more than USD 5 billion for China alone*. With a 600 million mobile users base, growing at the monthly rate of 5 million, imagine what a small percentage of counterfeit products can do to a company’s bottom-line… 

So, can bona fide innovators actually benefit from the trend? Ironically, since counterfeiters’ competitive advantage lies in speed-to-market and additional functionalities, the Nokias and Ericssons of this world could in fact integrate some of the “counterfeatures” into their own products, without fearing too much of an intellectual property legal suit. Moreover, customers know what they are getting: counterfeit products do not offer the same level of quality – they may even be health hazards – and obviously come without a warranty. It may work for a while but, after the second breakdown, many customers realise that quality has a cost and suddenly start to find value in branded products.

That said, given the success of counterfeit products among foreign buyers in Asia, marketing theorists may well have to include a category of «early counterfeiters» in their product adoption model…

* Estimates put at USD 650 billion the annual cost of counterfeit products to businesses.

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  1. Pingback: Marc Laperrouza » Blog Archive » China's Internet intellectual property game plan

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