| dc.description.abstract | In many industries, markets were dominated by large brands. However, there exist some meaningful small brands in some industries, such as the mobile phone industry. To explain this phenomenon, this paper will take the shanzhai phone published by the small brands as an example, and explore their living spaces and value of living.
This paper will use the structure - conduct - performance theory in industrial economy to be the framework. In particular, the theory of vertical disintegration addressed by Chang and Chen (2003) will be the main exploration, and we can discuss how shanzhai phone can be survived. In the beginning, we use the profile of mobile phone brand to illustrate how shanzhai phone affected the branded mobile phone. Then, we explain how shanzhi phone was restricted by relevant laws of China Mobile Communications. In next step, we introduce the development from wireless communication products of MediaTek, which is main chip supplier of shanzhi phone, in order to comprehend how MediaTek use Turnkey solution to support the development of shanzhi phone. In the end, we discuss the living space of shanzhi phone through the shanzhi phone market analysis, which contains the countering of the formal market (brand phone counterattack, IMEI code and the arrival of 3G technology), relevant stakeholders (regional governments and telecom service providers) and the difference between shanzhi phone and branded mobile phone.
As the shanzhai phone rises, it already becomes the third force to contend with multinational brands and China famous brands in the China market. To analyze this situation, we not only investigate the vertical disintegration, but also replenish four possible reasons to explain how shanzhai phone survives: (1) Vertical disintegration. Vertical disintegration can help the development of shanzhai phone, efficiency of cost, diversification of products, stability of quality, shorter average development time of t product, the support of the distributors, and it even help the economic development of related industries and regions. (2) Price factors. In the oligopoly market, branded firms will charge a higher price, which naturally lets shanzhai enterprises have living places. (3) The free-rider effect. Shanzhai enterprises can raise their own competitiveness by learning the behaviors of the branded firms. (4) The rise of the Internet. Through the popularization of the Internet, shanzhai phone can make up for its drawback being deficient in channels and lower asymmetry information problems.
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