Innovation Works or Shanzhai Works

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A few days ago, I was talking to some friends about entrepreneurs in China.  They asked me to summarize what I think, and there is nothing more apparent to me than the word “Shanzhai”.

Shanzhai means cloning.  But it is more than just a direct copying, but usually it also includes considerable localisation.  All of the biggest internet names in China started as clones of successful Western models, e.g. Baidu started as a clone of Google, Tencent tried to be ICQ in China, Taobao modeled after eBay, Renren is a facebook in China and Sina Weibo imitated Twitter.

Then, they tried their best to localize the services, making them popular among the local Chinese.  In the process, sometimes, they have out- performed the services they tried to  imitate in the beginning.  For example, Tencent’s QQ has over 600 million active users and the company earned over US$1.2 billion in profit last year.  ICQ is no longer a major player in the internet world.  Most industry insiders also believe Sina Weibo offer its users more functionality than Twitter.

And if we look at Innovation Works, the incubation center founded by former Google China head, Lee Kaifu, the trend is even more apparent.  Many of Innovation Works’ project are clones of successful internet companies.  In the list of portfolio companies (http://www.chuangxin.com/portfolio/), Dianxin is an Android clone, Wandoujia trys to imitate 91 Assistant, a popular mobile phone management software made by NetDragon and Umeng is modelled after U.S. startup Flurry.

Probably, readers who knows Innovation Works better can suggest even more examples.  Just a thought, maybe Prof. Lee Kaifu can change the name of  Innovation Works to  Shanzhai Works, so as to better reflect what it is actually doing.

  • http://twitter.com/VirgilArcher Buzz A.

    Chris Evdemon has a full 2010 IW portfolio posted up on slide 43 that details the western models IW’s portfolio companies are based on:
    http://www.slideshare.net/evdemon/technopreneurship-and-the-early-stage-ecosystem-in-china-2011

    To be fair, a decent chunk of the IW portfolio seems original. Chris makes the point that micro-innovation in China is the stand-in for full-out innovation based on a number of issues (evolving market, playing catch-up etc.).

  • Shan Zai Fu

    I think it is amazing how DianDian so vehemently rips off Tumblr. Every little icon and graphic seems to be totally copied over. InnovationWorks is truly a Shanzai company. They should move to Shenzhen to be close to their clone cousins in hardware, and consider re-branding by acquiring a hot domain name Shanzai.com.

  • Anonymous

    we cover shanzhai products (tablets and phones mainly) every single day, we also cover main stream technology. Most shanzhai tablets are no more shanzhai than a Samsung Galaxy tab… and yes… plenty of those phones include important features or localization features that the bigger brands aren’t willing to try.

    • http://redwiredrevolution.com/ Sherman So

      >> plenty of those phones include important features or localization features that the bigger brands aren’t willing to try.

      Interesting. Can you suggest some of that ??

  • JJ

    This is why we should call them “remakes” instead of “clones.”

    Just like how Hollywood remakes a lot of Asian films by reinterpreting the core story and then localizing it.

  • http://twitter.com/Ansonwang Anson Wang

    please copy the idea only…

  • http://masaru.ikeda.me Masaru IKEDA

    Hi Sherman,

    As for the figure of the fiscal profit that Tencent earned last year, I think it must be not “US$1.2 trillion” but “US$1.2 billion”. Just in case, I checked the company’s statement of accounts.

    Masaru

  • http://www.facebook.com/tracey.hsiang Tracey Zhaoqin Xiang

    Sherman,

    “Tencent…earned over US$1.2 trillion in profit last year”… the number must be wrong. I checked the company’s earning results which states it earned $2.9665 billion in revenue and $1.4855 billion as its gross profit in 2010.