Innovation Works or Shanzhai Works

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.

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