Research on the Phenomena of "SHAN ZHAI" and the Corresponding Intellectual Property Rights Strategies of China

By Wei, Feng; Lu, Yin et al. | International Management Review, January 1, 2011 | Go to article overview

Research on the Phenomena of "SHAN ZHAI" and the Corresponding Intellectual Property Rights Strategies of China


Wei, Feng, Lu, Yin, Tianzhu, Li, International Management Review


[Abstract]

The phenomena of "SHAN ZHAI" typically represented by the "SHAN ZHAI" mobile telephone but the series of "SHAN ZHAI" cause strong concerns in many fields. The problems of intellectual property rights management strategy and the national intellectual property rights system should be seriously considered and resolved. This paper analyzes the origins of the "SHAN ZHAI" phenomena and the intellectual property rights problems it brings about and presents the intellectual property rights strategies that China should take as an emerging technology follower under the national strategy of constructing an innovative country.

[Keywords] "SHAN ZHAI"; intellectual property rights strategy; emerging technology

Introduction

"SHAN ZHAI" undoubtedly is becoming one of the most prevalent items online since 2008. Annual verbal archives - Green Book on Word, edited by "Word" agency - has recently published the "ten most popular buzz words," among which "SHAN ZHAI" ranks top. Those "SHAN ZHAI" mobile telephones and other "SHAN ZHAI" products have caused various problems in society, economy, and intellectual property rights (IPR).

What on earth is "SHAN ZHAI"? Different people have different opinions. There is no unified definition of "SHAN ZHAI." Some people think "SHAN ZHAI" means to assemble the products by oneself; others think it means to imitate famous enterprises or their images, which is a typical phenomenon of DIY (Do it yourself). Another saying "SHAN ZHAI means those middle or small enterprises supplying attachments of formal factories or the plants providing products with low cost and unsteady quality. The authors of this paper think the definition of "SHAN ZHAI" is derived from Cantonese; it means "in miniature, small scale," or "subterranean factory," which features imitation, high-speed, and low-cost. The typical "SHAN ZHAI" enterprises start their operation from small workshops and earn quick money by copying brand name products and walking on the edge of industry policies.

Some scholars pointed out that the prevalence of the word "SHAN ZHAI" might come and go in haste, since it grew out of network media, print media, and video. But problems initiated from the prevalence of and discussions on "SHAN ZHAI" features or its culture would call for thinking about problems concerning operational strategies and institutional arrangements of intellectual property rights (Tao, 2009). The authors of this thesis are going to analyze the origins of the "SHAN ZHAI" phenomenon to investigate problems arising from it on IPR, and to present strategies China should take as a developing country.

The Origins of the "SHAN ZHAI" Pattern

"SHAN ZHAI" is not a phenomenon specific to China; it also occurs in other countries. Actually, it is a common pathway that allows late-developing enterprises to catch up and even surpass the originators. The theory of technology-running illustrates that technology-running is a problem of relative speed among countries in a fixed track (Perez, 1986), and imitation can help new-born enterprises to stride over (Guo Xibao & Xiao Liping, 2008), and they can catch-up through import and imitation (Luc,1985). Based on the empirical research in Korea, Lee and Lim (2001) classified the technologyrunning track into three categories: creational, by-passing, and compliant. Creational track means that new-born enterprises search for new technology on its way to development. The latter two mean that the new-born enterprises follow the same track in the leading countries with one non-linear way of development and the other linear. So, a large proportion of technology-running is realized through imitation. Wei Jiang (2003) also pointed out that developing countries should better progress step by step.

The phenomenon of "SHAN ZHAF is virtually a typical technology that commonly exists. However, different from normal technology-running, "SHAN ???G' features high-speed, low-cost, and imitation of the outlooks and functions instead of the technologies.

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