An Exploratory Study on the Industry Structure and Business Models of Shan Zhai Cell Phone Market in China

• Main Authors: Jen-Cheng Chiang, 姜仁成
• Other Authors: Ji-Ren Lee, Ph.D.
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/56862177193837242394

碩士 === 臺灣大學 === 高階公共管理組 === 98 === With low labor cost and abundant entrepreneurial energy, Shenzhen, China has become an important manufacturing cluster for a wide range of export electronics related products. This manufactory cluster has played a significant role in boosting up China’s economic strengthe during the last decade. Benefit from the rising of national income level and consumption power, a mobile phone industry has emerged in China during recent years. Interestingly, this new mobile phone industry revealed a very different structure from the existing one, which gradually has named Shan Zhai cell phone industry. The fast growing Shan Zhai cell phone industry has totally subverted the existing ecology of China mobile phone market and the competitive dynamic of world market, a significant structural change which stimulates our exploratory research efforts. The major purpose of the present study is to engage an exploratory study on the emergence of Shan Zhai cell phone industry upon which more systematic analyses on the industry structure and business models of Shan Zhai handset products are based. To achieve our research purpose, we apply frameworks of industry analysis and business model to disentangle the trajectory of industry development and the heterogeneity of business operations. The early stage of mobile phone development started from the launch of some imitative products with local brands. However, these copy-cat types of products failed to catch up with continuous product changes due to technology barriers. Due to such deficiency, international brand companys can easily beat them by lowering price on obsolete models. This competitive status remained unchanged until MediaTek provided a turnkey type of design solution for low-end mobile phone products which substantially reduced the technical barriers for these entrepreneurial firms. With MediaTek''s backup, many small manufacturers could easily integrate and upgrade products so that they can catch up with the market demand. By specializing in different divison of labor along the value chain, many small companies could share common resources of production and marketing so that all can achieve three lows: low RD costs, low production costs, and low inventory costs. To further penetrate themarket, Shan Zhai cell phone firms used high profit margin to attract local distributors to create its own channel in rural markets, a strategy which fits with China''s low-price domestic market segment. By dis-integrating the value chain, Shan Zhai''s model work well for fast growth and short life cycle products, such as mobile phone produts.This model reveals significant implications for industry development in other emerging markets as well.