chapter two the structure of a counterfeit industry fake stuff © 2011 taylor and francis
TRANSCRIPT
CHAPTER TWOTHE STRUCTURE OF A COUNTERFEIT INDUSTRY
Fake Stuff© 2011 Taylor and Francis
Key Ideas
Production Cost of Fake Cell Phone Life Cycle of Fake Cell Phone iPad and pseudo iPad The Great Patent Battle - MediaTek as an example
© 2011 Taylor and Francis
China as the World’s Factory
Electronic Stores mushroomed in Shenzhen
© 2011 Taylor and Francis
Cost Analysis of Fake Cell Phones
© 2011 Taylor and Francis
Cost incurred by Brand Name Cell Phone
Fake Cell Phone
Cell Phone Design
Hardware
Research and Development Expenses
Patent Loyalties
“ Turn-Key” Solutions, or low-quality components Softwar
eResearch and Development Expenses
Patent Loyalties
Cost Analysis of Fake Cell Phones(cont’d)Cost incurred by
Brand Name Cell Phone
Fake Cell Phone
Cell Phone Production
Costs include:Professional OEM Factory ProductionQuality Control (QC)Official Examination Fees
Made in family-run workshopsNot heavy QCNo Official Examination Fees© 2011 Taylor and Francis
Cost Analysis of Fake Cell Phones(cont’d)Cost incurred by
Brand Name Cell Phone
Fake Cell Phone
Distribution
Through Middle- and Large-size DistributorsProvides Customer Services (Repair, Replacement and Return)
Provided by Region-Based, Small DistributorsCustomer Services Not Available
© 2011 Taylor and Francis
Cost Analysis of Fake Cell Phones(cont’d)Cost incurred by
Brand Name Cell Phone
Fake Cell Phone
Brand Management
Global Marketing, Advertising and Brand Management
No AdvertisingNo Brand ManagementCounterfeiting Logo or Intentional Resemblance © 2011 Taylor and Francis
Cost Analysis of Fake Cell Phones(cont’d)
Cost incurred by
Brand Name Cell Phone
Fake Cell Phone
Sales Paying Operation TaxesBy Retail Electronics Stores
Avoiding Operation Taxes Also by Retail Electronics Stores
© 2011 Taylor and Francis
The Life Cycle of Cell Phone
Brand Name Cell Phone
Fake Cell Phone
Product Planning
3-6 months 0.5 – 1 month
© 2011 Taylor and Francis
The Life Cycle of Cell Phone (cont’d)
Brand Name Cell Phone
Fake Cell Phone
Cell Phone Design
Hardware
3-6 months 0
(Covered by Turn-Key Solutions)
Software
3-6 months
© 2011 Taylor and Francis
The Life Cycle of Cell Phone (cont’d)
Brand Name Cell Phone
Fake Cell Phone
Production
Professional OEM Factory Production: 1-2 monthsQuality Control: 0.5 monthOfficial Examination: 1-2 months
Family Workshop: 1- 1.5 monthsNon-official examination: 0~ 0.5 monthOfficial Examination Not Applicable
© 2011 Taylor and Francis
The Life Cycle of Cell Phone (cont’d)
Brand Name Cell Phone
Fake Cell Phone
Distribution
Middle- or Large- Size Distributors: 1-2months
Region-Based, Small Distributors: 0.5 month
© 2011 Taylor and Francis
The Life Cycle of Cell Phone (cont’d)
Brand Name Cell Phone
Fake Cell Phone
Total Time Spent
6-15 months 2-4 months
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Turn-Key Solutions
One-Stop Shopping which includes all the following:
Platform Drivers Application Software
Components IC design
Testing
© 2011 Taylor and Francis
iPad and Pseudo iPad
Model iPad Pseudo iPad
Release Date April 2010 March 2010
Price $499 In average $293
Screen Size 9.7 inch Varies from 5-10 inch
Features Wireless, handwriting input, eBook reader
Wireless, handwriting input, eBook reader, GPS, micro projector © 2011 Taylor and Francis
The Great Patent Battle
Since 2010 smart phone makers have become more litigious.
“Should any one firm gain an important lead, it might dominate the industry for decades – just as Microsoft has dominated the market for personal computer software. (Economist, October 23rd 2010, pp.67)
A new type of player: firms with open-source platforms, such as HTC (Taiwan) are sued by Apple and battles are estimated to last for years. Or MediaTek (See next page)
MediaTek’s Lawsuit Summary2006
v. Zoran
Infringement of patent for optical storage products
Result: MediaTek paid Zoran $85 million of loyalty fees
2007
v. Sanyo Electric
Patent infringement
The case was dismissed. The two companies licensed patents to each other.
© 2011 Taylor and Francis
MediaTek’s Lawsuit Summary (cont’d)2010
v. QCOM
CDMA and WCDMA Patent Cooperation
Result: The two parties reached a consensus for broader patent cooperation.
2010
v. British Telecom
A subsidiary of MediaTek infringed patent of BT in the United States.
Result: The two parties signed a reconciliation contract.
© 2011 Taylor and Francis