Shanzhai

Based on Wikipedia: Shanzhai

In 2012, a small Chinese company called Goophone did something audacious. They filed a patent for a smartphone called the "Goophone i5" and started selling it—before Apple had even released the iPhone 5. The clone hit the market ahead of the original. This wasn't a bug in China's innovation ecosystem. It was a feature.

Welcome to the world of shanzhai.

From Mountain Bandits to Mobile Phones

The word shanzhai literally means "mountain fortress" or "mountain camp" in Chinese. To understand what it means today, you need to travel back a thousand years to the Song dynasty, which ruled China from 960 to 1279.

In those days, shanzhai referred to remote strongholds in the mountains, places beyond the easy reach of imperial authorities. These weren't just geographic features. They became home to bandits and rebels who saw themselves as righteous outlaws, fighting against corrupt officials and an unjust system. The most famous celebration of this spirit appears in "Water Margin," one of the four great classical novels of Chinese literature, which romanticizes a band of 108 outlaws who gather at their mountain fortress to resist tyranny.

That rebellious spirit never quite died. It just found new mountains to occupy.

Fast forward to the early 2000s, to cities in the Pearl River Delta—places like Shenzhen, Dongguan, and Guangzhou. Here, in sprawling electronics markets and cramped factory floors, a new kind of shanzhai emerged. Small workshops began producing knockoff DVD players and MP3 devices, reverse-engineering popular products and selling them at a fraction of the price.

Then came smartphones, and everything changed.

The Phone Revolution No One Planned

By the mid-2000s, shanzhai manufacturers weren't just copying phones. They were innovating on them, in ways that established companies couldn't or wouldn't.

The secret weapon was a Taiwanese company called MediaTek. They produced cheap, widely available chipsets that dramatically lowered the barrier to entry for phone manufacturing. Suddenly, you didn't need to be Nokia or Motorola to build a mobile phone. A small team with modest capital could do it.

And they did. By the end of 2006, shanzhai manufacturers controlled roughly thirty percent of China's domestic phone market. By 2010, the Financial Times estimated they had captured about twenty percent of the entire global market for 2G mobile phones.

The economics were brutal—brutal for competitors, that is. A shanzhai phone could be produced for around twenty dollars and sold for one hundred to one hundred fifty dollars. The profit margins were excellent, and the prices were impossible for established brands to match.

But price wasn't the only advantage.

Innovation from the Margins

Here's what's counterintuitive about shanzhai products: they weren't always inferior copies. Sometimes they were better than the originals.

Large corporations like Apple and Samsung design products for global markets. They move slowly, with long development cycles and standardized features. Shanzhai manufacturers operated differently. They watched local markets obsessively. They iterated quickly. They added features that big companies would never consider.

Want a phone with two SIM card slots so you can have separate numbers for work and personal use? Shanzhai had that years before major brands. Need a phone with an extra-loud speaker for construction workers in noisy environments? Shanzhai made it. Looking for a phone with a built-in cigarette lighter? Yes, that existed too.

Philosopher Byung-Chul Han, writing about shanzhai culture, observed that these products were "anything but crude forgeries." In terms of design and function, he argued, they were "hardly inferior to the original." Their technological and aesthetic modifications gave them their own identity. Most importantly, they could "adapt very quickly to particular needs and situations, which is not possible for products made by large companies because of their long production cycles."

This flexibility extended to marketing as well. During Barack Obama's 2008 presidential campaign, shanzhai phone makers quickly rolled out Obama-themed devices and advertisements, capitalizing on global excitement in a way that no corporate marketing department could have approved in time. That same year, when Beijing hosted the Olympics, shanzhai products appeared featuring the Bird's Nest stadium and the Fuwa mascots.

The market demanded, and shanzhai delivered.

The Copycat Explosion

Once the shanzhai model proved successful with phones, it metastasized across the entire consumer economy. The Chinese author Yu Hua described the phenomenon vividly:

Once copycat cell phones had taken China by storm, copycat digital cameras, copycat MP3 players, copycat game consoles and other pirated and knockoff products came pouring forth. Copycat brands have rapidly expanded to include instant noodles, sodas, milk, medications, laundry detergent and sports shoes, and so the word "copycat" has penetrated deep into every aspect of Chinese people's lives.

But Yu Hua's observation went further. The copying extended beyond physical products into culture itself:

Copycat stars, TV programs, advertisements, pop songs, Spring Festival galas, Shenzhou 7 space capsules and Bird's Nest national stadiums have all made a splash on the Internet, each revealing their own special flavor and gaining instant popularity.

This cultural dimension of shanzhai became a phenomenon in its own right. The CCSTV New Year's Gala parodied the official CCTV broadcast. The Shanzhai Lecture Room mimicked prestigious academic programming. There was even a Shanzhai Nobel Prize.

What united these cultural productions was their target: elite, authoritative institutions that ordinary people could never participate in. Shanzhai offered a kind of democratic access, even if that access was satirical.

Imitation, Innovation, or Something Else?

To Western observers, shanzhai products often seem simply funny. The misspelled brand names—"Nokla" instead of Nokia, "Samsong" instead of Samsung—invite mockery. The perception is of cheap, low-quality fakes.

But this misses something important about shanzhai culture.

Unlike traditional counterfeiting, shanzhai producers typically don't hide what they're doing. Buyers know they're getting an imitation. The transaction is transparent. You're not being deceived into paying premium prices for fake goods. You're knowingly buying something inspired by a premium product at a fraction of the cost.

This transparency connects back to that original spirit of the mountain bandits. Shanzhai goods are often understood as rebelling against established commercial markets, challenging the notion that only official brands deserve consumer loyalty. There's an element of class consciousness here: why should only wealthy people have access to smartphone technology or fashionable design?

Some shanzhai products are created purely for parody and jest. Others are created with features deliberately excluded from authentic products. And yes, some are created to deceive. The category is broad, and intentions vary.

The Legal Gray Zone

The legality of shanzhai products exists in a fascinating gray area, particularly within China's intellectual property system.

China operates on a first-to-file trademark registration system. This means you don't need to demonstrate prior use of a trademark to register it. If you register the name first, you have legal claim to it—even if another company has been using that name for years in other countries.

This has led to remarkable outcomes. Major foreign brands including New Balance, Air Jordan, Brooks, and the Japanese retailer Muji have all lost trademark disputes in Chinese courts to shanzhai manufacturers who registered similar marks first. The imitators became, legally speaking, the legitimate owners.

Consider one illustrative case from 2019. A company called Jinhongye produces high-quality paper marketed under the brand Qingfeng, which means "fresh breeze" and is written with the characters 清风. A competitor began selling paper under an almost identical name: Qingfeng, written as 清凤, meaning "fresh phoenix." The characters look nearly identical. The pronunciation is almost the same, differing only slightly in tone. But the Hangzhou Internet Court ruled this was trademark infringement and ordered the imitator to pay one million yuan in damages.

This case was celebrated as progress in commercial protections. But it also illustrates how thin the line can be between legitimate branding and shanzhai imitation.

The Crackdown

By the 2010s, the golden age of shanzhai electronics was ending.

Several factors converged. Chinese domestic companies like Huawei, Xiaomi, and Oppo grew into legitimate global competitors, producing low-cost and high-quality electronics through official channels. Why buy a shanzhai knockoff when you could buy an affordable genuine product from an established Chinese brand?

MediaTek, the Taiwanese chipmaker whose components had enabled the shanzhai smartphone boom, shifted its business model. Rather than selling chips to anyone who wanted them, the company increasingly focused on established manufacturers. This raised barriers to entry for small-scale producers.

And the government began taking action. In January 2011, the Ministry of Industry and Information Technology announced a crackdown on shanzhai phone sellers and manufacturers, citing "money-stealing" services that used cheap phones to defraud customers. Industry commentators suspected the real motivation was China's broader intellectual property protection campaigns, part of the country's effort to be taken seriously as an innovator rather than merely an imitator.

The rise of e-commerce created new battlegrounds. When Pinduoduo, a popular Chinese shopping platform, listed on the Nasdaq stock exchange in 2018, it immediately faced criticism for selling shanzhai products. China's State Administration for Market Regulation launched probes into the company based on reports of counterfeit goods available through its platform.

New regulations tightened the screws further. China's 2018 E-Commerce Law made platform companies jointly liable for counterfeit goods sold through their services if they had prior knowledge of such sales. Suddenly, turning a blind eye to shanzhai became legally risky.

Even shanzhai websites—fake government portals using terms like "Central" or "National" in their names to appear official—faced crackdowns. Since 2016, the Ministry of Public Security reported shutting down more than five thousand such sites, along with sixteen thousand online groups and twenty thousand accounts.

The Philosophical Question

What, ultimately, should we make of shanzhai?

Business analyst Michael Zakkour argues that shanzhai culture reduces foreign investment in China, discourages foreign companies from marketing products there, and deters them from using Chinese services and technologies that might result in intellectual property theft. From this perspective, shanzhai is a drag on China's economic integration with the world.

But there's another way to see it.

Shanzhai represented a kind of technological democratization. For millions of people in China, Africa, Latin America, and Southeast Asia who could never afford an iPhone, shanzhai phones provided access to mobile technology. They could make calls, send texts, and eventually access the internet. The features might have been borrowed, but the utility was real.

Moreover, the skills developed in shanzhai manufacturing didn't disappear when the crackdowns came. They migrated into legitimate industry. The engineers who learned to rapidly iterate products, the designers who studied what local markets wanted, the supply chain managers who could coordinate complex manufacturing at low cost—these capabilities became the foundation of China's legitimate electronics industry.

Shenzhen, once the capital of shanzhai phones, is now a global center of legitimate hardware innovation. The transformation wasn't despite shanzhai culture. It was, in part, because of it.

The Mountain Fortress Today

The original shanzhai—those mountain fortresses beyond imperial control—eventually fell under government authority or faded into history. The outlaws of Water Margin were either killed, co-opted, or scattered.

Modern shanzhai may be following a similar trajectory. The wild west of Chinese manufacturing is being tamed. Intellectual property protections are strengthening. Legitimate brands, both foreign and domestic, are winning more battles in court.

But the spirit that animated shanzhai—the impulse to democratize access, to challenge established hierarchies, to adapt quickly to what people actually need—that spirit doesn't disappear so easily.

It just finds new mountains to occupy.

Somewhere, right now, someone is probably working on the next innovation that established companies haven't thought of yet, solving problems that premium brands don't even know exist, serving markets that global corporations have overlooked. Whether we call it shanzhai or grassroots innovation or something else entirely, that restless energy of the margins continues to push against the center.

The mountain fortress was never really about the mountain. It was about finding space to do things differently. And there will always be people looking for that space.