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The Development and Evolution of China's Mobile Phone Industry 

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No.: WPE2013-1

Author: Chen, Shin-Horng; Wen, Pei-Chang

Price: Free

Publication: 2013.04


Abstract:

This paper examines the development and evolution of China’s mobile phone industry, with a special focus on the effect of migration to smartphones on the industrial ecosystem and industrial transformation. The Chinese market was dominated not long ago by Shanzhai handset makers, which were often associated with notorious elements of bandit, copy cats, piracy, and illegal network access. However, in the migration from 2G to 3G and smartphones in China, a few home‐grown brands have become the leading suppliers of smartphones, outperforming international premium brands, such as Nokia, Motorola and even Apple. With an intensive case study, the paper takes into account the significance of layered platform‐based development in the migration towards smartphones and mobile digital services to examine the rise of the Chinese brands for smartphones. In addition, the paper discusses a co‐evolution process of social and market factors in shaping Chinese “good‐enough innovations”, highlighting the role of distinct demands in the Chinese market and the growing popularity of mobile internet services within Chinese walled garden with heavy regulations and censorship. Moreover, the paper discusses the role of industrial standards in the Chinese migration of smartphones, by referring to a “three‐level model for standards and innovation in ICT”, including the infrastructure, middleware (service platform) and application levels. In short, TD‐SCDMA can only be part of Chinese indigenous innovations and solutions for migration towards 3G broadband mobile internet services and smartphones; those at the middleware and application levels are indispensable and become more important as the mobile communications sector, in terms of both service and device, has become more application driven than ever. Therefore, China’s quest for indigenous innovations and industrial standards has to be viewed in a broader context than just the infrastructure level (3G standards per se), when it comes to migration towards smartphones and broadband mobile communications services. Keywords: Smartphone, co‐evolution of market and technology, mobile phone industry, platform, good‐enough innovation, TD‐SCDMA, Shanzhai handset