China's iClone

Cellphones, microchips, cars, even iPhones—there's virtually no high-tech Western product that China's cloners can't copy. Pretty soon, you might even prefer their work

By Dan Koeppel Posted 08.07.2007 at 1:00 am 16 Comments

Growing Beyond Fakes

The end of Chinese cloning will come when Chinese products become good enough to stand on their own, just as Japan's did in the 1970s and Korea's did in the 1980s. The difference is that China is moving much faster toward this goal than Korea or Japan ever did. Less than a year ago, the Chery QQ was junk. On July 3, Chery and Chrysler announced an agreement to build Chery vehicles that will wear the Dodge badge. Chrysler will sell the cars in Eastern Europe and Latin America beginning next year, and in 2009 will bring them to Western Europe and North America. The deal grew from Chery's plan to improve quality by outsourcing engineering and design to Western companies. There's little doubt that Chery will learn from its new partners.

An important factor in this transformation is China's improving consumer economy. Just as the Chery deal made the news, the Beijing government instituted a nationwide minimum wage. Although the move was made as a response to rising food prices, it increases production costs for Chinese manufacturers, forcing them to move away from rock-bottom products. In cities, Chinese paychecks have already risen fast enough to create a thriving consumer class. As those consumers demand better products, China's manufacturers will begin to develop items that meet export standards.

Take, for example, the iPhone. The key to its simple interface is a screen that responds to several touches at once. It makes rapid text entry possible and allows keyboard-and-mouse-type navigation through Web pages and the phone's built-in applications. The screen is built by a German company called Balda, but the technology itself, licensed to Apple's supplier, is neither American nor European. It was originally developed to aid in the rapid input of Asia's huge, character-based alphabets. It comes from China.

The Next iClones

Copies of the iPhone are now dividing into two categories: the inspired-bys and the wholesale duplicates. The first category includes work-alikes manufactured by well-known cellphone makers, like HTC-one of the largest manufacturers of smartphones-and Sun Microsystems. HTC announced that it will be bringing its "Touch" model to the U.S. this fall. In May, Sun CEO Jonathan Schwartz followed in the footsteps of Steve Jobs (and Meizu's Jack Wong) by displaying his own one-off version of a touchscreen prototype at a software-developers convention. Sun's chairman, Scott McNealy, had no qualms about making the iPhone comparison: "We have our own shirtsleeve version of Steve Jobs announcing a phone," he told the audience.

The number of duplicates is also growing. Although Meizu may have gone silent because of fears of an Apple lawsuit-after my visit in Hong Kong, they stopped responding to my e-mails and phone calls-other companies are moving ahead. A few days before Apple's launch, an online video surfaced depicting a sleek new product called the P168 [watch the video below]. The phone came in a black box, marked with both the iPhone and the Apple logos. The video showed the phone being unpacked and operated (the start-up screen also featured the Apple branding). There were features that the iPhone didn't have, such as the ability to operate on two different networks at once; six speakers; and, addressing a major prerelease complaint about the iPhone, a removable battery. I asked my translator if she could find one on the street. They weren't available in Beijing-yet-but a few weeks later, a friend discovered one in Guangzhou. The manufacturer of the P168 wouldn't comment for this story, but the hardware was real, and it worked.

Neither the miniOne, the P168 nor even HTC's model are likely to carry the mystique or quality of the iPhone. But that's not really the point. Those phones will be available to millions more consumers than Apple's product, at a lower price. The rest of the world will accept the clones as if they were the original. That will make them no different than a flood of Chinese products-cars, pharmaceuticals, food, appliances-that are emerging from the shadows and climbing the learning curve to the point that they will no longer be clones at all. They'll be the real thing.

For a further look at China's cloning industry, launch the gallery here.

A closer look at the P168:

Dan Koeppel's book Banana, based on his June 2005 PopSci story about saving the Cavendish, will be published next year.

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