China wants to establish itself as a top player in electronics with brand names like Lenovo, Haier and Huawei, and it's pushing harder toward that goal as the 2008 Summer Olympics approach. At the same time, Chinese companies continue to copy Western products ranging from Callaway golf clubs to Apple's iPhone. Cloning won't advance China's standing in the global technology race; in fact, it's a setback.
China's primary investor, Taiwan, is in the same boat. It wants to emerge from the high-volume, low-margin jungle and move up the electronics food chain. What both powerhouses are learning, or need to learn, is that in the end it's all about innovation.
For now, it appears that Chinese companies will seek to buy market share. Lenovo, which made international headlines with its recent purchase of IBM Corp.'s PC business, had been in discussions to acquire Packard Bell as part of its global expansion plans.
In 2005, Chinese appliance giant Haier made headlines when it attempted to buy U. S. appliance maker Maytag. The bid failed, but it won the once-unknown manufacturer some U.S. mindshare. Cheap Haier air conditioners are even showing up in American grocery stores.
What's clear is that China wants more than to be a high-tech power; it seeks a global brand-name presence. The question is whether it can shed its image as the knockoff capital of the world. A running joke in some high-tech circles is that the Chinese are not interested in R&D, but rather D&D--duplicate and design.
These days, the big OEMs are increasingly crafting unique products by developing good in-house software running on off-the-shelf chips. That was the case with the Apple iPod and iPhone--and there's the rub for the clone industry in Taiwan and China. You can make something that looks like an iPod or an iPhone, but you can't make it run like one. Any 13-year-old user will detect the difference in five minutes. There will always be markets hungry for affordable products that look like a status gadget. But that's a flimsy basis for market domination.
Asian cloners have been stuck in the low-margin business since both of us were junior reporters in Hong Kong and Taiwan nearly two decades ago. People like Stan Shih of Acer have spent their careers trying to build Asian brands with novel designs for sale in developing countries. So far, the strategy hasn't panned out.
But that doesn't mean it's time to quit trying. Taiwan and China are home to plenty of bright, ambitious developers. What they need are equally talented executives who can encourage designers to define real hardware and software innovations around products they dream up themselves.
Memo to Asia Inc.: Let some other chump do the clones. Get yourself a few more Stan Shihs, and regroup for another charge.
LaPedus reported from Taiwan for five years; Merritt was for five years EE Times' bureau chief in Hong Kong.