Yes, certainly the 80-3-2 rule makes sense, although those exact numbers might not, in every instance. I don't think we need to limit this "rule" just between Eastern and Western products, though.
Most companies offer multiple similar products at different price points. True for cars, true for clock radios, true for TV sets, refrigerators, and anything else you can name. GM USA can sell a whole lot more volume if they offer Chevy Cruzes AND Cadillac XTSs.
The problem I see is mostly that the trade media has come to assume that the way Apple operates is the way Western industry operates, and all the rest happens in the East. This is all part of the media hype surrounding Apple products.
Understanding China's approach to innovation is fundamental to figuring out the future direction of technology markets. There is another name for what Junko Yoshida describes above, a notion called "second-generation innovation," an approach that has worked very well for China. It allows Chinese companies to limit risk while serving domestic markets and generating more than enough profit to keep pressing ahead.
Replay available now: A handful of emerging network technologies are competing to be the preferred wide-area connection for the Internet of Things. All claim lower costs and power use than cellular but none have wide deployment yet. Listen in as proponents of leading contenders make their case to be the metro or national IoT network of the future. Rick Merritt, EE Times Silicon Valley Bureau Chief, moderators this discussion. Join in and ask his guests questions.