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THE BUSINESS MODEL OF A SHANZHAI MOBILE PHONE FIRM IN CHINA

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Author(s): Jin-Li Hu | Hsiang-Tzu Wan | Hang Zhu

Journal: Australian Journal of Business and Management Research
ISSN 1839-0846

Volume: 1;
Issue: 3;
Start page: 52;
Date: 2011;
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Keywords: Shanzhai | Business model | Value creation

ABSTRACT
This study defines Shanzhai mobile phone (ShanzhaiGi) as an indigenous innovation product supported by a group of value chain suppliers that provide good-enough products by charging reasonable prices in a rapid time frame to fulfill the needs of target customers. Through examining the business model of Shanzhai mobile phone firms, we find that the value created by them is to provide products that benefit the countryside people so that everyone can get connected. Moreover, ShanzhaiGi offers more features than premium international brands to fulfill the market demand of the masses. Shanzhai mobile phone firms capture values, sales revenues, and market shares through cost control by utilizing Shanzhai’s value chain suppliers and innovative channel management. While contrasting the business model of Tianyu (as the ‘King of Shanzhai’) with other market leaders (Nokia and Samsung), we find that the market leaders have a relatively more developed business model than Tianyu. Therefore, Tianyu should further enhance its segment, value chain relationship, and competitive strategy

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