Warsame Alinoor
Shanzhai (Bandit) Case
Syllabus Questions

Question 4

Short terms:
Some of short term decision that shanzhai (Bandit) should made is to improve their credibility and certifications by outstanding licensing deals with major owners. Chinese government required that all handset manufacturers be licensed, so that they can support the domestic handset industry. Also this was a great demand by manufacturers.
Some of the limited licensed manufacturers led a booming business in sublicensing, because many of the qualified companies were not able to obtain license and many small manufacturers lacked the needed qualifications. Previous companies were illegal to make handsets because they lacked production license, so this would help shanzhai handset makers and will able to expand their business also some of them will become mainstream suppliers.
Another short term decision that shanzhai should made is by acquiring IMEI numbers. This number prevents stolen phones from accessing the network and also allows security services to track mobile phones. Due to the high cost of around $20,000 - $50,000, Shanzhai firms tend to avoid IMEI numbers; which also takes about six months to get approved.
Long term:
Some of the long term decisions that shanzhai firms should make is to become a mainstream. Shanzhai firm should begin developing phones through legitimate which means they will obtain a proper licensing, following laws, and paying taxes. They also have to outsource and to the end-users countries since mainstream companies use the same strategy of outsourcing and mass production to lower the cost. They also have to become an international, since shanzhai mobile phones were popular in developing countries such as Russia, India, Bangladesh, Pakistan, and in the middle eat.
Questions 5:
These decisions are aligned with customers and profit goals. Some of the customer goals that shanzhai company should do is to become a mainstream, international, licensing & certifications and acquire IMEI numbers. By doing these they will gain more customers.
Some of the profit goals that Shanzhai Company should do is to make all the short term and long term decisions and lead time.
Case Question 3
One of the biggest challenges that Shanzhai Company face if they want to become mainstream is the government policy. In June 2009, India banned the import of Shanzhai mobile phones and in December they banned the use of phones without IMEI numbers. Also in Taiwan, India banned the purchasing and selling of Shanzhai phones on the Internet or retail stores. According to the case it shows that when the IMEI registration fee imposed in October 2009, Shanzhai’s exports decreased by 50%.
Shanzhai companies need to start worrying about how they can innovate and improve their product quality and reliability such as hazards due to the high levels of radiation, exploding batteries, and lack of after sale support.They also has to increase R&D by offering new products.
Shanzhai firms need to begin developing phones through legitimate such as obtaining proper licensing, following laws, and paying taxes. These companies are kings at manufacturing low-cost products quickly and efficiently, but they can also be extremely dangerous since there is little to no quality control in the market. In order to improve upon this, China’s domestic technology manufacturers must start to obtain Network Access Licenses (NAL’s) licenses from the Chinese government so that their phones to be legally produced and sold.
Shanzhai companies can also become mainstream by learning from the example of Tianyu, a company that has emerged as a legitimate Chinese company which seized a large market share in the country.