Knock-off Mini-notes Taking Off in China?

Brian Chen, Research Director, TFT LCD & Materials, DisplaySearch

With low prices and numerous fancy functions, knock-off, or copy-cat, cell phones, satisfy the needs of a large number of laborers and farmers in China, and have become a toy to many. By taking market share, they are threatening major global cell phone makers. Since knock-off cell phones can take less than one month from the initial design stage to final production, the supply chain allows for fast response to ever-changing consumer needs, and has challenged the time-consuming and complex processes of the legitimate cell phone industry. Extensive sales of knockoff cell phones reflect the fact that low-priced products with basic functions have a certain demand, even without reliable warranties or safety guarantees.

This phenomenon, called ShanZhaiJi, has led to the development of knock-off mini-notes (netbooks) in China recently. Eyeing the big potential of this market, increasing numbers of manufacturers are getting involved in the low-price mini-note market. Shipments of mini-note panels for the China market increased significantly since March, especially 10.x” sizes, which passed 300K per month in April. Therefore, Intel has softened its stance and begun supporting knock-off mini-notes to take advantage of the trend. In the meantime, VIA- and ARM-based CPUs are providing customizable functions at competitive prices to try to penetrate this market.

The main problems of knock-off mini-notes are irregular quality and poor after-sales service. Unlike knock-off cell phones, which are under $50, knock-off mini-note prices are currently between $150 and $350 (without subsidy). In addition, domestic Chinese notebook brands and leading global brands are also moving to avoid losing share in China to knock-off mini-notes. However, Chinese consumers are used to buying multifunctional products at low prices; will they accept legitimate products with similar functions at higher cost? It is worthwhile to watch the competition between established notebook brands and knock-off mini-notes in the coming months.

Figure 1: Knock-off “Axus” Mini-Note from www.shanzhaiji.com