Innovation At The Speed of China.

Popular Science is out with an article this month chronicling the maturation of China's counterfeiting industry. Years ago, China started out with simple brand counterfeiting in the fashion arena. Now, it manufactures everything from cars to cell phones at significantly lower pricing. Here is what happened to LG's "Chocolate" phone in China in 2005:

LG's phone began to sell out as
soon as it was released, but it took four months for the Korean
electronics giant to release a version for China. By then, it was too
late: A doppelgänger Chocolate had hit the market first, and had become
the preferred choice for Chinese shoppers. Quality wasn't an issue. The
fake phone was "exactly like the real one in design," a company
spokesperson told Chosun Ilbo, Korea's largest daily newspaper. "Chinese people think it's LG electronics that manufactures the fakes."

Today, iPhone clones are showing up on the market with improvements such as removable batteries and access to multiple mobile carriers. The Chinese are certainly benefiting from the R&D efforts of first world nations, but this isn't their end game. They will almost certainly invest in R&D in efforts to build better, originally-designed products.

They also have their problems too - cheap Chinese knock-offs may have a host of problems - from lack of occupancy crash safety in cars to toys containing lead paint. However, even the world's best manufacturers have found that the only effective way to combat knock-offs is to release new products in China with delay.

So, how can companies like Apple combat the clones? Here are a few suggestions:

• Iterate faster. Nobody expects a perfect v1 - but don't make consumers wait long for the next version.



• Build loyalty. Allow customers who stood in line to buy v1 phones an easy upgrade path.



• Learn from the clones. Removable batteries and access to both GSM and CDMA networks are just a few of the features that the clones have built. Apple needs to incorporate these features into their next release, even if it means swallowing some of their pride.



• Innovate faster. There's no time to complain about the competition. Get back in the R&D lab and create more of what made you great in the first place.

Come to think of it - these might be good rules for any company!