The Emergence and Growth Path of Shanzhai Firms
Shanzhai refers to a set of dynamic strategies for firms to grow out of counterfeiting. Shanzhai firms have traditionally been perceived as counterfeiters from the emerging economies producing cheap and low-quality products. This trend has changed in recent years when Shanzhai firms have grown into market leaders and have introduced leading technologies and applications. This paper focuses on the growth of Shanzhai firms by exploring how Shanzhai firms and Shanzhai industries emerged. We further investigate the context that supports the emergence of Shanzhai firms into market leaders. We leverage two case studies using the growth path of two market leaders in their respective industries to illustrate the two paths leading to the emergence of Shanzhai firms. We attempt to show that although Shanzhai firms start out with low legitimacy, these firms grow their legitimacy over time by building their core competitiveness in their respective industries.
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