Bunnie Huang’s Rules of Shanzhai
Fascinating read from my co-blogger Lyn’s research on shanzhai as an innovation space in the future.
My favorite excerpt comes from Bunnie Huang (the Chumby guy):
1) Buy low, sell high — and time counts as money. No holds barred.
2) Confucius’ silver rule, do not do unto others what you would not have them do onto you; or, “what goes around comes around”. (this is the equivalent of #5 and the loose moral thread that binds the ethic of the community).
3) Don’t make what you can buy for less. (your #1)
4) “A bird in hand is worth two in the bush”; or perhaps “cash flow is king”. There is little faith in the future value of IP or inventory. If sharing my specs with you means I close a deal faster, I will share it with you. Waiting a day to sign an NDA means a day longer I sit on my inventory (see my rule #1). This covers your rules #4 and #3.
5) “there is no propriety, only results”, or, perhaps “If it fits your foot, it’s a shoe.” (aka the thereifixedit.failblog.org mentality) An equivalent of #2 down below, except phrased in their mindset. They aren’t in the innovation business for innovation’s sake — they are in it to drive costs down (my rules #1 and #3). It also explains why there is a no-holds barred culture around reverse engineering.
6) The only intangible property worth anything are personal relationships (“guanxi”) (corollary of my #2 and reinforces your #5); also, the most valuable thing one may have is good guanxi. See http://en.wikipedia.org/wiki/Guanxi
A corollary of #6 is that “If I can’t embody it in a physical vessel, it has no value”. This explains why IP licensing in China is so awkward because they think of everything in terms of a bill of materials; every item must be inventoried and counted. Yet strangely, IP takes up a line item but has no space on the shelf in the factory, which seems like you’re just paying someone for nothing. So why pay it?