Innovation in the free market

Walking down the alleyways of China there seem to always be advertisements with cell phone numbers pasted on telephone booths, pedestrian overpasses and utility poles. First they showed pictures of scantily clad females over the cell phone numbers, then promotions for stamp-making prowess (刻萝卜章服务).

Now they all seem to be for electronic equipment recycling. High prices paid for used ICs and circuit boards! That’s China for you – never let a potential market go to waste.

Judging from all the advertising, something must be going right in this industry.

And in fact, it is without a question a vibrant industry which merits more than one case study. Here I’d like to mention just one small part of it: the circuit board copying industry (抄板行业). Basically the way it works is this: Let’s assume there is a new innovative device out on the market – one which you feel has great market potential. You want a piece of that market. So what do you do? You take it to a 抄板公司 (PCB copying company) to reverse-engineer it. Process all in all takes around 4 months start to finish.

Does this discourage innovation or hamper progress? Far from it. The original manufacturer has a full 4 months to stay ahead of the game and get the next generation ready. No one seems to feel slighted when they are targetted for copying. On the contrary, you know you have arrived when your product starts to prompt copycats.

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One Response to Innovation in the free market

  1. two_worlder says:

    this post opens up another question – is there benefit in creating “industry standards”. i used to believe it was “easier” if everyone were running MS Windows for example.

    Now i no longer believe that, it seems in reality it simply makes it simpler for large companies to train batches of non-unique workers and pay Microsoft for the help homogenizing their business, regardless of the normal crashes and daily problems and hourly bug fixes and minute by minute virus attacks.

    The corporations took the simple idea of “interoperability”, which simply means sharing documents and databases of the same format (we did that long ago) and expanded it to include identical systems running at every company, removing all innovation in the process.

    Lets hope the writer of this blog can start the ball rolling by convincing his employer that he should “think different” and dump Microsoft products (all copyrighted) which block innovation and keep us in the computing dark ages.

    Remember – every excuse not to change (compatibility) is one more reason to dump them because of their predatory nature. They put those problems in precisely so you could not change easily, which is why we must.

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