Sure, but after running all that RnD just about anything they make is reverse engineered immediately and perfect clones start being sold at rock bottom prices everywhere else. Whoever invests into extensive development with the intent to recoup costs via sales is the real sucker in this industry. Even official institutions like schools and universities rather order from aliexpress instead.
Even if that's true, if it sees any success it will both normalize that type of device in public, and very shortly see aliexpress flooded with a bunch of cheap clones from companies with no such beliefs.
Ironically, there's also a reverse phenomenon happening on Kickstarter. Between start and end of a crowdfunding campaign you may discover the crowdfunded product has already been cloned by the Chinese and is sold cheaper on Aliexpress.
That's what happens, when you start ordering from AliExpress chips for 1/10th of their price in regular stores like DigiKey. Wait until they figure out that what works are actually clones with ridiculous quirks.
There’s a difference between original designers and “cloners” in quality and attention to detail.
The Toyota clone wouldn’t be as good as the real thing and so there would still be a market for first party goods. But that market would be smaller as many people would be satisfied with a clone. And isn’t that more “efficient”? People satisfied with the cheaper good get the cheaper good and people who want the quality go for the original.
In today’s market, when someone who would be satisfied with a clone ends up buying an original, we see that extra money is spent only because Toyota is holding a monopoly on the design information. Except only creating the value should be rewarded, not monopolizing it.
We can see today how Joseph Prusa with Prusa research designed the worlds most popular 3D printer, yet many of the users are using clones. There is a market sufficiently interested in quality to support his 30 person (I believe) business despite his product being totally open source and actively cloned by huge companies.
It is possible to deliver value as an innovator and creator by selling the best stuff. Even at 3x the price of clones Prusa continues to grow.
So I don’t believe that there wouldn’t be car makers - though perhaps there’d be no “Toyota”.
Hah, first company I worked for involved the development of embedded systems and the boss wasn't shy about buying parts from AliExpress (thankfully most of it was still DigiKey). Some stuff had a significant cost difference: Official Omron rotary encoders vs copies, for example.
Of course they usually worked about 70% as well as the real thing.
I know someone who was selling an electronic module on Tindie. One day sales went through the floor. Turned out someone had cloned his entire product and was shipping volume on aliexpress. He just closed up shop.
I myself have spent weeks navigating the maze of dodgy NanoVNAs out there. Even one of the official resellers decided to cut costs and ship out poorly functioning clones and try and deny it.
Can’t win so don’t play. Eventually the markets will fall due to crap saturation.
Surely it takes away any incentive of the original producers to innovate if the product is quickly cloned (even under a different name) and sold at close to break even point, leading consumers to buy the cheaper one (and perhaps even wait for it to arrive), preventing the producer from even recouping their R&D costs?
If I may, what was the product and what is within the proprietary software which differs it from the clones? Because given China manufacturing scale it is given that every other thing will have a clone on aliexpress or taobao.
I find that in AliExpress land, the long tail of stuff being sold (i.e. the stuff outside of the brand-names) was almost always created as a single batch by a process that can’t be replicated (e.g. because the people who made it only came together at that place and time to make that thing), and when that stock is depleted, the individual item is never sold again. If there turns out to be high demand, then another product will be produced that will be similar (sort of a knock-off, but sometimes it’s better rather than worse) but not identical.
One place you’ll run into this approach with higher-ticket items (i.e. not a $0.03 comb) is in the handheld emulation-console market. Some cool little device was created that everyone wants (e.g. the aluminum-alloy RetroGame 350)? Too bad, they can’t make more even if they wanted to.
If everyone goes with the cheap Chinese clone, you can't have either. Because those cheap clones are so cheap because there is little to no R&D required. No software stack to create, etc. Because all of that work is being done by the more expensive, original brands. Support is likely only a small part of the cost.
No. Copying the designs and hiring out a production run is orders of magnitude more capital-intensive than "simply purchasing one" of the units already in production.
For the reverse-engineering, you must first purchase some units, then produce your own accurate measurements & drawings, then find a manufacturer or setup your own factory, and then pay for tooling, all BEFORE you make unit #1. This is far more complex & costly than "simply purchasing one".
For the thieves, all of those expenses had already been paid by the original designer. They merely bought their units at the marginal cost of production.
This eliminated the startup cost for the competitor's business. The seed capital and IP investment they would have needed was replaced by the theft. They then bootstrapped the stolen knowledge and new profits into their own production.
And the oritinal company is surviving and outpacing the theiving Chinese competitor, disproving your contention that 'they have no business'.
More generally, there isn't any business where you wouldn't be able to compete if you could buy the finished product out the back door of the factory at the marginal cost of production. If we could buy Apple or Samsung products out the back door of their factory at the marginal cost of production, we could certainly make a lot of profit very fast. Yet I see no viable argument they have no business model.
Yet Sherman estimates that he has lost “hundreds of thousands” of dollars in potential revenue due to copycats.
Just like piracy, it doesn't work that way. Far more people are willing to pay $10 for a selfie-stick phone case than $50.
Alternatively, I've also seen a lot of Kickstarters which were simply "marketing" for an existing yet not-so-well-known product available from Alibaba, with a substantial markup added. This means there is already significant "innovation" happening in China, contrary to what a lot of people think --- they just haven't seen the true scale of what manufacturing in China looks like.
The problem is design and tech companies and cloning resellers sling stuff direct to consumers via ungodly amounts of facebook ads. Because they’re direct shipments so many of those products are not safe or certified and many clones are labeled as certified but aren’t because they’re cheap knock offs made to look like the originals.
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