Chinese Journal of Sociology ›› 2011, Vol. 31 ›› Issue (2): 1-41.

• Articles •     Next Articles

The Informal Economy in the Era of Information Revolution and Globalization: The Shanzhai 〖CellPhone Industry in China

Bai Gao, Department of Sociology, Duke University   

  1. Bai Gao, Department of Sociology, Duke University
  • Online:2011-03-21 Published:2011-03-21
  • Contact: Bai Gao, Department of Sociology, Duke University E-mail:bai.gao@duke.edu
  • About author:Bai Gao, Department of Sociology, Duke University
  • Supported by:

    This research was funded by the Dean’s Office at Duke University.

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Abstract:

The shanzhai (山寨) cellphone phenomenon reveals the profound economic transformations of our time. First, information revolution has made production tools more accessible and has resulted in much wider participation in production. Supported by the deepened division of labor through the servicization of production, shanzhai cellphone companies are able to expand the Wintel production regime sustained by value chain into a hypothetical enterprise with a multidivisional structure. Second, globalization has linked many scattered longtail markets together. This has enabled the longtail products, which were hardly profitable in the era of mass production, to accomplish the economy of scale. Third, the Chinese innovation of the spatial overlap between an industrial cluster and specialized markets has provided an intrinsic mechanism of industrial expansion: the competition pressures resulted from the spatial concentration of small producers in the industrial cluster force them to differentiate their products which in turn promotes the economy of scope, while the big flows of merchants coming to the specialized markets sustained by the economy of scope help create the economy of scale for the highly individualized longtail products.