Creative plans to clone its own products
John Lui
CNETAsia
November 21, 2003, 10:05 GMT
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Faced with the seemingly impossible task of beating China's illegal clone workshops, Creative Technologies is planning to join them
Singapore-based electronics firm Creative Technologies will look into making cheaper copies of its own products to fight the flood of clones coming out of workshops in China, said Sim Wong Hoo, the firm's chairman and chief executive.
Speaking at a forum during the recent Global Entrepolis@Singapore conference, Sim said that it was difficult to enforce design copyright in China, given the speed at which clone workshops appear.
The small factories are producing devices similar to Creative's Nomad Muvo USB-keychain MP3 player, he said. One workshop may shut down when enforcement action is taken, but others spring up to take its place, he said.
"We just came back from Shanghai, and there are 40 companies selling these," he said, holding up a Muvo. "You can't sue all of them. How can we fight them?" he asked.
One company will generate the molds for making the devices, then sell the resulting molded components to numerous smaller workshops, which in turn employ manual labor to assemble the final products, he said.
"So what we intend to do going forward is to actually clone ourselves. We can't beat them, so we'll join them. We will build this device in China and use the same manufacturing skills and do it in a big way," he said.
"Buyers may not get the glossy finish. We'll take away some features and fight them in the market at their prices," he said.
The cheaper versions may be sold under Creative's own brand name or under another name, he said.
Creative launched the Nomad Muvo in July last year and the firm's US patent for a "memory module with audio playback mode" was published in September 2003 by the US Patent & Trademark Office.
Creative makes a host of PC-based multimedia products and home entertainment electronics. Its products are aimed at the middle and higher end of the market. For the quarter ending 31 December 2002, Creative reported a net income of $18.9m (£12m), down from US$26.3m in 2001. Sales for the quarter also fell to US$230.9m from US$249.5m the year before.
In January, increasing costs and dwindling trading volumes prompted Creative Technology to quit the Nasdaq stock exchange.
While software piracy is known to be rife in China, hardware counterfeiting is also common. Firms such as Hewlett-Packard have worked with authorities to crack rings making fake copies of its products. Last year, the US-based IT giant came down on a factory making counterfeit Compaq servers.
To avoid running afoul of international agreements, China authorities are keen to develop an electronics industry that does not rely on foreign patents. To this end, they are supporting efforts to create China's own third-generation (3G) cellular data standard as well as its own movie optical disc format, the enhanced video disc (EVD).
