According to Wikipedia, Shanzhai is defined as
the counterfeit of consumer goods, including imitation and trademark infringing brands and/or particularly electronics, in China.
Here in southern Africa, we refer to these products rather contemptuously as 'Fong-Kong'. Yet Shanzhai has come to define the rapid draw from poverty for the thousands of factory workers in Shenzhen from where the name is believed to originate. In a single lifetime, many Chinese factory workers have gone from dismantling and reverse engineering patented electronics due for the West to pioneering technologies with so much commercial success enviable to their former contractees. This culture, combined with Confucianism, has had sweeping disruptive effects in the capitalist establishments' concept of intellectual property in many industries ranging from textiles, automotive and construction. The confident leaps in technological features available in Chinese produced gadgets have driven many Western consumers to consider them as a serious player for their daily use.
So, should Silicon Valley give up on China?
The mighty Silicon Valley capitalist establishment has failed in China, in very public and expensive ways over the last few years. Amazon, eBay, Google, Facebook, and Microsoft have all either been frustrated out of China or completely shut out. The latest to join this crew has been Uber which saw tremendous losses recently world-wide. Apple has done well but has struggled there recently.
But, why has it been difficult for United States based tech companies to dominate the ever so enticing market that is the People's Republic of China in a retaliatory effort?
The internet companies in China are wide reaching and powerful in ways that are unimaginable to us. It is already difficult enough to enter a new, growing market in a foreign country without the added hostility assciciated with competing with an already established titan of the industry. Baidu, has a bigger share of the web searches in China than Google does in the United States for example. All of Alibaba's e-commerce websites handle more online sales than Amazon and eBay, combined.
Facebook and Twitter are banned in China, allowing Chinese 'versions' of the social media platforms free reign. The absence of competition in the market and a government whos's laws and interventions directly favour local companies has allowed the likes of Sina Weibo to grow at staggering rates. Google pulled out a few years ago because it was the target of regular massive cyber attacks and it didn't want to comply with the country's censorship rules.
Over the last decade where Western consumerism has reached unprecedented levels, China's technology has in turn become very, very good. Chinese tech companies make smart phones as good as iPhones, but with features tailored to Chinese tastes. like, guessing your age from selfies and Chinese tech ideas are being copied elsewehere. Facebook turned Messenger into a version of WeChat.
These three factors have contributed into hardening China into an online economy where locals rule. While it seems to big to ignore to the capitalist establishment, it's just too difficult to enter for American web powers.