“I’ve sold millions of them”

Looks like an iPhone: Nicai's i8

Prior to his death in October last year, Apple’s Steve Jobs accused Google of ripping off the iPhone in the design of its Android mobile operating system. “I’m going to destroy Android, because it’s a stolen product. I’m willing to go to thermonuclear war on this,” Jobs was quoted as saying by his biographer Walter Isaacson.

So it’s probably a good thing that Jobs didn’t get to see the Nicai range, a Chinese phone that makes no attempt to disguise its emulation of the iPhone 4.

Indeed, advertisements are proclaiming that Nicai’s latest model, the i8, is “just like Apple’s iPhone 4 but made by a domestic firm”.

Even in a country well accustomed to shanzhai (the local term for knock-offs, see WiC1), that’s a pretty barefaced claim.

While Nicai is not the first to try to cash in on the popularity of the iPhone, its success is getting attention. In a little less than a year, Nicai claims to have sold “a few million units”. The reason? The most basic Nicai smartphone starts at only Rmb399 ($62.73), which not only beats Apple’s iPhone hands down on price but also undercuts many of the low-end smartphones in the market.

The mastermind behind Nicai is Shanxi coal magnate Lu Hongbo (who still owns several coal mines in the province). Coal mining might seem some distance from handset manufacturing, but Lu says he was attracted to the business because the profit margin for mobile devices seemed high (to him, at least). And while Nicai claims to make no more than Rmb10 in profit on the sale of each phone, the coal baron says he wants to employ a similar strategy to his coal mining experience – that is, to sell in bulk.

“If you think about it, I make about Rmb10 profit for every tonne of coal. But why are coalmine bosses so rich? Because they make it up with volume. Every power generator is going to buy tens of thousands tonnes of coal, and that’s how I make money,” Lu told the Economic Observer.

The i8 is Nicai’s most basic model and comes in three colours: white, black and gold. But even though the device looks a lot like the iPhone, Nicai’s phone is nowhere close when it comes to performance. For a start, it runs on the older, slower 2G cellular network, although the Java-enabled device has just enough functionality to let users surf the web and play games. Small wonder, then, that Nicai’s biggest sales volumes come from less affluent rural areas.

Like Nicai, other low-cost smartphone producers have also been reporting robust growth. Smartphones priced between Rmb700 and Rmb1,500 accounted for about 64% of the Chinese market in the first quarter of this year, compared with 45% less than a year ago, says Analysys International. That explains why internet companies like Alibaba and Baidu are launching inexpensive smartphones themselves (see WiC151).

Early this month, the China Daily reported that Shanda, another internet giant, has also released its own Bamboo smartphone with a starting price of just Rmb1,200.

But is cheaper always better? Well, if Nicai’s case is anything to go by, the answer may well be no. Information Times compiled a long list of complaints from Nicai users, with many saying that the phone is poorly made and tough to use. “The phone is difficult to operate. The touchscreen doesn’t respond most of the time, and clearly isn’t as ‘highly sensitive’ as the ads suggest. The phone doesn’t even connect to WiFi. I don’t know how they can call this a smartphone,” one Nicai customer fumed to Information Times.

The old adage ‘you get what you pay for’, springs to mind.

In fact, an industry expert also pointed out to CBN that – based on its features and design – the Nicai phone shouldn’t cost much more than Rmb250 to make. And if that is correct, wily Lu is probably making a lot more than Rmb10 per sale…

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