By GE Zhenwei
“ZDW Technology, beware! Muzen Radio will not be so easy to kill off.”
Such was the bizarre message posted on Weibo on November 7 by Shenzhen radio maker Muzen Radio. Muzen, it is safe to say, has some grievances with ZDW Technology, another Shenzhen maker of electronic bits and bobs.
Muzen was founded in 2014 by designer ZENG Dejun and has since acquired an excellent reputation. Zeng has been making high-quality audio equipment for over 40 years and has a pretty intimidating standing in his field, perhaps the highest. He came up with China’s first hi-fi amplifier and CD player and is a five-time winner of the CES Innovation Award. From a very small niche six years ago, Muzen now sells millions of devices every year.
And so does ZDW. Indeed, ZDW sells a lot more. And quite a few of ZDW’s products look suspiciously like their Muzen equivalents, but the ZDW version is much cheaper. And the sound quality is probably “sub-optimum.”
As ZDW sales increased, Muzen sales fell. The time soon came when it made sense for Zeng to drag the radio pirates through the courts, a seemingly simple procedure.
Muzen Radio has a wide range of products including something called Little Prince, a Bluetooth speaker. But in 2018, the HM11 appeared, the very spit and image of Little Prince. The HM11 is made by ZDW Technology and is on sale right now on e-commerce sites. It is also exported in large quantities.
Similar unbranded and clearly intended resemble Muzen products, is on sale all over Shenzhen's Huaqiangbei digital market, priced at about 50 yuan (US$7), about a tenth of the price of the original. Why such a big price gap?
According to Zeng, you get what you pay for. And when you buy a Muzen product you are paying for R&D and design, plus top-quality components. Counterfeiters often use poor-quality or recycled materials and have no design costs at all, except in designing the easiest way to steal Zeng’s brainpower.
"We do not evade taxes,” said Zeng. “We pay social security and housing funds for our employees whose salary has quintupled over the last decade."
For pirates, coming up with new products is as simple as getting a hold of someone else’s and copying it, sometimes just copying the casing. Muzen obviously cannot compete.
ZDW Technology has been around since 2013, with a registered capital of one million yuan. It is primarily engaged in technology development and sales of electronic components and products. In 2017 and 2018, the company social security information showed it as having three employees.
Muzen has filed an unfair competition suit in Shenzhen Longgang District People's Court, and an administrative investigation procedure for patent infringement with Shenzhen’s market regulator, a common enough commercial dispute on the face of things.
Jiemian News contacted ZDW Technology for comment. ZDW’s case is that yes, they might well be copying Muzen, but then again, maybe Muzen Radio is copying them. Who knows? Everything will be decided in good time by the court.
Muzen is angry, aggrieved, vengeful. "We have been going through the legal procedures for more than a year. Two and a half years will have passed before the judgment. Is there really any point?" Zeng said. In addition to the lawsuit, Muzen set up a team to root out counterfeit products and file complaints to e-commerce platforms, but it didn't work well. Zeng said e-commerce platforms claim to be unable to handle complaints and that the pirated products sprung up quicker than they could be cut down.
YUN Youting, a lawyer Jiemian News spoke to was not hopeful. Obtaining evidence is difficult, compensation derisory, and lawsuits can take a long time to resolve. It might be best not to bother. "In-depth investigations into ZDW Technology may be dangerous: They might not be the nicest of guys. Who is to say whether or how much one product resembles another? Even if the pirate product is removed from a certain website, that is no guarantee that it will not be sold through other channels. IPR is a minefield," said the lawyer.
The best approach would be via patents.
"Their lawsuit is building on the name, packaging and look of well-known products, prescribed by the Unfair Competition Law. The claim is that ZDW has copied their product’s look. Since their product decoration is also functional, it is hard to predict the outcome."
Shenzhen Airsmart, the owner of Muzen, owns 137 patents, while ZDW has two. The maximum compensation is now five million yuan, but Muzen is unlikely to get anything like that much, even if they do win.
"Why not five million yuan?” said LI Zhongsheng, a lawyer from V&T Law Firm. “Because judges protect themselves. High compensation can result in all sorts of unspecified troubles.”
In Shenzhen, knockoffs are an everyday topic of conversation. Huaqiangbei, sometimes known as China’s Knockoff Valley, is second to none in this sphere. There are no secrets there. Designs, materials sources and production procedures are all widely known. Manufacturers don’t care about IPR. They make products, ship products and make a profit. It’s pretty basic.
Nonetheless, knockers-off are not just blindly copying. They occasionally come up with or stumble across innovative designs, such as dual sim dual standby (DSDS) and high-capacity batteries. On top of that, they create jobs, to some extent.
"It doesn’t matter,” said Zeng. “Knockoffs should not be championed or allowed to fade into a gray area. It needs to be stopped."
Recently, Shenzhen has shaken off some of its pirate’s hideaway image and is perhaps better known now as an innovation hub. In a new list of reforms for the next stage of Shenzhen’s journey, better protection of IPR was again proposed, as it has been many times before.
"Bad money drives out good,” said Zeng, “This is a far more serious problem. Solving it is far more important than another great innovation drive. We need to look after those who take risks to come up with great new ideas.”