Shanzhai grew by 43.6% in 2010, production cycle also cut by 25%

One out of every five cell phones sold in the world are Shanzhai, rues Nokia. Nokia is not the only brand suffering from the pangs of insecurity due to the momentous growth of the Shanzhai. Steve Ballmer voiced the same opinion last year, so did Apple when it sued makers of clones. The latest is RIM, which has shifted production of the BlackBerry Playbook to Taiwan to avoid leaks about the design. The Shanzhai seems unaffected, enjoying a growth rate of 43.65% and shipments of 228 million units, according to iSuppli Research.

With hardly 50 million handsets shipped in 2005, but 228 million in 2010, the Shanzhai have grown enormously over the last five years. iSuppli market research reports that the growth of Shanzhai phones in 2010 was up by 43.6%, with a hold of over 20% of the world’s cell phone market. Even Shanzhai cell phone production cycles have sharply reduced, now at one week, down from one to two months.

The growth curve will continue in 2011, but will slow down a bit due to the Chinese government crackdown on Shanzhai vendors. Shipments are expected to touch 255 million in 2011 at a rate of 11.8% compared to the 228 million units in 2010. Although shipments in China were down from 33.2 million to 24.2 million in 2010, an upward growth was seen in Asian countries overall from 110.2 million to 154.4 million in 2010.

Kevin Wang, director of China research at iSuppli says "The object of a nationwide government crackdown, the gray cell phone market in the world's most populous country is facing some trepidation as official scrutiny focused on illegal handsets and as consumers are starting to lose some interest in the devices …”

The smartphone market in China has also grown 220% year on year with Android brisk now on 50% of smartphones. Fortune, analyst Travis McCourt said “In general, smartphones have exploded in China this year …”

Overall the sales are soaring for the Shanzhai. The government curb might push more manufacturers to legitimize, which is ultimately a great move for both consumers and Shanzhai business as a lot of current Chinese manufacturing giants were yesterday’s Shanzhai.

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