The biggest concern with operating in China is to be knocked off; as start -ups, we all struggle to figure out how it's so cheap for manufacturers to produce the imitations of our products. Beside some other practices (this is for another post), the cost to produce and import is not magic, there are cost that remain the same, unless some one takes a short cut. That's what this is about - the grass is not always greener; the imitators are not magicians and here's the proof...
Twenty-four months ago we met an entrepreneur that was hungry and jumping into the deep end of the start-up world; Cycleboard was born.
Debuting and setting pre-sales, CES 2016 was the first time the world got to see the three-wheeled electric scooter. Crammed into the last row of Eureka Park (in the Sand Expo; Tech West Hall), Cycleboard began to turn heads.
The next 12 months, Cycleboard would go on to fund on Kickstarter and kick off production, retailing at $1299 USD. However, on the other side of the world a northern China company that was near the Cycleboard booth at CES decided to launch a knock-off...for one-third the price. Cycleboard then began to question the supply chain, trying to reverse engineer the costing and see how this company could possibly create similar product for a fraction of the cost. This was a huge blow to confidence until we discovered the truth.
Fast forward to CES 2017; this northern China company was at CES, again. Openly admit they copied the design of Cycleboard, they missed most of the details that make the product what it is. But then we find the true price; $1500. That's right...the 1/3 price of $450 was only pre-sales - they were loosing money on ever pre-order. Now this company can not even meet Cycleboard pricing of $1299.
Moral of the story is to focus on what you know; the other side is not greener. There is no short-cuts; products that are near identical will cost the same to produce. Strategies will vary depending on the capital available and position in the market place but again, decisions of your competition are independent of you. Take this as a lesson to not pivot too quickly or force change that is not needed; stay the course.