News that a group of enterprising Shanghainese individuals had been caught cobbling together fake iPhones from genuine parts and flogging them off on the streets of China reminded me of my days sourcing cellphones from this part of the world.
A few years back I was engaged in a project to buy cheap mobiles from a group of State Owned Enterprises and ship them off around EMEA, where they’d be bundled for sale with VoIP network minutes.
My mission was to find the best featurephones on offer and reconfigure them to provide alternative network calling via some clever little application layer hacks. My objectives were: a) secure the best phones at the lowest cost; and b) ensure that the SOE did all the development work for free. This all took place in an age before touchscreen smartphones, a time when the coolest app you could buy was Worldmate for Symbian UIQ .
As the vendor was a group of SOEs spread throughout the South and East of China I spent a lot of time traveling to many and various R&D centres and OEM factories. At each one I would be shown a range of mobiles and run a gamut of sales directors, account managers and engineers keen for business. Eventually I’d establish a shortlist of suppliers, then settle down with each one to thrash out some kind of deal.
Naturally this devolved into a battle of wits where I sought the lowest position for the stakeholders I represented and the SOEs fought for the highest possible price to maximise their own profit (and no doubt recompense the unwieldy chain of agents and middlemen who had made ‘introductions’). These meetings were painful and lasted many hours.
By way of preparation, perhaps the most useful ammunition to obtain in advance of negotiation was the Bill of Materials. Knowing each and every component and its associated cost was a surefire way to establish a reasonable Factory Gate price for a device. In most circumstances, short of bribery, there’s no easy way to come by such intel. Fortunately, buying large shipments of cellphones in China there is one great shortcut that can help the novice negotiator discover the base manufacturing cost of a mobile: go out and make your own copy of the phone.
Guangzhou has a great wholesale mobile market located down by the river in the old town, a veritable Aladdin’s cave of hooky goods. I like to think that this is the place the expression ‘fell off the back of a factory’ originated. Because the models that I was interested in were generally in mass production and available in the local mobile and electronic malls it was no trouble to walk into the market with a sample and say, “Hey, I want to buy every component of one of these, enough to make ten pieces please.”
It was the laziest form of reverse engineering you could imagine.
An hour later I’d be on the way back to the hotel clutching a couple of plastic bags stuffed full of boards, housing, screens, chipsets, keypads, ribbon connectors and batteries; a few hundred dollars lighter perhaps but happy in the knowledge that I could sit down and work out a rough BoM list from the materials in my possession.
Before the first contract meeting with one of the OEMs I’d pack up an unassembled mobile in a ziploc bag and make sure the opposing Account Manager saw it, maybe over some tea and cigarette glad-handing. He’d know I had a well-informed idea of the per piece price and we could all forget about any Fresh Off the Boat Foreigner shenanigans.
Many Tier One and Tier Two Chinese cities have a mobile market like the one in Guangzhou. Though prices might vary, stock doesn’t. I haven’t been to one of these places for a few years but on my last visit it was still possible to buy each and every component for each and every late model mobile phone that was manufactured locally. Heck, Nokia chipsets could be bought on a roll.
If you feel like an adventure, I’m sure you could go and make your own iPhone.
Image: Canton365