This means that one-person enterprises can get things made in a factory the way only big companies could before.

This means that one-person enterprises can get things made in a factory the way only big companies could before. Two trends are driving this. First, there’s the maturation and increasing Web-centrism of business practices in China. Now that the Web generation is entering management, Chinese factories increasingly take orders online, communicate with customers by e-mail, and accept payment by credit card or PayPal, a consumer-friendly alternative to traditional bank transfers, letters of credit, and purchase orders. Second, the current economic crisis has driven companies to seek higher-margin custom orders to mitigate the deflationary spiral of commodity goods. 

Institute for the Future’s model for “lightweight innovation.”

1. Network your organizations: “The bike vendors in Chongqing hang out in tea houses and shanzhai vendors in Shenzhen have a vast network centered in the large electronics malls.” 
2. Reward solution seekers: “Penny-a-unit profits force the shanzhai collaborations to be totally solutions-driven. They don’t make money if they don’t deliver. ‘Not invented here’ is never a problem.” 
3. Err on the side of openness: “The wild west of shanzhai is all about openness. Trade secrets of big companies are flowing freely. Everything is ‘open sourced’ by default. If we take the [intellectual property rights] issue aside, it’s really the ultimate openness we in the open-source world are looking for.” 
4. Engage actively: “The shanzhai vendors used to produce knockoffs after original vendors had the products on the market. But in the past year I have seen a lot of them act on the latest Web rumor, especially those related to Apple. It was kind of funny that there were several large-size iPhones (seven-inch and ten-inch) being produced by the shanzhai simply on the rumor that the iPad would look like a large iPhone.”

The rise of shanzhai business practices “suggests a new approach to economic recovery as well, one based on small companies well networked with each other,” observes Tom Igoe, a core developer of the open-source Arduino computing platform. “What happens when that approach hits the manufacturing world? We’re about to find out.”

Makers: The New Industrial Revolution by Chris Anderson