Technical Standards And The Subsequent Entrants Strategy Study

As the successful experience of QualComm Company, and the DVD case of which the Chinese enterprises are limited by the technical standard, both Chinese governm -ent and enterprises are dreaming of the independent IPR (intellectual property rights) of technical standard. Chinese enterprises are looking forward to the standard, and trying to put the own technical standard on all kinds of products.There are lots of technical standards in our daily life, specially the standard made by China State Bureau of Quality and Technical Supervision,the Association of Indus -try and IS09000. All of them are compulsive or commended as the public goods, and are not profitable.Why the CDMA technical standard of Qualcomm and the 6C union leaded by Philips can charge license fee on technical standard? What's kind of the problems the Datang's TD-SCDMA standard faced? How make great efforts on Datang's technical standard? Is Datang the only pattern of which can be used by new entrant. These are all the questions about which the writer is thinking over, and the incentive of the researching.After analysis, we think that the combination of the technical standard and IPR, especially essential patent, is the reason of charging license fee on each products of which used the technical standard. The essential patent has been the barrier to get into the technical standard for other producers.On the micro -level of the essential patent, we discuss why top company can make the standard. We know that it is hardly to realize the value for an individual patent, and most of the patens are valueless. But the combination of the patent and technical standard brings to the essential patent. The essential patent is a necessary aspect if you want to produce under the technical standard. According to make the technical standard, Top company combine the patent with the technical standard to be a essential patent or cross-licensing. Then top company realized the charging fees by holding the essential patent. Hence the competition between the markets is becomes to inner the market. The holder of the technical standard gets the benefit not only from the license of standard, but also from the quantity competition or producing the core-products, say chipset.Technical standard is a kind of the natural monopoly as its network externality. But there are several technical standards in one industry as there would be benefits conflicts among countries. According to build up Diamond Model, we can explain if the enterprise has the ability of making the technical standard by factor conditions; explain how to be admitted by market by demand conditions and obtain a number of users; analyszing the stratagem of technical standard company, e.g. enterprise union, opening technical standard and so on; By the related and supporting industries, we can analyze if there exists interrelate between the industries and support the the ability of competition; What role should the government play; and how the opportunity influnce the technical standard . We believe that the factors are affected by each other and indispensable for the technical standards.We can approve the method of Diamond Model according to analysis several countries cases of mobile communication. We believe that each factor of Diamond Model is very important, but can be different in sepcial conditions and cases. As the sample of Qualcomm, it is same important for factor of opportunities. If the Patent of CDMA is not the essential patent for 3G technique, the 3G standard made by company like Ericsson couldn't lean to Qualcomm, thus Qualcomm won't be the King of the standard.There are enterprises now in making technical standards in China, but most of them are new entrant, it is significative in researching how the new entrant participate in the standard competition. We think that there are competition between the technical standards and, inner the standards. Patten of Datang company is a case of that. We analysis the case together with the Diamond Model, and we believe that Datang couldn't be successful without supporting of the government. Hence we think the supporting from government is a key factor in case of Datang's Diamond Model, and we raise the detail method which government can be adopted. But we think Datang's technical standard is a special case, and government can not support all technical standards made by Chinese enterprises. It depends much more on the ability of the enterprise itself, to participate in the competition of inner standards, which to say the competition of essential patent. It is a process from following the standard to partial created to totally created the standard, so that the rate of essential patent is increased gradually, finally to be the leader of the technical standard. Enterprises depend on the market and supporting from government to exceed the technical standard. We introduce the pattern of Huawei and ZTE is a common pattern.