“They reintroduce it” — Shark Tank investor Kevin O’Leary explains how the Chinese knock off American businesses

Kevin O'Leary, a Shark Tank investor, is in the news again for his bold comments regarding how Chinese businesses copy and benefit from American inventions. The seasoned businessman gave an eye-opening insight into how American companies frequently succumb to an all too familiar strategy abroad in a recent Instagram video.

O'Leary asserts that whenever a product or concept proves popular in the US market, Chinese producers would eventually bring it back to the market, frequently with slight modifications and at a reduced cost.

"The company has to recoup the $10 million that it made, let's say in R&D. The Chinese don't so they knock it off and they reintroduce it into the American and Canadian and Mexican market and European market too at 30% to 40% off of the price you're selling it at because they don't have to recoup anything," he said.

The ease with which these knockoffs are made and circulated not only affects original enterprises but also raises fundamental questions about intellectual property protection and global competitiveness.

Although similar practices have been criticized before, O'Leary's remarks spark a critical discussion, particularly among startups and small enterprises attempting to defend their distinctive value propositions. His statement serves as a sobering reminder that invention is not enough on its own; preserving it is as important as the global marketplace becomes more complex.

Shark Tank's Kevin O'Leary throws light on how the Chinese capture the American market

Shark Tank investor Kevin O'Leary recently discussed a rising worry among American business owners: the way Chinese companies are taking market share in the United States. O'Leary describes how Chinese manufacturers frequently steal successful American items and swiftly relaunch them under a different brand, frequently at a lower price, in a widely shared Instagram video.

His remarks have spurred discussions about intellectual property theft and the difficulties tiny American companies have maintaining their competitiveness in the global market.

Shark Tank OG O'Leary begins the clip by outlining the typical North American startup launch procedure, frequently raising a sizable sum of money, sometimes as much as $10 million. However, he cautions that their popularity leaves them open to international copying.

"When an American company, or frankly Canadian for that matter, gets investors and does a startup. Let's say they put up $10 million bucks or whatever."

"As soon as it gets to a run rate of five million annually, almost 100% of the time it gets knocked off in China," he added.

A startup is targeted by Chinese imitators as it starts to generate steady revenue, especially when it reaches an annual run rate of $5 million. The original company's profitability is threatened by these knockoffs, which frequently arrive on the market more quickly and at a lower cost.

Shark Tank expert emphasizes how, in order to take over the market, they reduce the price by 30-40% as all the R&D is already done for them and sell it at a much lower price, and that is just pure profit margin.

Trending

Watch more such videos by Shark Tank's Kevin O'Leary on his official Instagram account.

×

Was this article helpful?

Thank You for feedback