The Problem with China

PLEASE NOTE: This article has been archived. It first appeared on in June 2001, contributed by then Editor-in-Chief Rip Rowan. We will not be making any updates to the article. Please visit the home page for our latest content. Thank you!

You can’t walk through a music store these days without having to step over an inexpensive large-diaphragm mic made in China. They’re everywhere.

A dozen companies have jumped into the market, reselling mics that are made in China but which sport deceptively cool German names like Audio Deutchkraft (based in Washington) and BPM Studiotechnik (at least based in Germany). Some of these companies are established entry-level audio companies looking to expand their product like – like Carvin and Nady – while others have used the availability of cheap, easy product to enter this new market – like Marshall Electronics, a.k.a. MXL, a cabling, video and surveillance company.

The first time I heard one of these mics I was pretty sure that Chinese mics were no threat to established mics from companies like Shure, AKG, and Neumann. I figured these “exploitation mics” would run their course and peter out. After all, I reasoned, these mics sound horrible. As soon as word gets out on the street, sales will dry up quick.

And the early mics that I heard did sound horrible. However some of the recent products sound pretty good. And the proliferation of mics and new mic companies has shown that, fad or not, this trend isn’t going to just blow over that quickly.

So what’s the story with these companies? Why should anyone care?

A Question of Ethics

Although there are a number of brand names being used – ADK, BPM, Joemeek, Carvin, Marshall Electronics, Nady, Studio Projects, etc. – all of the mics are made by one of three or four Asian companies. Chief among them is 797 Audio. 797 Audio (formerly Sondy) is a large state-operated microphone and electronics manufacturing facility in Beijing, China. They offer a line of 797-branded microphones which are clones of popular classic mics – Sennheiser MD421, AKG 414, Shure SM58, and others. These mics are either exact copies of the original mics, or are so close that they could fool any casual observer. None of the 797 Audio-branded mics could be sold in the US without a serious risk of legal liability, or at least the serious threat of lawsuit.

I must admit that the first time I saw the main product line on the 797 Audio web site I was appalled. “How the hell can these people just steal these classic mic designs?” I’m not sufficiently informed on the legal issues to know if these products were actually violations of patents or trademarks, but at the very least they were suspicious. And tasteless.

You had to look pretty close, didn’t you?

Because these mics are likely candidates for lawsuits if sold in the Western world, it is very difficult to find a 797 “clone” mic. However, Western distributors have discovered a great business opportunity with 797 Audio and the other Asian manufacturers: by creating their own designs and using 797 Audio as a manufacturer, Western companies can avoid lawsuits while taking full advantage of decades of reverse engineering and design cloning.

Since learning about 797’s penchant for copying classic designs, I have been pretty vocal about the issue. I have actively sought to persuade people to avoid these mics, stating that to buy a 797-made microphone is tantamount to stealing. After all, even if you aren’t buying a clone per se, you would be buying from a company whose main line of business is copying mic designs. As it turns out, however, that’s a pretty thin reading of the issue. I have sought out a number of different opinions on the Chinese Mic Problem, and I have learned that the situtation is cloudy at best.

The Issues

First off, one must realize that this is inherently a political issue. I have argued strenuously that I don’t care about the politics – that 797 Audio copies mic designs, and that’s wrong. However, there is simply a larger context which must be understood before one can make that value judgement.

China is a communist country. Although there have been advances in China’s willingness to trade with the West, and to allow some privatization of industry, practically all Chinese businesses are still essentially state-owned and operated. For fifty years, the Chinese government participated in the Cold War, denying Western countries the right to sell their products inside China, as we likewise refused to allow Chinese products into our countries.

Instead of allowing Western microphones to be sold inside China, the government sponsored a state facility which systematically cloned the best technology that Germany and America had to offer. What would be considered unscrupulous patent violations in our economy were justified political decisions made on the part of the Chinese government. It is difficult if not impossible to apply Western notions of free-trade ethics to this situation. They just don’t apply in the conventional sense.

And so this issue is inherently political. If you happen to subscribe to conventional Western notions of Communism – that Communism is an evil force that threatens the world – then you could easly see microphone cloning as simply a symtpom of a larger evil. If, on the other hand, you see Chinese communism as a political choice or a temporal phase, then you could say that the Chinese cloned Western mics because they had to. And even if you have no opinion on Chinese communism at all, you must recognize that the practice of mic cloning stemmed essentially from the political views of the Chinese government. Whatever your personal views on this matter, you will undoubtedly agree that it is impossible to seperate the political situation from the ethical questions. They are inexorably intertwined.

Fast forward to 2001. Changes have taken place inside China and in Western countries, and the flow of trade has rapidly increased. 797 Audio sees the opportunity to sell its products to a wider audience. And Western companies see a manufacturer with years of experience, ample manufacturing capacity, and, best of all, unbelievably low costs. The Chinese need an avenue into the US and Europe, and find it in the form of distributors who will specify mic designs (thus absolving 797 of possible legal responsibility) and market the mics heavily. The result is a field day on cheap large diaphragm condensers. Everyone’s got ’em, and more are coming every day.

I spoke with Alan Hyatt of PMI Audio Group (distributors of Studio Projects mics). Here’s some of what Alan had to say in defense of using 797 Audio as a manufacturer.

None of [797’s] knockoff mics show up in the USA or Europe. No one buys them except in China – where their market is a couple of billion! So in China, they market as they see fit, but they do not infringe or even try to market here. They do have a web site, so people do get exposed to that, and yes, AKG can do nothing about it in China, but they can everywhere else.
So now we come to  me, PMI Audio Group. I have a mic design. It is a good one, and I need a company  that can build it to spec for me and do a consistently good job. So after checking all the manufacturers, I choose 797. So now you ask, why then put their name on my microphone. Well here is why: everyone is bringing in mics from China under one name or another. Some very well known mic manufacturers are bringing them in from China. Some of these manufacturers lead the US market into believing that they actually make the mics. This is a misleading effort at best, and I do not like it. So to assure better quality and consistency, as well telling the USA market the truth that they are made in China, I agree to promote their name in order to get a better product and to ensure my design is always what it is.

Now, I have said that to buy a licit mic from a clonemaker is tantamount to endorsing the cloning. Perhaps. But another salient point should be made here: most of the mics which 797 has cloned are old technology. Most of these mics are at least 25 years old (the exception is the C3000). So even if the original technology was patented, it is unlikely that there exist any current patents protecting the technology.

Patents and Trademarks

Recently, AKG and Neumann have hastened to protect the “look and feel” design aspects of their mics through the use of so-called “3D trademarks”. A 3D trademark registration protects the “look and feel” (3D) qualities that consumers associate with a product. Examples might include Goldfish cheese crackers by Pepperidge Farms and the “golden arches” design of the older McDonalds restaurants, where the arches were part of the restaurant design. In essence, while a standard trademark protects the logo or other branding tools, the 3D trademark extends the notion of “brand recognition” to the very appearance of an immediately recognizable product.

While patents protect technology – and expire – trademarks last indefinitely. Moreover, some countries and US states have adopted the legal stance that a 3D trademark violation is essentially a counterfeit and thus subject to criminal prosecution.

3D trademarks are typically granted to those products that have achieved a kind of special recognition. Thus, the more established the character and look of a product, the more likely it is to be granted 3D trademark status. On the other hand, design aspects that are considered an intrinsic part of the functional design would fall under patent law and are not subject to 3D trademarking.

It’s a murky legal area, but the gist is clear: if a product is sufficiently entrenched and immediately recognizable from its basic shape and form, it can probably gain 3D trademark status.

Neumann has already filed for 3D trademark status, which is probably one of the reasons why 797 Audio is now focusing on copying the look of mics from AKG and Sennheiser. I asked Norbert Sobol of AKG about the 3D trademarks, and here’s what he had to say on the issue.

In the year 2000, [797] started to promote copies of our microphones, like the C 414, the C 3000 and the C 12VR. To stop the possible export activities, we also have filed a 3D-trademark protection for the very important C 414 design in various countries and have been granted 3D-trademark protection in England.

While we do our best to fight this matter on the legal front, it is particularly hard to do so at the source, namely in China. This has probably to do with the Chinese mentality believing that copying someone is rather an honour for the one who is copied than a shame for the one who copies intellectual property. And for most cases, this is an ethical problem and not necessarily a legal one.

A Question of Money

It has also been said that to spend money on a 797-made mic is to NOT spend money on an established mic company like AKG, Neumann, or Shure. Altogether too true. I would hate to see Neumann go bankrupt because 797 Audio captured the market. However, there is another side to that argument.

Some people claim that 797 Audio can build a mic that is “as good as a Neumann.” If this is true, then doesn’t that beg the question as to why we’ve all had to pay $2500 for a U87 for the last 30 years? Surely in 30 years Neumann could have built a manufacturing facility somewhere with cheap labor costs, and bought the price of a U87 down to, say, $750. No, the price of standard Neumann and AKG technology has not diminished.

The argument has been made that Neumann, AKG, and others deserve handsome markups on their products because these are the companies that invest so heavily in microphone R&D. If so, I haven’t seen the payoffs. Where are the breakthrough products? No, the only real commercialized breakthrough in mic paradigms in the last 30 years has been the PZM design – invented by Crown, and the Soundfield mics, which aren’t so much revolutionary mics as they are revolutionary mic processors. The most innovative small-diaphragm mic in recent history has been the Earthworks mics. The most innovative large diaphragm mic I’ve seen in years is the Rode NT1000. And the flat-out best large-diaphragm mic I’ve seen in years was the Brauner VM1 – built, in essence, by some guys in a barn who missed the glory days of the old Neumann mics. From Neumann, AKG, Shure, and Sennheiser we have seen just a steady trend of continuous incremental improvements and high prices – excellent mics to be sure, but nothing radical or revolutionary.

The bottom line is that there’s probably no vast untapped region for us to seek. There is no likelihood of a major step-function improvement in microphone technology. The simple fact is that – especially with large-diaphragm vocal mics – most engineers think that we got everything we needed 30 or more years ago. In fact the U87, U47, and C12 mics are very old designs, and are still considered by many to be the reference against which all other vocal mics are judged.

So if that’s the case, where’s the need for huge investments in R&D? I don’t see it.

The fact is that there is an ethical issue on the other side, too: that of price gouging. High-end audio companies get huge markups on their products because… well, because they can. And that’s great. Bully for them. However, companies that operate with incredibly high margins do so at their own risk. And the risk is simply this: with huge margins, these companies become fat and wasteful, and are easy targets for a lean, aggressive company with a low cost structure. Like 797 Audio.

So, Where Does That Leave Us?

Well, 797 Audio and its distributors perhaps aren’t quite as horrible as I originally thought. I still think the company is just plain smarmy – those clone mics offend my basic makeup – but they can build a good mic cheap, and aren’t apparently breaking any laws in doing so. And Neumann, AKG, and others aren’t quite the benefactors of the audio industry that I had always held them to be.

Frankly, I think most people would rather buy a Neumann U87 or AKG 414 than a 797 Audio mic. In fact, informal polling suggests that even 797 mic lovers would probably spend two to three times as much to get a Neumann instead, say, $400 for a TLM103, and $750 for a U87. But on one point people are unanimous – even without the name recognition and mystique of owning a classic brand, most people just can’t justify spending $2000 on a mic that offers them no substantial benefit over a $400 or $200 mic.

So the problem with China is that the problem is not just China. The market is poised for a huge change. Either 797 and its Chinese bretheren will continue to penetrate the market, gaining credibility and pushing out the prime brands, or German, American, and Eastern European mic companies will rise to the challenge and meet 797 Audio on its own terms by lowering prices and keeping the buyer’s favor. Only time will tell. I for one don’t want to see the end of the classic mic manufacturers. On the other hand, though, change is inevitable, and we all have to change, or die.

To rest on the success of yesterday is to become the failure of tomorrow.