> Sure there are initial product R&D cost overheads

I think this, plus different attitudes to intellectual property are the two big reasons western companies can’t compete.

The general strategy for R&D in the west is to spend significant sums developing a new technology, then building an IP moat around it to prevent direct competition. Our IP laws make this approach viable, and it allows companies to develop something new, then exploit it for decades without needing to innovate further.

China on the other hand does not have this approach to IP. Copying is rife, even between Chinese companies, and generally the idea of being given a state enforced monopoly just because you were first is laughable. As a result, when one Chinese company figures something out, that technology, process, technique, rapidly spreads around the entire market, and all of the competing companies benefit.

This creates few interesting side-effects.

* One a ginormous ecosystem of basic parts and components that are basically common between all competitors in a market (looks at the LiDAR units of robot vacs). This drastically lowers the barrier of entry for new players, it’s easy for them to get access to everything they need to build a “good enough” product, without having to do much R&D themselves.

* Two, it forces all companies to innovate and developer technology continuously. There is no state enforced monopoly for IP, so companies can only maintain an edge by innovating and advancing faster than their competitors at all time.

* Three, it’s makes a failure to constantly innovate an absolute death sentence for a company. Not just because they loose their edge, but because it takes time to rebuild the R&D skills needed to innovate as fast as their competitors. Once you start falling behind, you can never catch up, there is no space to financialise a company and sweat its assets. It’ll be dead before you got any return.

All this creates huge problems for companies like Roomba. They developed so very cool tech early on, but stopped innovating as fast, thinking they had a strong edge over any of their competitors, and solid IP moat. Unfortunately once Chinese companies caught up, and figured out how to get around their moat, its was impossible for Roomba defend against these new competitors. They were able to innovate orders of magnitude faster, because the environment that created meant only the fastest innovating companies could survive, they had huge momentum, and also a huge common core of shared components that had driven the cost of a basic robot vac to well under anything iRobot could achieve.