The emergence of shanzhaiji handset industry or bandit handset industry (山寨機手機產業) is an interesting phenomenon that is the only socioeconomic behavior occurring in mainland china. According to the National Development and Reform Commission of PRC, a company is permitted to produce the cellular phones with 200 million RMB and R&D capabilities. However, with only 100 thousands RMB capital, a shanzhaji handset producer can deliver the cellular phones in mainland china by getting a core technology of one package of chipset total solution (turnkey) from MediaTek / MTK (聯發科) in Taiwan. This new business model has been impacting the phone industry significantly in the mainland china. My research will focus on the development of entire shanzhaiji industry development from its origin to the status quo as well as future development. Three aspects of supply chain, market channel and government policy in terms of shanzhaiji industry are addressed in this research.