The modularity theory is an internal strategy for firms that consists of finding the optimal architecture for their product alongside the development process. Thus, the chain process is no longer considered as a whole since international standards, for example the GSM standard, can no longer be ignored. Therefore, differentiation in today’s markets applies to some precise and well determined modules. As a result, companies will tend to focus more on visual aspects such as the design. For that reason, innovation and marketing are key factors for companies willing to differentiate themselves from their competitors, especially in the technologic sector.

The first reason why the Chinese mobile handset market has so few undifferentiated players lies on the fact that China is still an emerging economy whose population isn't yet fully equipped by mobile devices. Therefore, the first concern for domestic brands such as MediaTek isn’t to develop the latest and most innovative technology, but to offer quality basic services for the existing modules. The constant evolution of “data transport technology” (1G, 2G, 3G) during the XXth century also prevented players from differentiating themselves, since they continuously needed to acknowledge previous technology before making new improvements. Yet, external forces aren’t the only reasons for the current situation in China. Internal factors such as new organizational strategy in the country's biggest firms holds a lot of responsibility. For example, Mediatek deliberately decided to drop tier-one markets (which are the most demanding in terms of R&D and costs) to focus more on cheaper technology for emerging markets. This decision proved itself to be very relevant as the emerging country's (countries'? idk check this - bacon) growth exploded during the following years. As a result, Mediatek quickly emerged as the main chipset provider to the Chinese mobile handset market. Innovation as well as personal customization was left to their customers' preferences as the software was open to modifications.

Furthermore, the aim of big companies such as Mediatek to cover as many people as they can has led to a point where it becomes more and more difficult to offer alternative models. Undifferentiation (not a word D:) also suited retailers that could negotiate bigger quantities of handsets at a lower price, allowing them to profit while retailing back to smaller entities. Finally, some cultural aspects need to be taken into account for shaping the local market. China has a reputation “for copying products”. This cultural aspect favored the emergence of thousands of small counterfeit brands, each of which are supplied by a common handset provided by the few big players.