By Radha Dhar
Shenzhen is home to world-renowned smartphone makers- Huawei and ZTE, leading drone company- DJI and social media giant Tencent. 30 years ago, with a population of 30,000, it was just a laid-back fishing village near Hong Kong. Today, it is a city of 15 million inhabitants and a hotspot for rising entrepreneurs. Exuding a global allure, it hosts 40,000 foreign invested companies. In 2015, electronic equipment worth 29 billion dollars was exported; labelling Shenzhen as the Silicon Valley of Hardware. The city has everything a tech geek could ever want: ample groups for creativity, diversity, government funding, tech-savvy consumers and scalability. This makes it California’s new-found sister in technical production.
Made In China
In 1979, Shenzhen was designated as China’s first ‘Special Economic Zone’– leading a slew of businesses to set up shop and inspire a buzz of entrepreneurial spirit. Lately, the current local government has been supporting the technology sector with bureaucratic funding and subsidies. Business startups are taking notice and have been pouring in ever since.
The tagline ‘Made in China’ seems to refer to Shenzhen, for it is known around the world as China’s manufacturing capital. Chances are, that your gadgets were assembled in Shenzhen. Over time, Shenzhen’s famous Huaqiangbei electronics market has amassed an intricate network of suppliers selling all kinds of gizmos and gadgets at throwaway prices. There you can find every unique part you would need to assemble an entire computer in under ten dollars.
Duplicates Better Than the Original?
Until now, Silicon Valley was presumed to be the uncontested mecca of brilliant techie minds with contemporary new ideas, seeking like-minded partners, angel investors. However, this no longer exists. From India’s Bengaluru to Shenzhen, developing nations are catching up fast. Shenzhen with its market size and consumer adoption rates has taken over California. It has become the new place to be for computer engineers, scientists, angel investors, incubators and accelerators. Can China’s new technological hub overtake Silicon Valley? Possibly.
For one, Shenzhen surpasses other tech hubs around the world in terms of market size. “Startups can achieve massive scale quickly because the domestic market comprises of 1.3 billion people, which is four times the population of U.S and Europe”, Recode.net points out. This is huge for start-ups that are trying to expand and get recognition. Moreover, the Chinese market is ideal since consumer-adoption rates of new apps and technologies are sky high. China has been leading the way in business. It had Momo before Tinder. S.F Express beat Amazon’s drone delivery concept and WeChat included a news stream prior to Facebook News. China is so far ahead that it has some trends that the rest of the world has not come up with apps for yet.
Apart from market size and consumer adoption rates, China wins out in speed too. There are few red tape issues regarding approvals being sought. One start-up founder told Bloomberg how prototyping is slow in the US and can take around one to two months. China churns out a new prototype every week. It is also easier to skip some steps and move up the ladder quickly. Big startups take five to eight years to establish in the US, while it normally takes three to five years to establish in Shenzhen. In a world where ideas get old fast, speed is critical.
The Holy Grail of Incubation
Shenzhen is the land of incubators and accelerators. This makes it a VC (Venture Capital firm) haven too. Incubators and accelerators are workspaces where engineers can allow their skills and creativity to unleash. These workstations provide facilities geared with a tool shed of complex machines and equipment that help techies in building the products they always dreamed of. If convinced, some accelerators are willing to invest and provide training if required. Among the most sought-after incubators is Hax, specialising in hardware and investing up to $100,000 in nearly 30 start-ups by providing free office space and access to its engineers and workshops. The Shenzhen government offers financial subsidies for such ‘maker spaces’ in order to nurture and develop this ability and identity.
The world of hardware has always been dominated by corporate laboratories and R&D budgets. Shenzhen has changed that market and made it inclusive. Going from proof-of-concept to deployment is now a quick weekend project anyone can do. These days the standard process jumps a few steps from prototype directly to crowd-funding, thanks to viral promo videos.
The Shenzhen Machine Has Kinks
Shenzhen may not yet be all it is deemed to be. Those looking to set up shop have to consider the repercussions of encouraging the poor labour conditions in Chinese factories and tying their companies to that image. Additionally, the Chinese government’s high level of censorship and restrictions curb access and create a wall of separation from the larger world. From a product development and UI/UX point of view, cheap parts mean poorer quality and less aesthetic polish compared to their international counterparts. Recently, due to the sudden boom, there is also major concern of increasing property prices due to a shrinking supply of undeveloped land. The surging cost of living could especially turn away start-ups facing an economic crunch.
What’s Next for ‘Gen Next’?
A young entrepreneur’s dream, the city offers a vast talent pool of highly educated engineers, efficient operations and enamoured foreign investors. As a reporter for ‘The Guardian’ puts it, “in Shenzhen, you have everything you need to turn a sketch on a napkin into 100,000 smartwatches”.
In a Bloomberg special, Shenzhen business veterans recalled the trend over time of how Shenzhen was once full of senior engineers working for EU or US companies. Now it includes young R&D engineers who are attracted to the culture and opportunity.
Shenzhen is known for its ‘maker faire’ movement that includes ongoing technology festivals. These spaces encourage open-source technology, incorporating arts and crafts into engineering and sharing in an internationally diverse community. Karina Chang, a director at Hax, concludes “You can buy a 9 dollar chip and turn a chair or desk into a smart device.” The possibilities are endless. As the world develops, onlookers will be turning more to the East to get a glimpse of the technological future.
Featured image source: Pixabay