Fishing Village that Took Over the Tech World

When Chinese leader Deng Xiaoping established Shenzhen as the first of the country’s Special Economic Zones (SEZ) in 1978, the ‘city’ was nothing more than a group of small, relatively poor fishing villages resting in the shadow of the much-wealthier Hong Kong 30 km to its south.

In the forty years since, the young city has experienced an unprecedented level of economic growth and modernisation, transforming itself from an agricultural outpost with fewer than 30,000 inhabitants, into a sprawling metropolis with an estimated population of 12–15 million (the population growth is so rapid, exact figures are impossible to determine).

Shenzhen stands as a monument to China’s remarkable change in fortune, and a testament to the legacy of Deng Xiaoping’s transformative economic policies. The young city has further served as a model for the urbanisation and modernisation of cities throughout China, as the economic prosperity of the region has supported the growth of a robust middle class, and a young, well-educated population who continues to serve as a catalyst for political and social progress.

The Pearl River Delta of the Guangdong province, which includes the cities of Shenzhen, Macau, and Guangzhou, was the first region to open to foreign business and capital, and became known as the ‘factory floor’ of the world throughout the 80s and 90s, initially producing labor-intensive goods such as textiles and plastics, before transitioning to the more lucrative production of consumer electronic goods. The Pearl River Delta has come to be known collectively as the ‘The Greater Bay Area’, and is now responsible for the manufacturing of 90% of the world’s electronic goods.

 

 

The Shanzhai Approach to Innovation

The heart of Shenzen’s extensive hardware supply chain lies in the sprawling Huaqiangbei Market, the world’s largest electronics marketplace, famous for selling any electronic component imaginable. The marketplace is a tangible embodiment of the driving force behind’s Shenzhen’s success: the idea of Shanzhai. In the past, the Cantonese-derived term was a derogatory descriptor for inferior, counterfeit goods produced en masse at low-quality factories. In today’s Shenzhen, what was once an insult has become an essential component of the city’s success.

The culture of Shanzai has transcended forgery to provide the makers and innovators of the tech world with an integrated, and highly efficient manufacturing ecosystem. Combining the unparalleled network of manufacturing and production factories in the Guangdong province, with an impressive array of gifted engineers and designers, the ‘Greater Bay Area’ is able to quickly convert ideas into prototypes, at a fraction of the cost. This extensive manufacturing network allows for a level of experimentation that is only possible in Shenzhen.

The openness and transparency afforded by the philosophy of Shanzhai, has fostered an environment of collaboration that drives innovation. The lack of copyright enforcement and intellectual property rights can be a deterrent to Western firms, but this attitude of openness toward the sharing of knowledge and resources allows for a degree of collaborative innovation that would be unthinkable in Silicon Valley.

 

“Shanzhai’s past has connotations of knock-off iPhones and fake Louis Vuitton bags. New shanzhai offers a glimpse into the future: its strength is in extreme open-source, which stands in stark contrast to the increasingly proprietary nature of American technology. As startups in the Bay Area scramble to make buckets of money, being in this other Greater Bay Area makes it clear why there’s so much rhetoric about China overtaking the US. It is.” — Bruce Sterling, Wired Magazine

 

Though the copycat connotations of Shanzai’s past persist, China’s consumer-driven approach to innovation along with the nimble, efficient nature of the nation’s manufacturing supply chains allows domestic Chinese firms to respond to consumers’ constantly evolving needs at a speed that would be impossible in any other environment. This low-cost, market-driven approach to innovation will continue to distinguish China’s young Silicon Valley, suggesting that Shenzhen is no longer simply a factory for the cheap manufacturing of foreign ideas, but a growing hub of innovation and creativity.

 

 

The Birth of the Minut Device in Shenzhen

Minut’s Head of Manufacturing, Martin Lööf, shares his experience with manufacturing our device, living in Shenzhen, and navigating the city’s immense geography as a young startup.

Minut’s time in Shenzhen began with our acceptance into the HAX accelerator for hardware startups. With offices in Shenzhen and San Francisco, HAX has provided seed funding to a dynamic portfolio of startups, and Minut represents their first and only Scandinavian-founded venture. Our founders relocated from Silicon Valley to the heart of Shenzhen, where they spent five months undertaking the task of turning an ambitious idea into a tangible product.

After living and working there for nearly half a year, what was your personal impression of Shenzhen as a quickly-growing, young city?

It is a very well functioning modern city, with a world-class public transportation system, where everything is constantly changing. Since I first came to the city 5 years ago they have opened 6 new metro lines, the area around our office has been transformed with numerous new restaurants, shopping malls and skyscrapers. Such is the speed of change in this city. It is a city where people flocked to seek out their fortune. Hardly anyone you meet grew up in the city, which creates an interesting mix of all the different provincial cultures and cuisines of China. But that also means that there is little historical context and heritage of what Shenzhen is, so the city is a bit of what you define it to be.

In a city known for its unparalleled resources and speed of manufacturing, what was your experience of the manufacturing ecosystems in Shenzhen?

ML: For our second-generation product we had about 5 months from initial specification draft to first pilot series at the factory. For a small company with limited engineering resources, this was quite fast. With our presence in Shenzhen, we were able to make a new iteration of the hardware every week if necessary. This is simply not possible in Europe. The ecosystem in Shenzhen is a vast network of service providers and manufacturers, on a scale that I haven’t seen anywhere else in the world. Take the markets at Huaqiangbei as an example, the area covers almost 3 square kilometres of multi-story shopping malls, densely packed with all kinds of electronics, from components to sub-assemblies to finished goods. They are an amazing cacophony of sensory impressions. Blinking LEDs, shouting salesmen, playing children, stores trying to out-play the music from the neighbouring store, remote-controlled toys zipping around, cigarette fumes and smells from the nearest street food stall. In all of this, there are genuine components, grey market components, fake components and re-used components. To find the one component that you are looking for and being sure of its authenticity is a daunting task.

 

From the perspective of an engineer what are the greatest advantages of manufacturing in Shenzhen? Did you encounter any downsides?

ML: The availability of services and speed of prototyping is amazing. You can get circuit boards and 3d prints made essentially overnight. The knowledge in mass manufacturing is also impressive and readily available. The mentality of most people you meet is also very thrilling and motivating. There is a real sense of hustling and a hunger for getting things done. Suppliers are willing to give you feedback on designs just to show their willingness to work with you. A lot of times if you ask a supplier if they can do something they will answer “yes” even before they understand what it is you want them to do. This is naturally both an advantage and a disadvantage. I think in Europe as an engineer I am much more inclined to over-design something before sending it out for prototyping. In China, it is much more common with a “shooting from the hip” style engineering where you build something just to try to see if it works and what you can learn and then iterate until it does. The speed of the ecosystem enables you to do so. For a startup where time to market and being able to iterate is absolutely crucial a lot can be learned from this. The greatest disadvantage of being in Shenzhen is accessing services that are outside of China. China has come very far in being open, but the internet is still censored. This means that the tools that you normally rely on for communicating and finding information do not work. Sourcing components that are not made in China also takes a lot longer than in Europe.

Would you agree that China is quickly-evolving from a manufacturing base for foreign companies into a hub of innovation in its own right?

ML: You see a lot of Chinese companies popping up that are innovative, confident and hungry. A lot of these companies are focused on the Chinese market, hence most westerners are not exposed to the rapid pace of innovation that is happening in China right now. In some areas, they are ahead of the west. Mobile payment systems have been used in China for years now. In Shenzhen, all the busses and taxis are electric. As knowledge and experience of the global market continue to grow, I think we will see more and more of these companies in Europe and the US.

Martin Lööf is a co-founder and hardware engineer at Minut.