Latest News  

Despite the crash, the next Silicon Valley is in China

A spectre is haunting Silicon Valley - the spectre of a Silicon Dragon. These may be tough times for the Chinese economy, the tech city of Shenzhen is playing its fiddle as Rome burns to the ground.

2015-10-23 10:44:24

Dubbed "Black Monday", August 24th ended with Chinese equities down 8.5%, wiping out hundreds of billions of dollars in market capitalisation. The Shenzhen market, often compared to America’s Nasdaq index, is down 41% since June 12th. These are dizzying figures, writes Amol Sarva for the Huffington Post Blog.

Only a few weeks ago, analysts discussed how the technical hub had threatened to dethrone Silicon Valley from its comfortable perch as global tech-Mecca. Forecasts are now less optimistic.
Yet, the Communist Party’s response to the consequent month-long crisis has been swift and forceful. On top of spending almost $235 billion to buy shares and shore up prices, the Party imposed a range of impromptu restrictions on the sale of stocks. Amidst stock meltdown, Shenzhen has remained sanguine, backed by this strong government response. Should the Valley worry?

The Shenzhen Phenomenon

Once an innocuous fishing village, Shenzhen was selected by Deng Xiaoping, then Chairman of the Communist Party, to be the first of the special economic zones (SEZ) in China, an experiment in market capitalism within Deng’s self-professed "socialism with Chinese characteristics." It was formally established in May, 1980 due to its proximity to Hong Kong, then part of the United Kingdom.
Since then, Shenzhen has grown exponentially to become China’s sixth richest city on a per capita basis at USD $17,096 (2011). Last year, Shenzhen saw more than 64 billion yuan (USD $10 billion) invested in research and development, accounting for 4 per cent of GDP - a figure matched only by South Korea and Israel.

Shenzhen’s roaring financial success, however, hasn’t hinged upon an attempt to imitate Silicon Valley. Instead, where Silicon Valley is to the digital revolution what Manchester was to the industrial revolution, Shenzhen is fast becoming the epitome of a production revolution.

A New Kind of Production Philosophy

"In the old days, if you wanted to be innovative (or) have the latest technology, you would go to Silicon Valley for electronics ... But today it’s Shenzhen," says David Li, the co-founder of China’s first makerspace, XinCheJian.

Gone are the days of low-cost and low-skill labor that rocketed the ‘Made in China’ slogan to global dominance (check out Knote’s article on the evolving working conditions in Chinese factories). Instead, Shenzhen’s success heralds the era of ‘Made by China’.

Global hardware innovators are beating a track to Shenzhen’s unique manufacturing ecosystem for one simple reason: its capacity to produce. "Ordering electronics here is now like service in a restaurant." says Eric Pan, founder and CEO of Seeed Studio, a Shenzhen-based hardware innovation platform.

The city has become a global powerhouse of hi-tech design and production by housing supply chain, design, and manufacturing processes under one single roof - often in the form of a symbiotic ‘makerspace’ - thereby streamlining at a fraction of the cost the roll-out of prototypes and products.
The Middle Kingdom’s ‘Makerspaces’

A lot of the rhetoric around Shenzhen pivots upon these ‘makerspaces’. Typically seen as a solution to a dearth of homegrown entrepreneurs, makerspaces are essentially community centers where tools and knowledge around ‘making’ are shared. The goal of a makerspace is straightforward: to empower creation.

Many ‘makers’, weaned on anecdotes of fresh ideas turning into vast riches, are seduced by the city’s gargantuan malls, incubators, and workshops, such as the Seg market in the Futian district or the Huaqiangbei Commercial Street which have just about anything a start-up could need - from circuit boards to drones, LEDs to liquid injection molding.

"If you’re an engineer with an idea and you’re waiting five days or two weeks to test it, that’s no way of being creative," says Will Canine, co-founder of OpenTrons, a company constructing open-source liquid-handling robots in Shenzhen. "When you’re creative you want to try an idea and move on to the next idea and then the next idea. That’s the kind of dynamic flow that’s possible in hardware in Shenzhen that’s not possible in the United States."

Start-Ups, Start-Ups Everywhere

Coaxed by the unrivalled access to parts and manufacturers and the unique makerspace-philosophy, start-ups are thronging to Shenzhen. While intellectual property theft has been a tenacious thorn in the side of many Chinese manufacturers (look no further than the iPhone), Shenzhen-based start-ups are perfectly placed to apply the wisdoms of shanzhai (counterfeit) culture to legitimate business, synthesizing Silicon Valley’s entrepreneurialism with makerspace manufacturing.
Crucially for start-ups, Shenzhen’s inexpensive system allows start-ups engage production runs of just a few thousand units, rather than requiring more cost-effective orders in the hundreds of thousands or millions. Some of the world’s largest electronics giants such as Foxconn, Huawei, and ZTE work in parallel to a vibrant grassroots manufacturing ecosystem.

Take DJI, whose high-end drones have from humble beginnings found a following around the world. Or OnePlus, whose recently released smartphone offers, according to TechRadar, Samsung Galaxy S5 performance for half the price.

"It is easy to approach a manufacturer in Shenzhen," Silvia Lindtner, assistant professor at the University of Michigan and researcher into the maker movement on the mainland explains to South China Morning Post. "Even if you’re a small startup, many of them will take an interest because it’s like, ‘That could be a business opportunity’."

A Silicon Dragon Future?

Donald Trump responded to Far East’s recent market chaos by arguing that America ought now ‘decouple’ from China. Trump’s hyperbole is, not for the first time, a little wide of the mark. Cities like Shenzhen are now irrevocably woven into the fabric of the global economy, its workers and innovators integral cogs in the supply chain machine of countless companies. As most of the mainland’s bourses are slumping, China needs to look to its cities like Shenzhen: the start-up petri-dishes that turn a sleepy fishing villages of 30,000 townspeople into a ‘Maker’s Dream City’ of 12 million people within three blazing decades.

A confluence of money, entrepreneurship and makerspace philosophy places within Shenzhen’s reach the Silicon Valley mantle. If the city can weather China’s bursting bubble and ensure its makerspace-philosophy continues upon its trajectory, the "Silicon Valley" title may even be outstripped by the more relevant "Silicon Dragon"

Amol is a co-founder of companies including Virgin Mobile, Peek, Halo andKnotable, built a building in New York called East of East, and studied cognitive science for his Ph.D.


0 COMMENTS ^ Go back to Top
WRITE A COMMENT ^ Go back to Top
 
Your email address will not be published.
Nickname
Email
Comment
Validation Code
   
 
 
NEWS
Logicom launched Cloud Marketplace platform in Romania

Logicom, one of the leading distributors of IT solutions and services and Microsoft Cloud Solution provider, announced the launch of Cloud Marketplace platform in Romania.

 Read Full article »
Excelian Luxoft Financial Services strengthens Its APAC presence with the acquisition of derivIT

Luxoft Holding, leading provider of software development services and innovative IT solutions to a global client base, announced that it has entered into a Share Purchase Agreement to acquire derivIT, a Singapo

 Read Full article »
SAP: Only four percent of companies offer customer experience based on contextual data to clients

According to latest findings of business and technology software solutions provider SAP conducted together with CMO Council, only four percent of companies offer real time customer experience based on contextua

 Read Full article »
Manpower: One out of three Romanian companies will hire people in second quarter, 2017

About a third of employers in Romania anticipate an increase of the number of employees in the second quarter of 2017, while only 7 per cent of company representatives foresee a drop of personnel, according to

 Read Full article »
Luxoft depicts top five global trends in software in 2017

According to the latest findings of software and It solutions provider Luxoft, transforming industries and business models within the context of accelerated innovation and strengthened disruptive technologies p

 Read Full article »
Oracle surpasses 9 billion US dollars worth revenues globally

Oracle Corporation announced fiscal 2017 Q3 results with total revenues up to 9.2 billion US dollars, a 2 per cent increase in US dollars and up 3 per cent increase in constant currency, the financial report st

 Read Full article »
Accenture Research: Three critical accelerators to closing the gender pay gap for class of 2020

Women graduating from university in developed markets in 2020 could be the first generation to close the gender pay gap in their professional lifetimes, according to new research from Accenture

 Read Full article »
CA Technologies positioned a leader for identity governance and administration

CA Technologies (NASDAQ:CA) has been positioned by Gartner, Inc., in the Leaders quadrant of the 2017 Gartner Magic Quadrant for Identity Governance and Administration (IGA).

 Read Full article »
SAP and Google announce co-innovation strategic partnership for global enterprises

During the Google Cloud Next '17 conference in San Francisco, the two companies announced the signing of a strategic co-innovation partnership between our two companies to help global enterprises run their busi

 Read Full article »
Voxpro opens office in Bucharest and hires 150 people

Multilingual business process outsourcing services provider Voxpro based in Cork, Ireland announced it would expand operations with a new office located in Bucharest where it plans to hire 150 people.

 Read Full article »
 
MOST RECENT VIDEO
 
 
MOST READ ARTICLES
» ROMANIAN OUTSOURCING AWARDS FOR EXCELL...
» Luxoft surged 40 per cent in 2015 – ...
» Exclusive OT print issue: Genpact may ...
» Manpower:Romania has world's third hig...
» SocGen's EBS division to grow 60%, exp...
» Bombardier: from Bucharest subway to t...
» People in Shared Services and Outsourc...
» Omnichannel: 4 pillars of a purposeful...
» Companies such as Endava and Fortech d...
» DB Global Technology: 40 per cent of t...
 
EDITOR CHOICE
TELUS International Europe: More proactive, personalized customer experience, thanks to the Internet of Things (IoT)

Industry research is apt to say we're on the cusp of a future full of "smart" devices — that is, billions of everyday items embedded with wireless internet connectivity

 Read Full article »
Romanian Outsourcing Summit: Focus on the added-value of business shared services in Romania

This year's edition of Romanian Outsourcing Summit joined representatives of the government and top representatives of leading companies operating in the sector of business shared services and related industrie

 Read Full article »
Romanian Outsourcing Summit reaches its third edition

OUTSOURCING TODAY, the integrated communication platform of the business services sector, powered by The Diplomat Bucharest, presents the Third Edition of the ROMANIAN OUTSOURCING SUMMIT on March 23rd 2017, at

 Read Full article »
The most critical Key Performance Indicator (KPI) in social media customer service

Measuring the impact that your social media interactions are having on your business — and your bottom line — can be a tricky endeavor. How can you really identify and quantify whether a particular social m

 Read Full article »
SAP employees to teach programming to scholars in Cluj-Napoca

Ten volunteers working for SAP company together with Cartea Daliei association will organize a Scratch programming teaching club to function at Emil Isac school based in Cluj-Napoca, the company announced.

 Read Full article »
Latest News  
 
about us | newsletter | contact | members area
Copyright © 2015 by Diplomat Media Events Design by Diplomat Media Events