Shenzhen: China’s “Silicon Valley”

It takes a grain of sand irritating an oyster to make a pearl. The city of Shenzhen, on the banks of the Pearl River, has taken silicon and, with the disruptive irritation of its energy and enterprise, created a pearl of a thriving technology hub.

 

More Moore

 

Moore’s Law states that every two years the number of components secured on a silicon chip will double. From the 1970s the population of the fishing village of Shenzhen grew with comparable power from 300,000 people to over ten million today. Its growth is a consequence of opportunities created by the silicon economy; freedoms granted it as a Special Economic Zone; its access to open source software and tools as well as funding and space allowing many start-ups businesses to get off the ground. Growth initially came from easily manufactured computer goods, but today Shenzhen is a technological vortex of innovation and enterprise that is vieing with California’s Silicon Valley, Cambridge’s Silicon Fen and Israel’s Silicon Wadi in the list of the world’s leading technology locations.

“If you were to do this in the U.S., you would just be importing the same materials from China anyway.” Jason Gui, co-founder of Vue

Mother of pearl

 

A secret of Shenzhen’s success was providing entrepreneurs access to resources. Start-ups get a leg up from the dozens of incubators and accelerators that offer office space, workshops, expertise and investment. One such is Hax that funds 30 or so start-ups each year. Such support allows start-ups to respond by developing and designing from concept to prototype into products in days – a process that takes weeks or months elsewhere. Expanding businesses can apply for venture capital from internet groups including Baidu, Alibaba and Tencent as well as international funders: there was a 90% increase in foreign investment in Shenzhen in the first three quarters of 2019. This year it attracted international companies including Airbus, Boston Consulting Group, and Accenture.

 

Sea turtles

 

Carl Pei, of smartphone maker OnePlus, says Shenzhen is inconveniently far from the consumer markets in the US, Europe and Japan and lacks an international perspective and skilled employees. However, he is not accounting for factors fuelling the cities explosive success. “Haigui” or sea turtles are foreign-educated Chinese graduates returning to take advantage of opportunities in Shenzhen. While distant from consumer markets, Jason Gui of Vue, a haigui using the Hax start-up incubator, counters by saying, Silicon Valley was “a little bit slow for us…  “If you were to do this in the U.S., you would just be importing the same materials from China anyway” – materials that are readily available in the city’s vast Huaqiangbei electronics market.

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