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From a fisherman village to the Silicon Valley of hardware: Dissecting the Shenzhen ecosystem

DIGITAL VENTURES December 27, 2018 11:42 AM

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It is widely recognized that China is one of the largest manufacturing bases of the world and a familiar city for this purpose is Shenzhen. Believe it not, today, Shenzhen is not only an outsourcing hub but is among China’s top city for innovation that some have started calling Shenzhen as the Silicon Valley of Hardware. As China is becoming a leader in technology, Shenzhen’s role becomes even more interesting. Today, Digital Ventures will share about the Shenzhen ecosystem, the mechanism that has driven this city towards becoming a hardware hub.

 

 

From a fisherman village to the Silicon Valley of hardware

30 years ago, Shenzhen was a city dependent on the fishery industry. However, after the arrival of technology, the city turned to hardware production factories that is well-recognized by small and large companies worldwide. Later, it has become one of the top hardware manufacturers of the world.

Shenzhen became a special economic zone since 1980 by starting with toys and textile production. Then, it continued to high-value products such as electronics for consumers. In 1990, Shenzhen began producing more electronics which created an ecosystem for hardware manufacturing that supported the whole supply chain. This was the foundation that later made Shenzhen become a hardware hub.

A key turning point that helped Shenzhen leap into becoming a hardware hub was the 2015 5-year development city plan by Shenzhen’s Party Committee Secretary. It emphasized infrastructure development such as public utilities, education, and medical care. This aimed to attract skillful talents to the city to support the city’s ecosystem.

 

Robotics: Leading China towards becoming the world’s factory

As Shenzhen became the center for the world’s hardware production, they began developing other innovation to support this aspect. One of which was robotics that underwent solid development. As a result, Shenzhen became an advanced manufacturing city and robotics became the city’s outstanding industry.

This can be observed from Shenzhen’s leading startups which are all robotics manufacturers and advanced manufacturing system developers. DJI produces various robotics items but is known for its camera drones. UBTech designs robots for education. Meta Factory is a made to order hardware product designer which requires advanced manufacturing so that each product is produced with speed and in accordance with client’s requests.

 

 

Number of patents: Confirmation of an innovation development city

Not only is Shenzhen strong for its industry, but the city’s innovation invention rate is also quite remarkable. This is seen from the number of patent filing in Shenzhen. According to OECD’s survey, since 2013, R&D investment is more than 4% of the GDP. This number is rather high and on par with Israel and South Korea.

The World Intellectual Property Organization states that China holds the world’s highest rate for patent filing in its country. In 2015, China filed over 1,102,000 patents, much higher than other innovation leaders such as USA, Japan, and Germany.

As we scope down, we find that Shenzhen is the city with the highest patent filing rate. China’s National Intellectual Property Administration states that in 2015 the number of patent filing in Shenzhen is 3-folds higher than Beijing which ranked second.

The numerous patent application reflects their recognition for R&D. As a result, leading tech companies and startups with various world-class products and solutions are developed at Shenzhen.

 

Prominent Shenzhen tech companies and startups

Shenzhen is home to several leading Chinese tech companies and startups. The Chinese Unicorn Development reports that, in 2016, there were 13 unicorn startups in Shenzhen. Their total value accounts for over 39 billion USD.

To get a better picture of the Shenzhen ecosystem, we have listed leading Shenzhen-based tech companies and startups below:

  • Tencent is one of the three tech giants in China who was born and has its headquarters in Shenzhen. Their products and services cover various industries with a familiar one in the service platform called WeChat.
  • DJI is a startup that gadget fans are surely familiar with. They are the world’s market leader of camera drones’ manufacturer. Today, they are the largest unicorn in Shenzhen with a company value of 10 billion USD.
  • UBTech is one of Chinese unicorn startup in robotics. They design a series of robots for education and entertainment as well as use AI to enhance intelligence. Recently, they have applied Amazon’s Alexa AI assistant in their products.
  • WeBank is a FinTech startup who is the first to develop online private banking in China. Their service includes the complete deposit and loan services with Tencent as the main investor.
  • Meta Factory is a startup that offers a solution for hardware products. Services include prototype designs to manufacturing and sourcing parts. This is another noteworthy startup in Shenzhen.

 

It can be seen that the move from a factory town to a hardware innovation base of the world began from a transformation at the ecosystem especially from the government’s plan and dedicated support for R&D. Digital Ventures have more stories on these interesting development from different tech scenes. Follow us for more updates.

Thank you for the information from sipo.gov.cn, coresight.com, and startupgenome.com