Not long ago, AAC ran a piece about what cities around the globe could rival Silicon Valley as a tech center in the coming years. Shenzhen was one of four cities listed. Here's a closer look at why and how it's earning the title of China's Silicon Valley.
Most people haven’t heard of Shenzhen, China. But the city, which is located in southern China right next door to Hong Kong, is the source of China’s technology explosion.
Shenzhen used to be a fishing village known for its shopping, but over the years it has grown to become China’s Silicon Valley.
Image courtesy of Forbes.
Shenzhen has been focusing on a few things to make it a technological hub like Silicon Valley: the attraction of large companies, factory infrastructure, and large-scale support and investment. Its quick growth has drawn a lot of attention from people all over the world. The resources that Shenzhen possesses are abundant and not easy to come by, which is why it is now being looked at as one of the new technology hubs in the world.
Many new startups have found Shenzhen the place to be because creators can quickly turn their ideas into products. Well-established companies have also been attracted to Shenzhen because they can work directly with the manufacturers rather than being so far away. A lot of big companies and production centers are already located in Shenzhen including Foxxconn, MakerBot, and Huawei. Being able to directly interface with manufacturers and quickly turn an idea into a reality has been a real selling point for companies.
A Huawei facility in Shenzhen. Image courtesy of phoneArena.
Shenzhen has seen enormous amounts of support from the government and it was declared the first Special Economic Zone by Deng Xiaoping in 1980. That intentional development, combined with the subsequent impact of companies both big and small moving to Shenzhen, is astounding: Shenzhen’s economy increased by 8.9% compared to the national growth of 6.9%.
Location & Infrastructure
Shenzhen's location has been a huge factor in why companies want to move into the city because it is just across the border of Hong Kong, which is a financial center in China. In addition to being so close to Beijing, Shenzhen is also very easy to get to and travel within the city is also very easy.
Image courtesy of Google Maps.
The proximity to Hong Kong has also helped fuel the investments into Shenzhen and it’s growing technology scene. Hong Kong has a large amount of investors that have taken an interest in the technology and innovation in Shenzhen. Other groups in China have also taken notice of Shenzhen’s growth such as China’s Merchant Group and the NRDC, National Development and Reform. These groups have helped to jumpstart the growth in Shenzhen by supporting the building of the infrastructure with incubators and maker spaces.
The factory infrastructure in Shenzhen has both breadth and depth: There are offices, PCB manufacturers, and shipping resources around every corner. Because of the large number of factories, startups can quickly test and prototype different ideas without such a large risk involved if the idea doesn’t work out.
Shenzhen's High-Tech Industrial Park. Image courtesy of Wikipedia.
Shenzhen is very powerful in this respect because hardware is much harder to get off the ground because of the large overhead and manufacturing demands that come along with expanding the business. The large factory infrastructure makes the production more cost effective and because the manufacturing is so fast the companies can focus on the ideas and developing other products.
Shenzhen is becoming the Silicon Valley of China because of its ability to attract new companies, the factory infrastructure, and its support and investment from many different sources. Shenzhen is just beginning to reach its peak of technology. More and more companies continue to expand and flock to Shenzhen to utilize its resources. Shenzhen has a lot of attractive qualities whether you are a startup, a well-established company, or an investor looking for a new opportunity.