Shenzhen, the Silicon Valley of Hardware

I was reading the Why Startups Are Leaving Silicon Valley article, of how startups are moving out of the Silicon Valley into other rising cities with different cities attracting different industries, when my eyes lingered on the words “Shenzhen for hardware”. SHENZHEN! My hometown! Other than a sense of pride, I was surprised to see that Shenzhen being referred to as the “Silicon Valley of Hardware”. Growing up in the big city, I was aware of the “Shenzhen speed”, a tiny fishing village evolving into one of the major metropolitan cities in China in merely a couple decades. Now you might be wondering, if Shenzhen is such an important city, why have I never heard of it? Do you know that on the back of your iphone it says “Designed by Apple in California. Assembled in China”? More specifically, they were assembled in Shenzhen. If you have ordered things from China, mostly likely these items are shipped from Shenzhen. The Chinese tech giants Tencent and Huawei were both founded in Shenzhen. Even the recent controversy surrounding gene-editing babies originated from Shenzhen. I have always referred to it as the city right next to Hong Kong, which has a much wider reputation worldwide. Little do I know, Shenzhen is gaining more global recognition than I realized. I know I had to dig deeper as to why Shenzhen becomes the Chinese Silicon Valley.

A time lapse video of Shenzhen, featuring a light show celebrating the 40th year of the Economic Reform Movement. Fun fact, you can spot my home at 1:20. It’s one of the buildings on the right.

History and personal stories

China was suffering from poor economic performance ever after the new nation was born in 1949. To reboot the economy, in 1979 as part of the Economic Reform, Communist Party leader Deng Xiaoping designated Shenzhen, still a fishing village of 30 thousand people, as the first of five special economic zones, due to its convenient location to Hong Kong. Shenzhen, created to be an experimental ground for the practice of market capitalism guided with socialism values, was given special tax benefits and preferential treatment to foreign investment. From then on, the city bloomed, attracting both capital and talents from all provinces in China and all over the world. Today, Shenzhen has a population of 12.5 million people and by 2017, its GDP expanded by 8.8% to $338 billion, 4.13% of which went into R&D, surpassing its neighbor Hong Kong. Over 40% of the output came from innovative businesses such as internet, biotech and telecom.

Technology, knowledge, and a window to the external world.

Shenzhen’s motto

If you call New York the melting pot of the world, I would call Shenzhen the melting pot of China. Shenzhen’s welcoming atmosphere attracts people all over China. Almost everyone in Shenzhen is an immigrant from another province. My dad and mom, for example, both came to Shenzhen to seek opportunities during its growing stage. My dad came to Shenzhen in 1988, wanting to learn cutting edge technology which are inaccessible in other inland provinces. He worked at a firm called SAST, which specialized in electronic appliances such as CDs, DVDs, DVD players. At first, he worked in the management part of R&D. Realizing the lack of electronic and computer science talents, he took it upon himself to learn these skills and became a lead engineer in the firm. My mom came to Shenzhen in 1992 and took advantage of the graduate program by Peking University offered in Shenzhen. Then she met my dad and they got married 🙂

You are a Shenzhener once you are here.

Shenzhen’s welcoming slogan

Silicon Valley of Hardware

While local players like Tencent and Huawei contributed gained China a say in the telecom, software and AI field, the city’s true claim to fame is hardware. 90% of the world’s phones and computers are built in Shenzhen. With hundreds of thousands of engineers, rapid prototyping, unparalleled supply chain flexibility and big scale, Shenzhen is now the go-to city for businesses building robots, drones, smart sensors and other hardware related technology.

Not simply a place to fix your phones or computers, Shenzhen’s Huangqiangbei Electronics Market is the powerhouse of gadgets. From LED lights to circuit boards, you can basically find any component to build intelligent hardware with a low cost. David Li, director of Shenzhen Open Innovation Lab, said that with a gigantic electronic manufacture base, Shenzhen experiments with electronics because that has become part of Shenzhen’s natural resources. Hardware designers and entrepreneurs come to the market to find not only desired parts, but also ideas and inspiration. The creative ecosystem in Shenzhen fuels the tech and startup industry and the abundant resources speed up the process of prototyping. “One week of R&D in Shenzhen, takes one month in the rest of the world.”

To get started with hardware entrepreneurship, HAX Accelerator is the place to visit. Founded in 2011 by Cyril Ebersweiler and Sean O’Sullivan, HAX is the first venture capital firm in the world focused on hardware startups. The program selects startups with a hardware element and offers on-site support from building initial prototypes to networking with global retailers. Stage 1 of the program, HAX Seed, utilizes the city’s startup-friendly ecosystem and proximity to supply chain, helping companies build prototypes, mechanical design and factory manufacture. Essentially, the HAX Seed program in Shenzhen is like your Computer Science or Engineering lab and HAX is like your TA. Companies receive investment from the SOSV Hardware scaling fund in exchange for 10% equity. Stage 2 of the program, HAX Growth based in San Francisco, offers mentorship on scaling and networking. With the Silicon Valley advantage, startups can connect with corporates, investors, partners and press. HAX Growth has no cash investment associated in exchange of 2% equity within the new startups.

The new makers in Shenzhen

Similar to its software counterpart, hackers, makers take advantage of the free, open-source hardware resources, creating new devices and tinkering existing ones. The word “maker” comes from MAKE, a magazine by O’Reilly Media since 2004. MAKE focuses on DIY(do it yourself) and DIWO (do it with others) projects ranging from computers. electronics, robotics, metalworking to woodworking. You can see how this movement clicks with Shenzhen’s hardware culture. The city literally buzzes with innovative ideas. With the open source hardware resources, they can learn from other creators in the industry, improving their designs and creating something more. One can download 3D model plans and print their own. If you like someone’s work, you can base your own design off of the existing model. One of the problem revolving open source resources is the safety of intellectual property. In other industries, people might be sued for creating a similar product. Instead of calling these people “copycats”, makers in Shenzhen call them “fans”. Fans are the makers who make for fun, and if you want to stay on top of the game, you have to renovate your idea and move on to the next big thing. This model can be better summarized as “innovation through integration”.

With the idea that everyone can make and the fast pace of the vibrant city, the maker mentality is expanding beyond the hardware engineers and even to a non-conventional age group. Kids in Shenzhen are learning computer programing and building simple electric circuits since as early as elementary school. Take my 10-year-old brother for example. My mom signed him up to take free classes by our local library‘s MakerSpace program. By now, he is fluent in coding his own games in Scratch, a visual blocked-based programming language developed by MIT Media Lab. In this picture, he built a “cardboard monster” whose eyes lit up when the switch was flipped.

My brother, Victor, is the one in blue top and grey striped pants

The open-source ecosystem and abundant supply chain cultivate the startup culture in Shenzhen. In addition, the city is shaping future innovators and makers from a young age. With much potential yet to be discovered, I am excited to see what role Shenzhen will play in the global market of technology and innovation.

8 thoughts on “Shenzhen, the Silicon Valley of Hardware

  1. Very well written and very informative. I still remember the days where I owned an “OPhone”, an iPhone copycat made in Shenzhen. Its amazing how Shenzhen was able to earn it’s title of innovation. I definitely want to look more into the drone industry, because some of the things they had in the video were incredible. I hope to visit Shenzhen there myself one day. The light show really made the city look like a scene out of a movie. Awesome post.


    • One of the best drone companies in the world, DJI, was founded in Shenzhen. From its wiki page, it says DJI drones accounts for 70% of the world’s drone market.


  2. Woah Shenzhen looks super cool! I really love the idea of “fans” instead of “copycats.” By rephrasing it that way Shenzhen really shows where its priorities lie. It is not trying to make a select few rich. Instead it sounds like they are trying to just promote the creation of incredible things for the benefit of everyone. Now, I am sure it is not that simple but it sure sounds more friendly than some of the stuff that goes on with patents in the US. I definitely want to visit someday!


    • Yeah, the line of copying or not in the open source community (software or hardware) is blurry. Several articles I read talked about this issue, but they didn’t give a clear solution to the situation. In China, the problem of copyrights is just gaining awareness in recent years.


  3. Great post! This was a very interesting read, and the part that caught me the most was how young kids are learning computer programming and other technical subjects. I wish I had an opportunity to learn things that young. This reminds me of an article I tweeted about tech startups scouting kids in high school. It seems like kids from this area will greatly benefit from learning so young, and will be ahead in the game of recruiting!


  4. Cool post, the sheer size of China and some of its major cities always amazes me. Enjoyed learning more about Shenzhen. I think something that many people in the U.S. don’t realize is that some of Silicon Valley’s biggest companies are facing stiff competition from the likes of Alibaba, Tencent, Baidu, Xiaomi, etc. Education in Shenzhen is a great asset for policymakers to invest in, since it will help the city to remain globally competitive with a talented workforce.


  5. What a great post. I have certainly heard of Shenzhen, but the video was new to me. Thanks for your insiders perspective! I do think it’s important to keep a global eye on innovation, even if we are going to SF.


  6. Great post Melanie! It’s such a shame that I didn’t know too much about Shenzhen other than that it’s a city of innovation, given the fact that I’m from not too far away from it. The history and programs of hardware entrepreneurship you mentioned definitely sparked my interest to look more into the current situation of this beautiful city!


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