Once there were only 4 original SEZs in China, Shenzhen was the one with the least of official blessing.
Back in days, Shantou was the official favourite of the government, so all of China's money was poured into it.
But the party officials made huge, grave and extremely banal mistake: they thought they will suddenly institute growth where there is none just by issuing official edicts. People who used to the idea of getting anything from others with a simple "I want," were shocked, and felt disbelief when they saw for the first time that building "that market economy thing" was completely outside their capability. It showed them how inept they, the elite class, were.
Shantou was full of "5 star hotels" and first shopping malls in China, and Shenzhen was full of factory dorms and omnipresent smell of unwashed socks. You know, there rest is history. Where is Shantou now, and where is Shenzen?
Now, we live in Shenzhen where not only the empty hotels and shopping malls being constructed in droves, but also there are 10 empty investment funds for each remaining manufacturing company.
It appears that nor the government, nor the industry has learned this lesson.
Their desire to turn Shenzhen into "Fancy Global City®" borders on being a maniacal obsession.
These people have really hard time distinguishing in between cause and effect.
SF, and SV got the title of a global tech capital not because of dotcoms moving there, but because these localities made it possible for these dotcoms to grew up there. Them turning into global cities as a result is a consequence of this, not the cause.
Shenzhen was on track to becoming of a city where 80% of worlds production of anything electronic takes place, until demolitions of 2009-2011 that were catastrophic to the industry, and the later pivot to being a "Fancy Global City".
Not much on it in English, but that was like a magnitude 9 seismic event for the electronics industry globally. Any industry insider will confirm that.
First, demolitions began in 2009, the month new mayor moved in. At first, compensations were laughable. Imagine putting a factory for $20m USD just to discover a year after that you have to shutdown and and only be compensated for the land it stood on for $1m? In 2010, they began offering a relocation option to Shanwei, a totally middle-of-nowhere town without even one percent of Shenzhen's workforce. And in 2012, they very well made an ultimatum: "demolition by the end of the year, or right now if you refuse"
In total, around 15000 to 16000 factories were closed over the years and their land expropriated.
Most moved to outskirts of Shenzhen municipality, just to be 1 cm outside of Shenzhen city jurisdiction.
Longhua, Baoan outskirst, Dongguan. Zhuhai in particular scored a lot of heavy hitters, to Shenzhen mayor's disdain. Zhuhai gave "refugees" a complete carte-blanche to setup any factories they wanted.
Very very few factories did use their relocation option to Shanwei. Those were real heavy industry companies in their majority, because for them facilities relocation cost was a genuine life and death matter.
Best to say that 2009-2012 events have led to growth being scattered, and great loss of "cluster effect."
While Longhua was a rural locality before these event, it did scored few companies who moved into already existing, vacant plan economy era factories and refurbished them. Our Wi-Fi OEM contractor rents one of such factories. Longhua's officials were, of course, very glad to see such developments. There are few residential high rises there now for people who moved to work in those factories from Shenzhen. It will certainly acquire title of a city before the end of a decade.
Dongguan was already the second biggest manufacturing hub in the province after Shenzhen, and will soon take the first place from it.
Zhuhai, I bet, will be becoming what mayor of Shenzhen city originally wanted, a high-tech, high-value service/product hub. The city was very receptive to genuine tech companies, and was very accommodating when it was coming to securing land for factories and campuses, as well as guarding newcomer companies from overzealous bureaucracy.
P.S. I think I need to clarify what to understand under factory. The digit of 15000 companies is given for all "manufacturing enterprises," which could be anything from a garage workshop, to a one man factory ran from a flat.
Any guesses where is the next Shenzhen going to be? Or is there now a dispersion/diaspora wave occurring that makes it difficult to determine a new center of gravity?
>dispersion/diaspora wave occurring that makes it difficult to determine a new center of gravity?
Yes, dispersion is real. Local oldtimers say that 10 years ago, things were very convenient when one can walk from an RnD office to factory floor in 15 minutes. Now, with factories located in a circular pattern around Shenzhen city, you have to drive 2 hours from downtown Shenzhen to first locality with significant industrial presence. And if you get stuck in traffic doing so, it sucks.
These commutes in between RnD offices and factory floors are giant time wasters. Not to say that this is even a bigger nightmare for component logistics, especially for companies with longer supply chains.
To add to this, it takes really big money to drag high-end talent to places like Longhua. Living in a skyscraper apartment next to a collective farm with pig pens is not for everybody.
Everybody wants to live in the fancy urban core, and those who can afford, certainly do. Yet, jobs there are few, unless you want to work as a starbucks barista.
I'd say that Dongguan will take over Shenzhen for general light industry manufacturing, and Zhuhai for high-value service/products/stuff in next 5 years, and Shenzhen as it once was will be gone.
Shenzhen has changed a lot in the past three years (when hasn't it) - but the specific trend I've noticed is the electronics factories moving out and the high end malls moving in.
The cost of maintaining a 3x3 meter booth in HQB has continued to rise (especially now that the subway line construction has finished) while real business has shifted online to TaoBao.
Yes, it's still the undisputed electronics center of the world but there's a palatable shift on the street from wholesale to retail. Factories I work with there say as much. Permitting is becoming a chore. Home ownership in a licensed complex (as opposed to unlicensed) is unattainable. Even trips to T2's are going further and further afield.
Why would I want to bother going to HQB when I can just order from those guys on taobao? The consumerization of the electronics market is sad for those into browsing.. it's fun. But really, if you want to prototype something it's way easier to order online and if you actually want to produce something then random stuff from HQB or taobao isn't going to cut it anyway.
1) You get a visceral read on what's up and coming - every month and half it's different but volume doesn't lie. Reading the tech news you're in a filter bubble for whatever company is spending the most on PR but on the street you get a real sense for what's being made in volume. Pulling the threads on why this new widget is trending this month is always educational.
2) For prototyping something I find HQB quicker - you can get supplies, programmers, and adapters all in under an hour - usually it was just a new test fixture for isolating a QA issue you've found but having it down the street is wonderful. For production, yes, by all means go through your supplier network.
3) Going in person let me build up guanxi with the niche vendors where I was a repeat customer. As a 6'4" huge foreigner I left an impression, and in turn was able to leverage that network to find things I couldn't/didn't know of. WeChat has streamlined this but the tone is completely different there between people I've met in person and people I haven't.
Their HQB stand was usually a 'satellite' showcase for their factory which was located in the greater Guangdong province. Usually Bao'an. Now they're closing their showcase in the mall and just having an online presence and a factory showroom (if you don't mind a one hour drive).
Assuming China's economy continues to grow over time (a good bet, regardless of pace), one certainty is that there are going to be plenty of euphoric runs and meltdowns to match. With the immense wealth that China has compiled, it's inevitably going to push bubbles in asset classes from time to time, whether in real estate or tech. Culturally the Chinese seem to enjoy speculative investment at least as much as the US does. The meltdown in question is about as interesting in terms of consequence, as the guaranteed flood of worthless stories that will claim Silicon Valley is dead (again, for the nth time) after the next recession hits.
I was struck by the map showing the emptying out of the minor towns and cities. While it's something I've been aware of for years, that visualisation is particularly stunning (and, tangentally, with such concentrations things like high-speed rail and China's delivery/Taobao culture look very efficient).
I don't see anything in the article that supports the thesis of the title? Shenzhen has grown 858% in 25 years, and faces growing pains. OK, but that's not a "meltdown" like the title suggests.
Yes, the title is completely detached from the article - usually there is at least a small reference in the copy to justify sensationalist titles, but here I didn't find any.
I probably didn't read every word carefully, but does the article really reflect the HN title? I don't really see it in there. What I read is "It grew a lot, and it's not perfect". Of course such kind of project is government created and therefore is kept alive as long as the government sees value in it. It's not different in California. Such kind of areas don't survive all by themselves. In reality innovation/investing is not something that can keep a city alive by itself.
Lived in SZ for 2 years, the comments in the media are too negative. Shenzhen is losing manufacturing, all the while the city's GDP continues to grow. Why? Because it's moving into more higher value areas such as software. I don't see any downside for SZ, it's location at the heart of the region, between HK, GZ etc, makes it well placed to continue to thrive.
This article basically said nothing. So there's a bunch of wanna be maker spaces where nothing gets made? So too are there a bunch of wanna be accelerators in the bay area that never fund anything. So what?
Once there were only 4 original SEZs in China, Shenzhen was the one with the least of official blessing.
Back in days, Shantou was the official favourite of the government, so all of China's money was poured into it.
But the party officials made huge, grave and extremely banal mistake: they thought they will suddenly institute growth where there is none just by issuing official edicts. People who used to the idea of getting anything from others with a simple "I want," were shocked, and felt disbelief when they saw for the first time that building "that market economy thing" was completely outside their capability. It showed them how inept they, the elite class, were.
Shantou was full of "5 star hotels" and first shopping malls in China, and Shenzhen was full of factory dorms and omnipresent smell of unwashed socks. You know, there rest is history. Where is Shantou now, and where is Shenzen?
Now, we live in Shenzhen where not only the empty hotels and shopping malls being constructed in droves, but also there are 10 empty investment funds for each remaining manufacturing company.
It appears that nor the government, nor the industry has learned this lesson.
Make your conclusions.