It has been said many times that Shenzhen is the hardware capital of the world, however, what exactly makes this city the ideal place to manufacture your hardware product? From the amount of materials available to its mentality, there seems like no other place in the world offers a structure such as this former fishermen village. “China turns your working 3D print prototype into a product that is actually possible to manufacture in mass production”, said Thijmen de Schipper, Co-President of YULU Toys, who manufactured his products there.
Shenzhen is, of course, not the only place where hardwares pieces are manufactured. But what makes it so special is the amount of markets and manufacturers in the area. The Huaqiangbei Commercial Street electronics market is the largest of its kind and has 20 different shopping malls that cover 70 million square feet. The city also makes 90% of the world’s electronics. Which means that the the time spent to build a product is significantly reduced in Shenzhen if we compare to other areas of the world.
Besides, because Huaqiangbei Electronics Market is the world’s largest electronics market, it comes as no surprise that the variety of components and shops is significantly bigger than anywhere else. In this market there are over one hundred shops and vendors who sell, repair, and modify electronic components and devices for other inventors and consumers.
Not only is the process a lot faster, but it is also easier. Manufacturers are easily reachable and the concentration of knowledge in the area is huge, which helps when going from design to an actual product. “You go to China to make sure that you prototype something that is also manufacturable”, explained Thijmen,
One of the factors that influence this is that some U.S. companies usually have their distribution center there, which means that if you want to work with them, it’s better to be in the country.
“The biggest advantage of setting up shop in China comes down to the distribution and logistical processes of our customers. Most big retailers have their distribution center, Quality Assurance and Logistical processes located in China, so if you want to work with Walmart USA, for example, they request products out of China because they don’t ship from The Netherlands to the U.S., they only ship from China”, said Thijmen.
3. QUALITY AND COSTS
People have often associated products made in China with a lower quality, however, this is far from the truth. Shenzhen’s industry is incredibly well developed, and the availability of products compares to no other. Its machines are both efficient and of high-quality, especially when it comes to 3D printing.
Not to mention the fact that it is a lot cheaper to manufacture a product in China. Firstly because the components are manufactured there, but also because China offers a relatively low corporate tax rate of 25 percent. What’s more, according to a report from the Organization for Economic Cooperation and Development, in China there is no tax on interest earned in bank accounts, the country’s dividend tax rate is between 5 and 10 percent, and there’s no capital gains tax.
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4. THE ECOSYSTEM
The ecosystem in Shenzhen is also one big reason to manufacture your hardware product there. It is an inspirational place, birth of the latest tech trends and that offers all types of support for innovators wanting to work there. From makerspaces, incubators and accelerators that offer all the support a startup could possibly need, to experts and government aid.
Finally, and most importantly, the reason why Shenzhen grew to be what it is now is because of its mentality. The community strongly believes in the principle of the freedom to create, explore, and invent. There is no such thing as intellectual property rights and closely-guarded prototypes. The open source mentality is how they operate. Ideas are shared and collaboration is the key. Everyone has access to the information, and everyone and anyone can modify it.
If you want to know more about Shenzhen’s Innovation Ecosystem, check out this diagram and visualize all the support available for startups in that region.