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Shenzhen trip report – visiting the world's manufacturing ecosystem

203 points by sadfaceunread 12y ago

userbinator 12y ago
Visiting Shenzhen is highly recommended if you have any interest in electronics at all --- I'd say it's definitely an eye-opening experience, and can change your perspective on the manufacturing costs of all the things we usually take for granted. bunnie has organised another trip there near the end of this month, if you're interested: http://www.bunniestudios.com/blog/?p=4087 http://www.bunniestudios.com/blog/?p=4087
- prawn 12y ago
  I would love to do more factory/production tours but in many countries it seems that insurance and legal issues have made them too difficult. Brewery tours are common (the Budvar one in the Czech Republic is great) but I'd be just as interested in car manufacture, electronics, furniture, clothing, almost anything. Are there any formal tours in China? I don't mean the sort of tour where you are driven around in a bus visiting factories, but an index of factories that are willing to take an appointment to visit for a fee, just out of curiosity.
  - jonmrodriguez 12y ago
    In the USA at least, a lot of factories can give tours if you have a friend who works there. For example, you could tour the SpaceX rocket factory in Hawthorne, CA, which is AWESOME.
    - Scoundreller 12y ago
      I guess this is the case, as they like to wow suppliers/customers or use it as a way to keep a trucker/customer to wait X minutes until the order is actually done without complaining too much. The "tour for a friend" is probably seen as an opportunity to practice the tour when it doesn't really matter, test new things, etc. I got to tour a sulphuric acid plant. It was fun. The friend worked in the closest equivalent to hell that I've ever seen (well, the cauldron part anyway). I love walking by a X000 fahrenheit tank with the guide saying as you have to crouch around to get around it "Don't go near, hot!".
  - leoedin 12y ago
    In the UK most factory tours seem to involve either a) people related in some way by business (clients here for a meeting, why not take them round the factory), b) student groups, c) family/friends or d) the local members group for professional institutions (eg in the UK the institute of mechanical engineers). I'd imagine your best bet is to see what the latter groups are doing (although whether or not you can attend without having the right degree is probably fairly dependent on local policies and how many other people want to attend).
  - akgerber 12y ago
    There's an abandoned blast furnace (Carrie Furnace) outside Pittsburgh that offers occasional tours, and also doesn't have any meaningful security.
- starky 12y ago
  I'd second this. I've been there a couple times and it is quite the experience. I only visited one electronics factory, and the rest were other types of factories that make mechanical components (injection molding, die casting, sheet metal, silicone molding, etc.) but they were all fascinating and I have a lot better understanding about the supply chain now.
  - ascorbic 12y ago
    I'll third it too. I visited earlier this year with a UK trade mission for the Maker Faire and to meet suppliers. I visited several factories, both with the trade mission and independently, and it was one of the most fascinating weeks of my life. One place that I'd definitely suggest visiting, if only for the contrast with most other manufacturers, is Seeed Studios. Really cool place, and totally unlike any other place I visited. It's also very well set up for tours.
aftbit 12y ago
This is a great write-up about a world into which I normally have no visibility. I didn't realize on a that manufacturing capabilities for small-scale operations had advanced that much.
jonmrodriguez 12y ago
> In an interesting twist, the factory boss suggested that we could build the precision molding tools in China and then send these tools to a US shop for running production. > This role reversal is an indicator of how the technology, trade, and know-how for injection molding has shifted to Shenzhen. Even if US has the manufacturing capacity, key parts of the knowledge ecosystem currently exist only in Shenzhen. This is what really saddens me about outsourcing manufacturing from America, is that we lose the knowledge about manufacturing technology. Although we may be at the forefront of software development, in many areas of manufacturing technology the cutting edge development happens in China now. I'd really like if we could bring about a revival in manufacturing engineering in the US. Other than the ecosystem effect, the main way that China has an advantage is labor cost, so I propose that we could build up a "Shenzhen of America" in the San Diego / Tijuana free trade zone. The repetitive work that takes a lot of hours would be done on the Mexico side, where labor is now almost as cheap as China. The manufacturing engineering and tool-making would both happen on the American side, bringing these jobs back to the USA from China. San Diego / Tijuana are shipping ports on the Pacific, facilitating importing electronic components from China, Japan, and Korea, and then we could do all of the PCB fab, PCB assembly, injection molding, and final device assembly (as well as all tooling for all of these processes) over here in the Americas. I'm very supportive of China's development but competition is good and as American citizens we can't just throw in the towel, we have to build our manufacturing knowledgebase back up and be willing to actually compete.
- dbarlett 12y ago
  Isn't that what a maquiladora [1] is? [1] http://en.wikipedia.org/wiki/Maquiladora http://en.wikipedia.org/wiki/Maquiladora
  - jonmrodriguez 12y ago
    Yes! Although the term Maquiladora may have a connotation of low-tech work, e.g. textiles rather than high-tech electronics.
- jordanbaucke 12y ago
  That would probably require a revival of Americans actually having the motivation to go to trade-school to be a machinist, carpenter, electronics manufacturing technician, etc. On the other hand the US is steeped in an omnipresent push toward the value of a '4-year degree' no matter the discipline. Until there is a serious motivational shift toward technical-trade, America's workforce will continue to atrophy it's industrial knowledge base.
Cookingboy 12y ago
One anecdotal story: One summer I went back to Shenzhen and decided to get a PlayStation 2 with a mod chip installed so I can play pirated games (I was a poor student). Now, there was this one mod chip that was really good but requires a bit of soldering work to get it installed right, and me, being an EE student, was no stranger to a soldering iron, so I planned to do it myself after buying the chip. So I bought a brand new PS2/mod chip combo from this small electronics store and the shirtless owner actually offered to solder it for me for free. I took up on the offer since I get to test the chip on the spot as well. He opened up the PS2 case, with one hand took up a soldering iron, while the other hand holding a cigarette, started working. I nervously watched him tapping around my brand new PS2's motherboard with just one hand while paying most of the attention to the live soccer game on TV at the time. 5 minutes later he was finished and 8 years later that PS2 is still working and reads all pirated discs with absolutely no problems. Throughout college I've never met anyone who's as good at soldering as this shirtless electronics shop owner I met in Shenzhen.
- seanmcdirmid 12y ago
  You can find these people everywhere in China, even Beijing. Weirdly enough, many of them here are Uighers.
- lovelearning 12y ago
  One possible conclusion I drew from your anecdote is fascinating me : that if governments formulate the right policies to create powerful new industries and demand for them, even those who aren't formally educated in those industries are capable of making themselves just as skilled, if not more, simply by repeatedly practising those skills and driven by the profit motive (I'm assuming that this shop owner is not formally educated in EE).
narrator 12y ago
The most interesting thing to me about China's capitalism is the massive amount of small firms. I think there's a tendency among western firms to use cheap financial capital to acquire smaller firms. I'm not sure if this is the case in China where the government is more directly involved in directing lending and not focused on mergers and acquisitions.
- ams6110 12y ago
  Capitalism is pretty new to China. Check back in 20-50 years.
Wogef 12y ago
I’ve lived in Shenzhen for almost 10 years (native New Yorker). This article was a bit better than most for Shenzhen- it was at least willing to speculate that a lot of Shenzhen’s advantage now comes from talent and infrastructure. It’s still pretty common for people to attribute it entirely to lower labor costs- which is just not the case. Shenzhen, like New York is an immigrant city. People come from all over China to get ahead, and get rich. Unlike New York it’s only a bit over 30 years old- and back then it was basically a fishing village. This is important because of the Hukou system: http://en.wikipedia.org/wiki/Hukou_system http://en.wikipedia.org/wiki/Hukou_system It’s a bit long to go into (check the link) but basically it ties people to their birthplace and gives them a significant “home field” advantage. If you are in Shanghai or Beijing and have a local Hukou you have access to the best education system, the highest paid jobs in both the public and private sector, and often a large network of friends and family members in local government. People from Shanghai or Beijing rarely immigrate to Shenzhen because they lose that advantage and are forced to compete with what they would consider the rabble. People from other provinces can rarely compete on even ground with locals- both for legal and cultural reasons. The rivalry is less like US States and more like countries within the EU- but worse. A “local” in Shanghai may feel perfectly entitled to cut to the front of a line if those people are "Waidiren” (outer province people- 外地人). It’s considered perfectly reasonable for migrant children not to get the same healthcare or schooling. The local dialog about them in every city is a familiar one- basically “damned dirty immigrants taking our jobs and committing crimes”. Needless to say the Central Government is quite keen to keep the provinces deeply prejudiced against each other- because it distracts their attention from the real culprits. Shenzhen on the other hand is by far the most egalitarian city in China. The city is so young that no one really has an "Uncle" etc. in local government willing to “investigate” competitors or send some easy government contracts their way. There is little difference between those few born in Shenzhen and those who came a few years ago. There is no local dialect that is used to subtly determine who’s “local”- everyone basically speaks Mandarin. So for people in relatively poor provinces (Hunan, Hubei etc), with brains and education but little in the way of prospects due to their Hukou, Shenzhen represents the best possible opportunity to compete in a first tier city almost purely on merit. Success here is based largely on hustle, brains and hard work- while in other cities at least 50% is simple corruption (well placed relatives in banking and government). Most Chinese would place the number even higher. So Shenzhen gets a lot of China’s best and brightest, but also those who are inherently ambitious- because they were willing to leave their hometowns and family (a much bigger deal here). A huge amount of the slow grinding machinery of legacy corruption does not exist here (massive numbers of bureaucrats given comfortable jobs doing basically nothing as a form of social welfare). It happens occasional sure- but not to the point that it does in other cities where merit and hard work is almost meaningless next to the right connections. The result is a giant magnet for talent and a massive, well funded playing field where that talent competes with significant rewards reserved for the most skilled, clever and hardworking. There are a lot of incredibly smart highly motivated people here- and that, more than just simple labor costs is responsible for Shenzhen’s market position.
zhte415 12y ago
If anyone is interested in the aspects of reuse and recycle touched on in this article, I highly recommend Junkyard Plant, a book about recycling largely but not exclusively focused on China. There are a couple of chapters on electronics and Shenzhen, as well as other chapters ranging from paper & cotton, steel, plastics, aluminium, etc, and the entire sourcing chain. http://www.amazon.com/Junkyard-Planet-Travels-Billion-Dollar-Trash/dp/1608197913 http://www.amazon.com/Junkyard-Planet-Travels-Billion-Dollar...
ausjke 12y ago
As an embedded linux hacker I am very happy to see articles like this. I just opened my small firm in Shenzhen to do hardware and embedded linux software. The ecosystem there is just unbeatable and the willingness of engineers there to get job done is hard to find here at US at the moment. USA, by all means, is under attack in this regard. Unless one day the kids here put education first, I somehow feel the future is hopeless.
nraynaud 12y ago
if some people are interested in a little bit more details than a reverse culture chock blog post, there is a bunch of interesting videos here about the link Shenzen/Hong Kong, shipping your product, finding your factory etc: https://www.youtube.com/user/iantube/videos https://www.youtube.com/user/iantube/videos
NicoJuicy 12y ago
I'm curious, someone mentioned me about the (lot of ) empty buildings in china (or big cities). Banks lend to people with the right connections (it's otherwhise impossible), they get an easy loan with the building as insurance. They invest 25% of the money, leave with 75%. The bank takes the building back and no one can live in it. Is that right (asking to the ones living there)
- akfanta 12y ago
  > someone mentioned me about the (lot of ) empty buildings in china (or big cities). In some smaller cities, yes. The demand is always higher than supply in the big cities like Shanghai/Beijing/Guangzhou/Shenzhen. > Banks lend to people with the right connections (it's otherwhise impossible), they get an easy loan with the building as insurance. Having the right connections will make your bank loan a lot easier, but if you are qualified, you certainly can still get one without connections.
yamazi 12y ago
Actually, due to China government policy change and labor shortage, more and more major electronic manufacturers and their suppliers have moved their operations to Eastern China, such as Suzhou in the past 10-15 years and now even inland cities like Chongqing and Zhengzhou. Many of my friends have already moved out of Shenzhen.
pmorici 12y ago
"What's great about AQS is that, with the help of bunnie, they have started working closely with startups and other projects that previously would have had a very hard time finding a partner in China because of the small volume" So I guess that is the secret to getting AQS to respond to your request for an assembly quote.

203 points by sadfaceunread 12y ago

Visiting Shenzhen is highly recommended if you have any interest in electronics at all --- I'd say it's definitely an eye-opening experience, and can change your perspective on the manufacturing costs of all the things we usually take for granted. bunnie has organised another trip there near the end of this month, if you're interested: http://www.bunniestudios.com/blog/?p=4087 http://www.bunniestudios.com/blog/?p=4087

prawn 12y ago
I would love to do more factory/production tours but in many countries it seems that insurance and legal issues have made them too difficult. Brewery tours are common (the Budvar one in the Czech Republic is great) but I'd be just as interested in car manufacture, electronics, furniture, clothing, almost anything. Are there any formal tours in China? I don't mean the sort of tour where you are driven around in a bus visiting factories, but an index of factories that are willing to take an appointment to visit for a fee, just out of curiosity.
- jonmrodriguez 12y ago
  In the USA at least, a lot of factories can give tours if you have a friend who works there. For example, you could tour the SpaceX rocket factory in Hawthorne, CA, which is AWESOME.
  - Scoundreller 12y ago
    I guess this is the case, as they like to wow suppliers/customers or use it as a way to keep a trucker/customer to wait X minutes until the order is actually done without complaining too much. The "tour for a friend" is probably seen as an opportunity to practice the tour when it doesn't really matter, test new things, etc. I got to tour a sulphuric acid plant. It was fun. The friend worked in the closest equivalent to hell that I've ever seen (well, the cauldron part anyway). I love walking by a X000 fahrenheit tank with the guide saying as you have to crouch around to get around it "Don't go near, hot!".
- leoedin 12y ago
  In the UK most factory tours seem to involve either a) people related in some way by business (clients here for a meeting, why not take them round the factory), b) student groups, c) family/friends or d) the local members group for professional institutions (eg in the UK the institute of mechanical engineers). I'd imagine your best bet is to see what the latter groups are doing (although whether or not you can attend without having the right degree is probably fairly dependent on local policies and how many other people want to attend).
- akgerber 12y ago
  There's an abandoned blast furnace (Carrie Furnace) outside Pittsburgh that offers occasional tours, and also doesn't have any meaningful security.
starky 12y ago
I'd second this. I've been there a couple times and it is quite the experience. I only visited one electronics factory, and the rest were other types of factories that make mechanical components (injection molding, die casting, sheet metal, silicone molding, etc.) but they were all fascinating and I have a lot better understanding about the supply chain now.
- ascorbic 12y ago
  I'll third it too. I visited earlier this year with a UK trade mission for the Maker Faire and to meet suppliers. I visited several factories, both with the trade mission and independently, and it was one of the most fascinating weeks of my life. One place that I'd definitely suggest visiting, if only for the contrast with most other manufacturers, is Seeed Studios. Really cool place, and totally unlike any other place I visited. It's also very well set up for tours.

aftbit 12y ago

This is a great write-up about a world into which I normally have no visibility. I didn't realize on a that manufacturing capabilities for small-scale operations had advanced that much.

jonmrodriguez 12y ago

> In an interesting twist, the factory boss suggested that we could build the precision molding tools in China and then send these tools to a US shop for running production. > This role reversal is an indicator of how the technology, trade, and know-how for injection molding has shifted to Shenzhen. Even if US has the manufacturing capacity, key parts of the knowledge ecosystem currently exist only in Shenzhen. This is what really saddens me about outsourcing manufacturing from America, is that we lose the knowledge about manufacturing technology. Although we may be at the forefront of software development, in many areas of manufacturing technology the cutting edge development happens in China now. I'd really like if we could bring about a revival in manufacturing engineering in the US. Other than the ecosystem effect, the main way that China has an advantage is labor cost, so I propose that we could build up a "Shenzhen of America" in the San Diego / Tijuana free trade zone. The repetitive work that takes a lot of hours would be done on the Mexico side, where labor is now almost as cheap as China. The manufacturing engineering and tool-making would both happen on the American side, bringing these jobs back to the USA from China. San Diego / Tijuana are shipping ports on the Pacific, facilitating importing electronic components from China, Japan, and Korea, and then we could do all of the PCB fab, PCB assembly, injection molding, and final device assembly (as well as all tooling for all of these processes) over here in the Americas. I'm very supportive of China's development but competition is good and as American citizens we can't just throw in the towel, we have to build our manufacturing knowledgebase back up and be willing to actually compete.

dbarlett 12y ago
Isn't that what a maquiladora [1] is? [1] http://en.wikipedia.org/wiki/Maquiladora http://en.wikipedia.org/wiki/Maquiladora
- jonmrodriguez 12y ago
  Yes! Although the term Maquiladora may have a connotation of low-tech work, e.g. textiles rather than high-tech electronics.
jordanbaucke 12y ago
That would probably require a revival of Americans actually having the motivation to go to trade-school to be a machinist, carpenter, electronics manufacturing technician, etc. On the other hand the US is steeped in an omnipresent push toward the value of a '4-year degree' no matter the discipline. Until there is a serious motivational shift toward technical-trade, America's workforce will continue to atrophy it's industrial knowledge base.

Cookingboy 12y ago

One anecdotal story: One summer I went back to Shenzhen and decided to get a PlayStation 2 with a mod chip installed so I can play pirated games (I was a poor student). Now, there was this one mod chip that was really good but requires a bit of soldering work to get it installed right, and me, being an EE student, was no stranger to a soldering iron, so I planned to do it myself after buying the chip. So I bought a brand new PS2/mod chip combo from this small electronics store and the shirtless owner actually offered to solder it for me for free. I took up on the offer since I get to test the chip on the spot as well. He opened up the PS2 case, with one hand took up a soldering iron, while the other hand holding a cigarette, started working. I nervously watched him tapping around my brand new PS2's motherboard with just one hand while paying most of the attention to the live soccer game on TV at the time. 5 minutes later he was finished and 8 years later that PS2 is still working and reads all pirated discs with absolutely no problems. Throughout college I've never met anyone who's as good at soldering as this shirtless electronics shop owner I met in Shenzhen.

seanmcdirmid 12y ago
You can find these people everywhere in China, even Beijing. Weirdly enough, many of them here are Uighers.
lovelearning 12y ago
One possible conclusion I drew from your anecdote is fascinating me : that if governments formulate the right policies to create powerful new industries and demand for them, even those who aren't formally educated in those industries are capable of making themselves just as skilled, if not more, simply by repeatedly practising those skills and driven by the profit motive (I'm assuming that this shop owner is not formally educated in EE).

narrator 12y ago

The most interesting thing to me about China's capitalism is the massive amount of small firms. I think there's a tendency among western firms to use cheap financial capital to acquire smaller firms. I'm not sure if this is the case in China where the government is more directly involved in directing lending and not focused on mergers and acquisitions.

ams6110 12y ago
Capitalism is pretty new to China. Check back in 20-50 years.

Wogef 12y ago

I’ve lived in Shenzhen for almost 10 years (native New Yorker). This article was a bit better than most for Shenzhen- it was at least willing to speculate that a lot of Shenzhen’s advantage now comes from talent and infrastructure. It’s still pretty common for people to attribute it entirely to lower labor costs- which is just not the case. Shenzhen, like New York is an immigrant city. People come from all over China to get ahead, and get rich. Unlike New York it’s only a bit over 30 years old- and back then it was basically a fishing village. This is important because of the Hukou system: http://en.wikipedia.org/wiki/Hukou_system http://en.wikipedia.org/wiki/Hukou_system It’s a bit long to go into (check the link) but basically it ties people to their birthplace and gives them a significant “home field” advantage. If you are in Shanghai or Beijing and have a local Hukou you have access to the best education system, the highest paid jobs in both the public and private sector, and often a large network of friends and family members in local government. People from Shanghai or Beijing rarely immigrate to Shenzhen because they lose that advantage and are forced to compete with what they would consider the rabble. People from other provinces can rarely compete on even ground with locals- both for legal and cultural reasons. The rivalry is less like US States and more like countries within the EU- but worse. A “local” in Shanghai may feel perfectly entitled to cut to the front of a line if those people are "Waidiren” (outer province people- 外地人). It’s considered perfectly reasonable for migrant children not to get the same healthcare or schooling. The local dialog about them in every city is a familiar one- basically “damned dirty immigrants taking our jobs and committing crimes”. Needless to say the Central Government is quite keen to keep the provinces deeply prejudiced against each other- because it distracts their attention from the real culprits. Shenzhen on the other hand is by far the most egalitarian city in China. The city is so young that no one really has an "Uncle" etc. in local government willing to “investigate” competitors or send some easy government contracts their way. There is little difference between those few born in Shenzhen and those who came a few years ago. There is no local dialect that is used to subtly determine who’s “local”- everyone basically speaks Mandarin. So for people in relatively poor provinces (Hunan, Hubei etc), with brains and education but little in the way of prospects due to their Hukou, Shenzhen represents the best possible opportunity to compete in a first tier city almost purely on merit. Success here is based largely on hustle, brains and hard work- while in other cities at least 50% is simple corruption (well placed relatives in banking and government). Most Chinese would place the number even higher. So Shenzhen gets a lot of China’s best and brightest, but also those who are inherently ambitious- because they were willing to leave their hometowns and family (a much bigger deal here). A huge amount of the slow grinding machinery of legacy corruption does not exist here (massive numbers of bureaucrats given comfortable jobs doing basically nothing as a form of social welfare). It happens occasional sure- but not to the point that it does in other cities where merit and hard work is almost meaningless next to the right connections. The result is a giant magnet for talent and a massive, well funded playing field where that talent competes with significant rewards reserved for the most skilled, clever and hardworking. There are a lot of incredibly smart highly motivated people here- and that, more than just simple labor costs is responsible for Shenzhen’s market position.

zhte415 12y ago

If anyone is interested in the aspects of reuse and recycle touched on in this article, I highly recommend Junkyard Plant, a book about recycling largely but not exclusively focused on China. There are a couple of chapters on electronics and Shenzhen, as well as other chapters ranging from paper & cotton, steel, plastics, aluminium, etc, and the entire sourcing chain. http://www.amazon.com/Junkyard-Planet-Travels-Billion-Dollar-Trash/dp/1608197913 http://www.amazon.com/Junkyard-Planet-Travels-Billion-Dollar...

ausjke 12y ago

As an embedded linux hacker I am very happy to see articles like this. I just opened my small firm in Shenzhen to do hardware and embedded linux software. The ecosystem there is just unbeatable and the willingness of engineers there to get job done is hard to find here at US at the moment. USA, by all means, is under attack in this regard. Unless one day the kids here put education first, I somehow feel the future is hopeless.

nraynaud 12y ago

if some people are interested in a little bit more details than a reverse culture chock blog post, there is a bunch of interesting videos here about the link Shenzen/Hong Kong, shipping your product, finding your factory etc: https://www.youtube.com/user/iantube/videos https://www.youtube.com/user/iantube/videos

NicoJuicy 12y ago

I'm curious, someone mentioned me about the (lot of ) empty buildings in china (or big cities). Banks lend to people with the right connections (it's otherwhise impossible), they get an easy loan with the building as insurance. They invest 25% of the money, leave with 75%. The bank takes the building back and no one can live in it. Is that right (asking to the ones living there)

akfanta 12y ago
> someone mentioned me about the (lot of ) empty buildings in china (or big cities). In some smaller cities, yes. The demand is always higher than supply in the big cities like Shanghai/Beijing/Guangzhou/Shenzhen. > Banks lend to people with the right connections (it's otherwhise impossible), they get an easy loan with the building as insurance. Having the right connections will make your bank loan a lot easier, but if you are qualified, you certainly can still get one without connections.

yamazi 12y ago

Actually, due to China government policy change and labor shortage, more and more major electronic manufacturers and their suppliers have moved their operations to Eastern China, such as Suzhou in the past 10-15 years and now even inland cities like Chongqing and Zhengzhou. Many of my friends have already moved out of Shenzhen.

pmorici 12y ago

"What's great about AQS is that, with the help of bunnie, they have started working closely with startups and other projects that previously would have had a very hard time finding a partner in China because of the small volume" So I guess that is the secret to getting AQS to respond to your request for an assembly quote.