Is this the best place in the world to prototype hardware? Visiting Shenzhen

by Mike88Aug 27, 2014

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SEG Plaza Shenzhen - Credit Wikipedia

SEG Plaza Shenzhen – Credit Wikipedia

Shenzhen is the best city in the world for Makers, Hackers and anyone who needs to build physical product. After two visits I am convinced you are crazy to build electronics or hardware in any other part of the world.

I just returned from a trip to Hong Kong and Shenzhen. It was my first time into China, I found Hong Kong exciting but exhausting and despite the stories I had heard about Chinese cities I found Shenzhen to be very clean, safe and it just seemed to work really well as a city, traffic was ok, the metro was very efficient, streets were clean and the people polite.

Large buildings on spacious green city blocks stretched for as far as the eye could see for such a populated hub of industry it is very pleasant. 30 years ago Shenzhen was a small regional centre, now its estimated that there are ~19 million, 4 million above the official estimates as Chinese from all over the country come here for work because it has become one of the growth Chinese cities.

In my day job I run a team of people prototyping inventions, primarily electronics based devices. I had heard Shenzhen was the centre of the universe when it comes to electronics and making just about anything.

I was in Hong Kong for a short break and I decided to take a few day trips to across the border to see for myself. You can easily do it in a day and I will shortly publish details in another post to show you how but for now think of it as a 45 minute suburban train trip from Hong Kong with a low stress border crossing. If you look at it on a map, its like travelling from San Francisco to the Valley.

SEG Plaza Markets Shenzhen

The highlight of any day trip is the SEG Plaza Markets, they are absolutely amazing. If you work in Electronics, are a hobbyist or have ever dreamt of building your own electronic hardware you have to visit.

SEG Plaza

SEG Plaza

It is simply mind-blowing, the SEG centre is one of the largest markets, has 10 floors of electronics, with the bottom most levels given over to every imaginable component you would need to build any electronic device. All the surrounding buildings have similar arrangements, I lost count of how many of market buildings there are in the zone however it would be upwards of 15 surrounding the SEG Plaza.

Across the 10 floors there are literally thousands of little booths containing every chip, IC, memory,  screw, bolt, nut, LED, reels of components ready for Surface Mounting (SMD), strips of LEDS in reels stacked 6ft high.

IMG_1121

Adhoc soldering on counters is the order of the day, workers are soldering components together, mounting chips or LED onto boards etc with Children running around as the day gets later. Occupational Health and Safety is not really a known concept.

As you get higher up the floors (there is a maze of escalators, with no apparent logic to it) the floors start to progress from components and accessories to fully assembled computers and notebooks, many are touting that they are from major brand names like Samsung, Acer (they probably aren’t) Lenovo (they might be) and then hundreds of motherboard resellers which may or may not be as described.

There is an amazing buzz to the place, literally it doesn’t stop, every moment there are dozens of people running from trader to trader, or wheeling trolleys stack with reels of components.

But unlike markets you will find in tourist ares the markets are really not for Westerners to buy a few gadgets, although they are welcome but they are not really looking for tourists.

The markets exist to trade components between suppliers and factories in the surrounding districts. Thousands of these little booths represent factories in the province, and other factories buy and ship whatever they need to each other.

Most of the traders are friendly

Most of the traders are friendly

Aside from just about every component, nuts, bolts, LEDs, lights, switches, SMT Rework stations, SMD ovens, CNC Routers just about anything you need to build an electronic project can be had within a few city blocks. The amazing thing is that they are just taking orders and shipping product all day, non stop people wheeling trolleys stacked high with reels of electronic components whizz past every few seconds.

CNC Routers

CNC Routers

A few words of warning

I don’t want to be alarmist or negative on doing business here because I think from my short visit the place is amazing and we will be establishing a presence sooner than later, but it was clear to me after a few days in the markets you could easily get taken for a ride.

Its not clear to me the sort of consumer and legal protections you expect in the Western world are available here to a Western visitor.

Whilst there are many honest suppliers it pays to beware. Many are selling used components, many sell substandard or even mislabeled products. No one is particularly worried about your needs, they may not give you the time of day to get the right thing for you or may not understand you, understandably most don’t speak English, Spanish, German or whatever you speak. Its very much caveat emptor.

Some might be genuine brands, and may actually work. Others less so. In their defence the Chinese Authorities are apparently trying to stamp out blatant counterfeit products according to some of the senior business people I spoke to.

Some of the companies do a great range of knockoffs including this very well engineered Jambox knockoff, interestingly there are many vendors of very cheap iPhones and Samsung phones, story is that they work and they have real smart phone components inside them but they are not at all the genuine article.

IMG_1018

I think the secret is that if you are looking at phones that cost less than costs for Apple or Samsung to make them then its a pretty good bet that they are not genuine.

The companies who make these knockoffs are known as Shanzhai which comes from the old stories of bandits who live in the mountains and evade the authorities, their products used to be mostly poor quality, however many of them are now making much higher quality products and starting to produce products which match the big guys for quality and innovation and some of the first double SIMM phones came from these companies. Some of these companies are turning into major brand names for the domestic Chinese market.

Successful Manufacturing in Shenzhen

It would seem that if you want to build product, you need to build solid relationships with local businesses, in my opinion the best way to start these relationships is to find yourself a fixer or sourcer of components who for a fee can introduce you to suppliers and manage the process when you are not in country.

To quote one of our guides,

“Product comes first it must be the right thing, then relationship, then price. Relationship is much more important to us than price”

To be successful manufacturing here I think one of your team has to be here regularly, many Kickstarter projects appear to have come off the rails for this reason, they completely underestimate the complexities and costs of managing the manufacturing process offshore.

Some of the expat old hands in the area talk about quality fade, where what you specified and ordered is gradually (or suddenly) substituted with lower quality or cheaper components and you might not get the good news until its in your customers hands.

Perhaps the only way to guard against this is to find someone who is trusted and recommended by a western manufacturer you know and trust and to have someone on hand inspecting the factories on a regular basis.

I think you also need to take some risks, check out some of the suppliers but not bet the farm on them until you build a longer term relationship.

If it is important that you know the exact components you are getting and where they came from for quality control reasons or certification requirements ie Medical Devices or other such, there is every chance this is not the right way for you to obtain components or develop new products.

Shenzhen is FAST

The upside is when you have someone here managing the more intense aspects of the development cycle such as rapid prototyping or getting the assembly and manufacturing process right you can rapidly accelerate your product development. As an example you can build prototypes at 2-5 times faster in Shenzhen than you can if you are sitting in Sydney or San Francisco (SF might be a little easier).

The convenience of being able to walk down the street and pick up the parts you need cannot be underestimated especially compared to being in a western city where you could face 1-2 weeks delay to get components in from overseas and $70 in express airfreight fees.

In Sydney if I want to order a new board, it can take 3-5 weeks to be fabricated, assembled, tested and then delivered.

In Shenzhen PCBs can be ordered and delivered within 2 days, assembly can be turned around in a few days, and if you have your engineer there you can have them work through the process with the assembly guys rather than 10,000 km away waiting two weeks for it turn up not knowing if it will work.

Its difficult to imagine building products in China and not having a member of your team here monthly if not during the whole process, certainly if you manage to get any level of success with your product you will need to establish a presence here.

Getting to the SEG Plaza Markets

Getting to Shenzhen from Hong Kong is fairly easy, but you need to do your homework before you go as once you are in the China its much more difficult to get access to Google Maps and many of the online Google tools you might be used to. If you are coming from Hong Kong take the metro from Luohu to Huaqiang Rd, its very cheap and very fast. I will post a separate article on getting there and through immigration later this week.

At the time I wrote this, 5 day Shenzhen Special Economic Zone Visas are available to most nationalities who wish to visit the city but the fees vary depending on your country (basically China just treats your citizens the way they your country treats their citizens). Note there are some nationalities that cannot get in via the 5 Day visa, in particular the USA. You should confirm your eligibility before you hope on the train at Hong Kong.

IMG_1041

Helpful Resources

There is a very active expat hardware community making cool stuff.

The guys from Dangerous Prototypes run these great Hacker Camps where for a very reasonable fee will take a group through the details of getting established and building product in Shenzhen, factory tours, where to eat, live, the markets and all the things that on your own you probably would struggle with for months or years.

They have another camp 3rd week in Sept 2014.

They kindly videoed the last one
 http://www.youtube.com/watch?v=RId5bSbineI
 http://www.youtube.com/watch?v=41kjXza2nG0
 http://www.youtube.com/watch?v=qzvr8AnBGs8
Other resources

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About The Author
Mike88
Mike88
Mike Nicholls Australian Inventor + Entrepreneur working with a small team of engineers building prototypes from Inventions including two medical devices. Publishes Startup88.com and has assessed/reviewed +500 inventions and +200 startups in the last 3 years. Mentors Sydney Startups via Incubate and other incubators and helps members of the Australian Startup Community via the Startup88.com website with free publicity and advertising. Experience in numerous industries including Digital Publishing, Cloud Computing, Apps, Hardware, Aviation, Real Estate & Finance and Health/Medical Devices.
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  1. […] However after you see the ready availability of mechanical and electrical components in their wholesale trading markets you will understand how this can speed up the prototyping process, we have written a few stories about our visits to Shenzhen here. […]