Centre for creativity
Leading Chinese manufacturers have transformed city.
Over the past two decades Shenzhen has grown into a global epicentre of telecommunications innovation and equipment production. With large companies such as Foxconn, Huawei and ZTE, along with tens of thousands of smaller design houses and "mom-and-pop" factories, the city pulls together all aspects of the hi-tech design and manufacturing ecosystem in one place.
"Shenzhen is the hardware hub of the world, thanks to the Free Economic Zone established by the government," says Shlomo Freund of StartupNoodle.com. "In addition, it's conveniently located next to Hong Kong, which brings it closer to international markets exporting its goods. On top of those factories, Shenzhen also becomes the hardware hub for start-ups and new technologies, as everything is around the corner."
Shenzhen's manufacturers broke into the global telecommunications market around 2003 by undercutting the prices of then giants such as Nokia and Motorola. While the industry giants were selling their feature phones for about US$800, Shenzhen was able to offer them for only US$100. This price created new demand for mobile phones around the world, as many people who were priced out of the market could now afford to buy one. This led to Shenzhen becoming the origin for more than 300 million new mobile phones each year.
As Shenzhen's telecommunications industry evolved, the quality and sophistication of its top manufacturers' feature products improved. Companies such as Huawei grew from producing phones as cheap and fast as possible to introducing some of the most innovative and high-end smartphone models in the world.
Huawei got its start in Shenzhen as a manufacturer of phone switches in 1987, but has grown into China's largest telecommunications equipment producer. It now offers a full line of mobile phones, consulting services, as well as entire telecom networks. In addition, Huawei is delving into new areas of research as diverse as cloud computing, broadband and the internet of things. With more than 76,000 employees involved in research and development in 21 research and development centres around the world, innovation has become one of the company's prime focuses. The move seems to be paying off as Huawei shipped more than 100 million mobile phones last year alone and recorded total earnings of about US$60 billion, a 35 per cent year-on-year increase.
ZTE came onto the Shenzhen scene in 1985 and eventually became another dominant player in China's telecom industry. Providing telecommunications equipment, such as the Axon Pro and the ZTE Star II smartphones, and mobile terminals, the company posts annual earnings of about US$15 billion. ZTE's future developments will include new wireless charging, 5G, and cloud computing technologies.
