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How did Shenzhen of china become the electronics manufacturing services factory center of the world?

Editor:seve wuTime:2018-08-13Views:


How did Shenzhen of china become the electronics manufacturing services factory center of the world?
There are a few possible reasons. The first being, the Chinese government opened up Shenzhen as a Special Economic Zone (SEZ) so that foreigners could easily enter China from here. This combined with cheap labour and fairly lax environmental controls and an economy (dollar) that is kept artificially low, created the perfect conditions for a lot of export businesses. This made a lot of electronics factories (as well as fashion, and a plethora of others) start up. The convenience of having a lot of space, low barrier for entry, and little environmental issues meant that factories for every kind of electronic part sprang up very quickly. The ability to source a new capacitor, or resistor or whatever else you want from across the street, or a mile away creates a very easy system for prototyping, and manufacturing, as you don't have to wait for parts to ship from across the country, or worse, across the world. 
Again we can't discount the cheap labour and the lax environmental laws, and the ability to bribe local governments, a lower tax rate, and an artificially deflated dollar (to make manufacturing and exporting goods more attractive to foreign investors).
Your iphone, ipad and Macbook are all manufactured and Assembled in Shenzhen China by a company called Foxconn, the official supplier for Apple. The fact that Shenzhen becoming the sourcing and manufacturing capital for electronics in the world does not happen overnight. It is a myriad of historical, political and technological factors that contributes to the status of the city as a hardware hub.
A Throwback to the end of 1970s, when the commencement of Chinese economic reform took place in the Pearl River Delta Economic Zone, Shenzhen was a sound suburban village where most of its residents make a living by fishing or farming. However, the city benefit significantly by the new policy of Chinese economic reform, and it literally became the first place in China where a market-oriented economy is based as opposite to a planned-economy model which was adopted in most part of China back then. People are eventually given monetary incentives for doing business and therefore it drew young and educated labor from all over China which resulted in a economic boom.
So far these were the historical and political reasons behind the scene. In order to establish a solid electronic manufacturing industry, apart from labor, we still need the capital and technologies. 1970s and 1980s were also the gold age for electronics industry in terms of quality and quantity of new inventions. Lots of trending inventions had come to the scene: commercial color television, Walkman, telephone were all in huge demand. Due to the benefits of low labor cost, Shenzhen has soon attracted lots of foreign investment from Japan, UK, U.S., Germany and the countries from the developed part of world. International companies flooded into Shenzhen to establish their manufacturing pipeline to implement their own technologies.
40 years has almost passed by and Shenzhen is no longer a place where foreign companies come and outsource their electronic assembly. It has become a place where domestic Chinese companies started, grew and became industry incumbents globally: Huawei(Telecommunication), DJI(drone), Tecent(Social Media), and etc.
Shenzhen is no doubt the ideal place for electronic manufacturing services, PCB design and prototyping, and electronic OEM projects. Our company China SourceLink is a Shenzhen-based China sourcing agent that positioning to international customers who are interested in developing their electronics, hardware, Internet of Things, Smart home projects in Shenzhen China. We are a team with strong engineering background and understanding of merging technologies that bridge the language gap and information asymmetry for you and your suppliers.
Shenzhen may be its densest point, but the real story lies in the formation of the pearl river delta metacity(intentionally did not use megacity which would falsely imply continuous urbanized area.... Megacity reflects the truth: it is many, interconnected cities).
It is not just that Shenzhen is the electronics factory of the planet but also that guangdong is the factory of the world. If you look at the story of it all, it is plainly evident that this did not happen by accident. Each supply chain was planned out. This is one way that the Chinese economic+political agglomeration is more efficient than others at tasks like this.
*more efficient == more efficient
*more efficient != all around better
Today Shenzhen has moved up the value chain and is in fact more of a design city while a good deal of manufacturing is done in further off places like dongguan and zhongshan, which are both official members of the prd metacity.
It is mostly due to the fact that Deng Xiao Ping transformed Shenzhen, a small fishing village into a reduced tax area, making that many industries (not only electronics) get attracted by the advantages of going there, and also because the local government support R&D related to this industry.
When you want to build an economy, you make a taxes free area or taxes reduced area, and automatically it attract companies.
For example, in Shenzhen contraty to Shanghai it is much easier to export by avoiding paying VAT at export...

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