Shenzhen: The Silicon Valley of Hardware - WIRED Documentary

[EEVblog]

Not sure if this has been posted or not yet:

[coppice]

That is one of the better series about electronics in Shenzhen, although it focusses too much on a particular type of electronics activity to give the view much of a feel for the overall industry in China.

[raptor1956]

The US and other western companies that went to China to have things made more cheaply so they could achieve a higher margin will discover again what there fathers discovered when they moved production to Japan for similar reasons.  Over time they develop there own engineering capabilities and then go into business as competitors.  The US companies that outsourced to Japan the production of TV sets soon found that Sony et al were then making there own TV's and competing against them.  And, within 15 years had replaced them.

The smart guys that come up with the economic justification for outsourcing were not so smart after all.  OTH, when you can eliminate higher paid employees and replace them with much cheaper people you can make a lot of money until they put you out of business.  When your time horizon is, at most, next quarter, the eventual demise of your company doesn't matter -- you've made your killing and can get out and let those left deal with the consequences.

Strip mining can be applied to people to...


Brian

[dannyf]

why do you have to wake up our friends who still dream of china being a communist country where everyone is in absolute poverty? it's best to leave them in that fantasy.

although it focusses too much on a particular type of electronics activity to give the view much of a feel for the overall industry in China.

The story is too much on the not-so-important part of the ShenZheng SV: it focuses on the low-value add part, though I can understand why they picked up that.

Two things about ShenZheng that should scare SV:

1) the co-mingling of all sorts of technologies: hardware, software, chips, mobile, network, ..... People there understand very well that to make money, they have to work with other vendors. So the exchange of ideas is far more wide spread, expected and accepted than it is in the west.
2) the young age of decision makers: this is where most of the decision makers are 20 or 30 something. You go to a meeting and the boss is likely younger than you. they have the power to make decisions on the spot. experience is out, and "newness" is in.

the 2nd point was quite scary to me in particular. The first couple times I went to a few industry conferences there and I was absolutely shocked by the young audience. I was expecting then that most of the chinese engineers would be on PIC or AVR of the world and then I ran into a roomful of Chinese at a STM32 conference. The ST rep said that all he did was to go from one chinese city to another chinese city doing those conferences and handing out discovery boards.

I knew on that spot that 8-bit is dead. and I knew anyone in a high cost country would have to change their business model to survive.

and that was like 10 years ago.

SV is still ahead in most areas. It is just that their dominance is shrinking, and pretty fast.

[zapta]

Any significant innovations from Shenzhen, or is it mostly about markets trading and manufacturing?
 
Edit: invitations /innovations

[nctnico]

The US companies that outsourced to Japan the production of TV sets soon found that Sony et al were then making there own TV's and competing against them.  And, within 15 years had replaced them.

When it comes to the Chinese I really don't worry about my job. The communistic education system kills any kind of self initiative and out-of-box thinking needed for engineering. What I see around me is companies pulling out of China due to lack of engineering skills. Just look at how poor test equipment companies do at writing firmware.

[Rick Law]

The US companies that outsourced to Japan the production of TV sets soon found that Sony et al were then making there own TV's and competing against them.  And, within 15 years had replaced them.

When it comes to the Chinese I really don't worry about my job. The communistic education system kills any kind of self initiative and out-of-box thinking needed for engineering. What I see around me is companies pulling out of China due to lack of engineering skills. Just look at how poor test equipment companies do at writing firmware.

Two points:

First, take your assumption as truth that they are not as good but look at the math of population size

Their population (1.3b) is larger than twice the EU at 500m.  Today, the %(of population)-graduated-college in China is small but growing.  %-graduated-college follows the GDP/living standard trend.  At China GDP trend today, they will achieve %-graduated-college reaching that of the west in the not-too-distant future.

When that happens, raw math will be difficult competing against China.  Assume in EU top 25% college-grads are good engineers.  China only need the top 9.6% to be better than EU's top 25% for China to have more "good engineers" than EU. 


Second point:  Don't underestimate the Chinese education system.

Hard to find real gauge for measurement, but PISA is closest to quantifying education outcome.    Finland and Netherlands not withstanding, China is running circles around the rest of us in the "west".

China (Shanghai) only did PISA twice but twice they were number 1.    Korea, Singapore, Hong Kong and Taiwan consistently score within top 5.   Recalling (from my imperfect memory) the last 5 data-available years, Finland is best in Europe but not frequently top 5.  Netherlands might have visited the top 5 slot twice.  USA/UK has not seen the top 5 slot for decades.

Granted, China is not tested nation-wide but selected areas only.  So only the small coastal areas are excelling.  But keep in mind, their coastal areas is where most of their people are located.  Shanghai metro area alone has 34 million.  That is bigger than many European nations.   Plus the high value of education is deep in the Chinese mindset.  So the Shanghai excellence will likely spread.  I think we the west we are in denial and we are in truth the ones in deep doo-doo.

Supporting references:

https://en.wikipedia.org/wiki/Programme_for_International_Student_Assessment

You can look at the BBC summary:

http://www.bbc.com/news/business-32608772
Math & Scince 2015

    1. Singapore
    2. Hong Kong
    3. South Korea
    4. Japan
    4. Taiwan
    6. Finland
    7. Estonia
    8. Switzerland
    9. Netherlands
    10. Canada
    11. Poland
    12. Vietnam

http://www.bbc.com/news/business-26249042
2014 Maths top 40

    1. Shanghai (China)
    2. Singapore
    3. Hong Kong (China)
    4. Taiwan
    5. South Korea
    6. Macao (China)
    7. Japan
    8. Liechtenstein
    9. Switzerland
    10. Netherlands
    11. Estonia
    12. Finland
    13. Canada
    14. Poland
    15. Belgium
    16. Germany
    17. Vietnam
    18. Austria
    19. Australia
    20. Ireland
    21. Slovenia
    22. Denmark
    23. New Zealand
    24. Czech Republic
    25. France
    26. United Kingdom
    27. Iceland
    28 Latvia
    29. Luxembourg
    30. Norway
    31. Portugal
    32. Italy
    33. Spain
    34. Russian Federation
    35. Slovak Republic
    36. United States
    37. Lithuania
    38. Sweden
    39. Hungary
    40. Croatia

2014 Reading top 40

    1. Shanghai (China)
    2. Hong Kong (China)
    3. Singapore
    4. Japan
    5. South Korea
    6. Finland
    7. Ireland
    8. Taiwan
    9. Canada
    10. Poland
    11. Estonia
    12. Liechtenstein
    13. New Zealand
    14. Australia
    15. Netherlands
    16. Belgium
    17. Switzerland
    18. Macao (China)
    19. Vietnam
    20. Germany
    21. France
    22. Norway
    23. United Kingdom
    24. United States
    25. Denmark
    26. Czech Republic
    27. Italy
    28. Austria
    29. Latvia
    30. Hungary
    31. Spain
    32. Luxembourg
    33. Portugal
    34. Israel
    35. Croatia
    36. Sweden
    37. Iceland
    38. Slovenia
    39. Lithuania
    40. Greece

[nctnico]

OK so the Chinese are good at monkey-see-monkey-do. Engineering takes thinking outside the box along unguided paths which is exactly what the regime doesn't want people to do.

[mikeselectricstuff]

OK so the Chinese are good at monkey-see-monkey-do. Engineering takes thinking outside the box along unguided paths which is exactly what the regime doesn't want people to do.

How many new, innovative, imaginitive tech products have come out of China?
I'm struggling to think of a single one.

[Rick Law]

OK so the Chinese are good at monkey-see-monkey-do. Engineering takes thinking outside the box along unguided paths which is exactly what the regime doesn't want people to do.

nctnico, I understand what you are saying and I agree.  But it is not as if the West is any better here.  We don't want people to have different ideas either.  What goes on in academic will eventually sip into business world.  What is going on in academic is political correctness running wild - political correctness is "only the things we agreed with should be considered".  That mindset will sip into the business/engineering world - and did.   During the rush off the mainframe into the minis... I am sure you can imagine (a real life case): it was politically incorrect to even consider CICS for something new, but instead, it must be on a UNIX mini - even while CICS would be the best.

As long as we are complacent, we are at risk.  Just because they are not there today doesn't mean they wont be there tomorrow.  We just think we are more creative, but how sure are we? 

OK so the Chinese are good at monkey-see-monkey-do. Engineering takes thinking outside the box along unguided paths which is exactly what the regime doesn't want people to do.

How many new, innovative, imaginitive tech products have come out of China?
I'm struggling to think of a single one.

How sure are you that they wont tomorrow?

About 15-20 years ago when I was in lower/middle management rank in a fortune 1000 firm.  Our divisional head was talking to the division's managers about impending competition from India, he said a lot all of which are bad new.  He closed off with, "that said, their entire IT industry today is only 40 million USD.  That is not even close to our company-wide IT budget..."  Less than 1/2 a decade later, nothing bigger than a floppy disc (in a manner of speaking) was left and all else were out-sourced.

Remember, Japan started the same way, so did Korea.  They are now challenging or surpassed the USA/Europe in design and development in many fronts.  The path China is on is not new.  What make them different is scale.
Those too sure of themselves are the easiest to defeat...

[Fred27]

Very interesting documentary. Thanks for posting about it.

[dannyf]

I ran into two families (well into the 0.1 percentile), both had their kids learning Chinese.

Check out the Chinese immersion programs at elite colleges and try to get your kids in. Middlebury for example will reluctantly take your kid, on the condition that you thank them profusely for donsting your 12kusd to them.

The poor are poor because they cannot foresee far enough into the future.

[nctnico]

The path China is on is not new.  What make them different is scale.

True but China is lagging far behind on a cultural and political scale. At some point in the documentary there is some discussion about politics and how 'things are made to happen unofficially'. That simply means the governmental 'logistics' aren't even in place to take the next step. Even after China has a democratic government (and probably has fallen apart like the former Soviet Union did) it will take a few generations for the communistic ways to diminish before the Chinese can truly tap into their potential. Just look at how Russia has fallen back into old habbits.

@Dannyf: learning Chinese language and culture has nothing to do with engineering skills. I'm pretty sure the Chinese will continue to produce whatever they can make money with and doing business is easier if you speak the language.

[madires]

OK so the Chinese are good at monkey-see-monkey-do. Engineering takes thinking outside the box along unguided paths which is exactly what the regime doesn't want people to do.

How many new, innovative, imaginitive tech products have come out of China?
I'm struggling to think of a single one.

I dont think it's that simple. We have different business models. If you're expensive, you have to innovate to give customers a good reason to buy your product. If you're inexpensive, you just need to copy the features and sell your product for less. Being cheaper is always a good reason to buy from you. 15 years ago Huawei blatantly copied Cisco's 2500 and 3600 series routers. Today they (and also ZTE) sell tons of network gear (internet, mobile, DWDM) to all major telcos, carriers and mobile providers around the globe. And this stuff is too complex to be just copied and pasted.

[hammy]

True but China is lagging far behind on a cultural and political scale.

Thats an argument I heard several times. But why should they strive for our western world capitalism?

[nctnico]

Huawei has 16 R&D centers world wide. Only 3 of them are in China. Appearantly Huawei has taken over other companies in order to gain engineering skills.

[nctnico]

True but China is lagging far behind on a cultural and political scale.

Thats an argument I heard several times. But why should they strive for our western world capitalism?

You are missing the point. The point is: in an environment where critical thinking is discouraged engineering will never take off.
Oh and the Chinese are already much better at capitalism than the western world!

[madires]

Huawei has 16 R&D centers world wide. Only 3 of them are in China. Appearantly Huawei has taken over other companies in order to gain engineering skills.

I'm not aware of any takeover of another major vendor. But the other vendors fired a lot of R&D staff over the years after the dot-com bubble.

[hammy]

You are missing the point. The point is: in an environment where critical thinking is discouraged engineering will never take off.

Silicon-Valley is also "good at monkey-see-monkey-do."

Oh and the Chinese are already much better at capitalism than the western world!

Thats undeniable.
But I think china is greatly underestimated. They don't fit in our thinking and scheme, but they do it in their own way.
Some years in the future, less than 10, they are way ahead. Their middle class is already huge (and growing)! Our middle class is shrinking. And in every economy the middle class is driving the progress.

just my two cents

[Sal Ammoniac]

The thing that scares me most in this country (United States) is not China, but the increasing trend towards anti-intellectualism. This is driven from two fronts: fundamentalist religions and big corporations.

The fundamentalist religions are opposed to teaching basic science such as evolution and the big bang theory because they conflict with their religious views. They want to replace the teaching of evolution with their own version of science based on a literal reading of the bible. They want to teach our kids that the universe was created in six days 6000 years ago and that a world-wide flood 4000 years ago destroyed all life on earth except that carried on Noah's ark. (Heck, one group even spent over $100 million to build a full-size replica of the ark and use it as a tourist attraction to promote their views.)

Big corporations effectively control government and the media in this country and favor anti-environmentalism and ridiculous military spending. They want a nation of distracted consumers who are too busy buying goods and services they nether need nor can afford to pay attention to what's really going on.

Our educational system reflects this on all levels too. Smart kids tend to be outcasts while the popular kids are the jocks and cheerleaders. At many institutions the amount of money spent on science and math education is dwarfed by what's spent on the football program. I guess this doesn't really matter any more because the big corporations are outsourcing the high-tech jobs while simultaneously decrying the lack of home-grown talent. Pot. Kettle. Black.

[Bud]

Thanks for showing me the scammers who make half baked rigols and fake Agilent GPIB adapters.

[Marco]

The thing that scares me most in this country (United States) is not China, but the increasing trend towards anti-intellectualism. This is driven from two fronts: fundamentalist religions and big corporations.

Three sides, the social justice crowd comes with it's own religious truths which can not be denied.

Anthropogenic global warming and our ability to make a dent in it with expensive feel good projects. Intellectual and economic ability not being significantly dependent on genetics and haplogroups/races/genders (Chinese forays into eugenics and genetic engineering is especially annoying for them). Systemic racism. The possibility of integrating all cultures in a single nation. Cornucopianism. Etc, etc.

[edy]

I've heard about this HAX Accelerator program... Turns out there are a lot of these IndieGogo/Kickstarter campaigns that get their start there. But so far, of the ones I've seen they are all failing to deliver on time, and without any obvious improvements. Seems like a make-work project for the local factories.

For example take this one which we have been following for the past 2 years in the forums:

https://hax.co/companies/lightphone/

They've produced what exactly? Late on shipment for a $100 G2 phone (which carriers are likely to not support for much longer) that looks like nothing more than a re-designed Alibaba credit-card slim cell phones which can be had for $15-20 like these:

https://www.google.ca/search?q=AIEK+phone&tbm=isch

Forum link: https://www.eevblog.com/forum/crowd-funded-projects/light-phone-on-kickstarter/
Their site: https://www.kickstarter.com/projects/thelightphone/the-light-phone

And by the way, the WIRED video host for the above program Andrew "Bunnie" Haung, presumably of bunnie:studios even tore down one of these "Gongkai" phones and in the forum thread (and link below) you can see comparison photos of the Light Phone prototypes and the one on his page here:

http://www.bunniestudios.com/blog/?page_id=3107

I am not too confident in what HAX is putting out, if this is any representative example. But just like they mentioned in the video, even if 9/10 of these HAX innovations fall flat, the 1/10 that do make it and go viral can give them a big return on investment. So the power there is just rapid development of products that you keep throwing at the wall... and hope something sticks!

[Rick Law]

The thing that scares me most in this country (United States) is not China, but the increasing trend towards anti-intellectualism. This is driven from two fronts: fundamentalist religions and big corporations.

Three sides, the social justice crowd comes with it's own religious truths which can not be denied.

Anthropogenic global warming and our ability to make a dent in it with expensive feel good projects. Intellectual and economic ability not being significantly dependent on genetics and haplogroups/races/genders (Chinese forays into eugenics and genetic engineering is especially annoying for them). Systemic racism. The possibility of integrating all cultures in a single nation. Cornucopianism. Etc, etc.

The problem is not the fringe groups since they are a relative small portion.  Instead the problem is the lack of skills of the majority of the college graduates (here in the USA).

How many college graduates don't know who we (USA) gained her independence from?  Who was it we were fighting during WWII?  Who did we fight during our civil war?  Largest planet in our solar system?  Approx size of the moon compare to Mars?  ...  Even Jay Leno made a few youtube videos about that.

So, we have a sizable portion of our college grads who doesn't even know how to do the basics, think they are technology-savvy because they use a smart phone, and think they should start off as a VP somewhere.  An ungodly number of them ended up living in the parent's basement without job and given up looking.

Our house-of-cards is coming down hard.

[Cerebus]

True but China is lagging far behind on a cultural and political scale.

Thats an argument I heard several times. But why should they strive for our western world capitalism?

Furthermore, China had a rich and sophisticated culture back when Nctnico's ancestors (and mine) were living in mud huts and banging rocks together for entertainment.  There's a very long list of cultural and technological achievements that first saw the light of day in China. For instance the puddling process for Iron was used in China by the beginning of the Han dynasty (202 BCE) and was re-invented in England in 1783 but, hey, what's nearly two millennia for the West to catch up?

Just because China went through a 'funny turn' for much of the 20th century doesn't mean that they have lost all the influences that at one time made them the most intellectually sophisticated culture in the world. They kept that culture alive for tens of centuries and I suspect that it is quite possible that it can enjoy a resurgence. They just have to avoid making the mistakes that the West has made and, sadly, on current evidence they seem to be working quite hard at repeating the West's mistakes. (e.g. By embracing the worst aspects of capitalism, China seems to have created a property bubble that looks to burst soon. That is something it would have been easy to avoid [in a centralist command economy] by learning from a little observation of Western economies over the last few decades).