Shenzhen: from the 30,000th settlement to the 11th millionth city of the future

    In the late 1970s, 30 thousand people lived in the Chinese village of Shenzhen. The economy was based on fishing, and salt was mined west of the city. Of the advantages, the village had only a convenient location for trade in the port in the Pearl River Delta.

    Today it is the 11 millionth city where Apple phones are made, where Samsung, Huawei, ZTE, Lenovo factories are located, where you can buy all the components and assemble the iPhone for a hundred dollars on the market. This is one of the most technologically advanced cities in the world with developed production and an innovative ecosystem aimed at copying, reproducing and creating new technologies. Here the idea of ​​communities is realized, incubators are working, and foreign investments come to China through this city.

    I propose to talk about the policies that led to the creation of Shenzhen, the development institute responsible for this, and about the innovative ecosystem that has developed in the city, which was created under communism.


    Pingan International Finance Center is on the 4th line in the ranking of the highest skyscrapers

    Background


    In the late 1950s, Mao Zedong in China launched the Great Leap economic and political campaign . The authorities of the absolutely agrarian country at that time set a plan for fifteen years to build an industrial economy - for example, to increase steel production by 10 times and overtake the UK in this indicator, as well as raise agriculture. People were divided into communes, in which instead of money they began to use workdays.

    The main role in the smelting of metal was given to the peasants. Workshops appeared all over the country where, in small clay ovens, workers without any knowledge and experience made low-quality cast iron, suitable only for plows and hoes. But there was no longer enough time and energy in agriculture for communes. Success reports were rigged.

    Coal consumption for metallurgy caused interruptions in electricity. In some regions, light industry enterprises were closed because of this.


    Chinese peasants smelting cast iron

    Problems with agriculture were aggravated by the development of the Soviet academician Lysenko, the founder of the pseudoscientific direction of Michurin agrobiology. The seeds were planted deeply with the expectation that they would avoid competition with other plants. As a result, they did not germinate. Due to the mass extermination of sparrows, launched "from above", the population of insects that exterminated crops has grown. And in 1960 there was a drought.

    The result is about 45 million deaths between 1958-1962 .

    One of the politicians who tried to correct the mistakes of the Great Leap Forward was Deng Xiaoping. In 1976, after the death of Mao, he became the de facto leader of China. Xiaoping began to hold meetings with Western leaders and establish diplomatic relations with other countries. Inside China, as an experiment, he established a special economic zone in Shenzhen.

    Money instead of cards


    In China, a policy of reform and opening up began in the late 1970s. In the West, it was perceived as a transition to capitalism. The government empowered local leaders and allowed international trade and foreign investment.

    In 1979, the Law on Sino-Foreign Joint Venture Enterprises was adopted , and in 1988 on the Sino-Foreign Joint Venture Enterprises. In the first case, a legal entity similar to the Russian LLC, CJSC or OJSC is necessarily created, and the profit is distributed in proportion to contributions to the capital. In the second case, you can do without creating a legal entity, distribute profits as agreed, and instead of making a contribution to the authorized capital, use cooperative conditions - for example, the right to access the market.

    A Sino-foreign joint venture is created for 30 years, and then this period can be extended by receiving a special decision of the State Council of the PRC.

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    Shenzhen in 1979,

    Deng Xiaoping, on his reform and opening up policies, said: "Crossing the river, we feel the stones." Shenzhen, a special economic zone since 1980, has become one of these stones. The authorities began to test economic transformations at this training ground. While throughout China, bread and electricity were on the cards, in Shenzhen they used money. Those who came here wanted to feel more freedom.

    Shenzhen is one of the cities located in the Pearl River Delta. On its territory long before it became a city, the center of the state salt monopoly (III century BC), a port for trading in spices, salt and pearls (XIV century) was located. In the 16th century, the basis of the territory's economy was salt, tea, spices and rice. In the late 1970s, when Shenzhen had the status of a village, 30 thousand people lived in it, mainly engaged in fishing.

    Since 1989, the region has been developing the China Development Institute - China Development Institute. About 100 scientists and experts resolve issues related to the reform and opening up policies, provide expert support to Chinese and foreign companies, and promote new market practices.


    In 2017, the International Financial Center Pinan , a 599-meter 115-story skyscraper, the 4th tallest in the world and 2 tallest in China, was completed in Shenzhen

    The role of the development institute


    In less than 30 years since the beginning of the China Development Institute, Shenzhen has become China's economic leader, including in the telecommunications industry. Shenzhen attracts foreign investment: here are Samsung, Foxconn factories, which produce iPhone and iPad, components for Canon, Sony, Microsoft, Cisco, an IBM research center and DuPont, PepsiCo and Hewlett-Packard factories.

    In 2015, Shenzhen is the third largest container port in the world , only ports in Shanghai and Singapore overtook it.

    The agglomeration population is 11 million people, and GDP is growing at 9% annually. But what is especially interesting is that Shenzhen accounts for half of the patents registered in China.

    The Development Institute is developing financial and tax measures to stimulate entrepreneurship and production. He also carries out reforms at the local level. Their goal is to simplify life for startups and businessmen as much as possible: they try to provide services in a “one-stop shop”, and use an intelligent system for tax accounting.

    The administrative authorities of Shenzhen have extended powers, and the central authorities of China try not to interfere in their work. This allows you to quickly respond to local situations, develop and implement new ways to support companies. If successful, such practices are transferred to other regions.

    Ecosystem


    Shenzhen is one of the most tech cities in the world according to Tech Insider. It collects 90% of household appliances in the world .

    The influx of people, according to Wanda Guo, Executive Vice President of China Development Institute, is one of the most important factors for high-tech industries. In 1990, the city's population was 875 thousand people, and in 2014 reached 10 million 680 thousand. In terms of population growth, Shenzhen is in the top five cities. People come to the city for new experience, a profession to open startups.

    Shenzhen began with the production of simple products. The main focus was on simple mass production. Then he faced competition from other Chinese cities, in which they practiced practices that had worked successfully in Shenzhen. Cities competed in production, and Shenzhen needed to be ahead of them again. Then the government began making Silicon Valley out of it, supporting not so much production as innovation. Boji

    image
    Factory in Shenzhen , which, according to 2006 data, exported 1.6 million Christmas trees to the United States.

    Some entrepreneurs start with simple copying, but in the end they come up with unique products. Fakes are called the word "Shanzhai", which means "mountain fortress"- the so-called gangster den. The Russian equivalent of "pirate". Such people in China are the most “innovative” and “creative,” they disassemble a foreign product, copy it and sell it at times cheaper. In Shenzhen, there is room for experimentation: you can buy any components on the market, and if they are absent, you can order them at one of the plants. The focus of "Shanghai" has shifted from copying products of famous brands to creating new products that are sold around the world.


    Workers at Foxconn factory, which produces iPhone, iPad, accessories for Playstation, Wii,
    Xiaomi, Huawei, Intel and Cisco.


    In the center of Shenzhen is the most famous electronics market in southern China - HuaQiangBei. A few blocks away they sell phones, speakers, computers, cases and accessories, from which you can probably assemble at least a huge humanoid robot. There are original new parts, parts from used phones, there are a huge number of fakes. Here you can assemble your iPhone 6S 16GB.



    The world’s largest hardware accelerator in the world, which accepts seed projects, HAX, is based in Shenzhen and San Francisco . Startups after passing the accelerator claim $ 100,000 investment for 10% of the capital. HAX helps in design, in engineering, provides expert support. Startups are helped by the fact that the accelerator is located near real production facilities, which reduces the delivery time of almost any parts: in the morning the order is in the evening delivery. A test batch of products comes in a few days, not months, as in most other regions or countries. As a result, before entering the market, startups at HAX need 3 months, when in Europe it would take 9 months.

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    The manufacturing unit that HAX works with. A source

    The city has a developed community of makers. Hubs like X.Factory are gathering people to learn new skills in the design and manufacture of wood, metal and plastic products using equipment from a saw to a 3D printer. Since 2014, Maker Faire has been held in Shenzhen annually . Among the visitors to such events is Sexy Cyborg , which has already been written about on Geektimes several times. Below is a fresh video from her in 360 format from the Maker Week Expo in Shenzhen, an excellent tour.

    The growth of the solvency of the population, the influx of people from other cities causes the growth in demand for education, entertainment and tourism.



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    Sexy Cyborg, design enthusiast

    The future of the city


    Successfully developed in Shenzhen, strategies for decentralizing power and stimulating entrepreneurship and production have been deployed in other regions - the special economic zones of Xiamen, Zhuhai, Shantou and Hainan. Shenzhen had to cope with the competition of other Chinese cities in terms of production, and the authorities decided to develop innovations in it. The government pushes production outside of Shenzhen to transfer it to the category of Cities 3.0 - a center of knowledge, technology and education.

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