Shenzhen: China’s Ecosystem for Open-Source Innovation
Silicon Valley is dead, long live Silicon Valley? Once the breeding ground for digital innovation and home of leading tech giants, the Bay Area is now facing a rising force from the Far East — the city of Shenzhen in China, to be exact. The rapidly growing Chinese tech-sector creates both a stream of innovation and an extraordinarily skilled workforce, likely to fundamentally shape the economy of tomorrow. It all began in the city of Shenzhen, which evolved out of fast-paced digitalization and industrialization. Today, the city located in China’s south has a GDP of USD 302 billion and has become the country’s centre of high-tech innovation, attracting the attention of more and more big players from all over the world. But China’s new narrative has only just started.
Shenzhen: From fishing village to the Silicon Valley of the East
A mere 30 plus years ago, Shenzhen only was one of many fishing villages on the coast of Guangdong province. In 1980, the city was chosen to be the first of five Special Economic Zones (SEZ) under the control of former ‘Vice Chairman of the Communist Party of China’, Deng Xiaoping. The fishing village evolved into what is known today as the global open innovation ecosystem of China — or, to put it differently: The Silicon Valley of the East.
The ‘Chinese Dream’, if you will, rose after the end of the Cultural Revolution led by Mao Zedong, during which both the country’s economy and society endured significant suffering. With Mao’s death in 1976, Deng Xiaoping was one of the leading forces in the reconstruction of the impoverished nation and thereby declared the Special Economic Zones with more liberal economic policies. The former fishing village of Shenzhen radically transformed, changing its infrastructure and growing the fastest a city has ever grown — from a population of 30,000 to over 12 million. Thanks to Deng Xiaoping’s strategy of ‘opening the economy’ and the exponential technological development, Shenzhen, is now considered by many the world’s leading innovation hub for future technologies.
While taking advantage of its former role as a Special Economic Zone, the demand for electronic products started rising along with the growing purchasing power of the Chinese people. At the same time, the consumer electronics market’s close proximity to materials, parts and service suppliers enabled rapid and cost-efficient product development. Both economic and demographic changes since the 1990s paved the way for today’s Chinese tech players to thrive. Along with this ongoing socio-economic transition, the counterfeited brand products, that are referred to in Chinese as “Shanzhai”, triggered a mindset shift at the core of the maker movement. Accordingly, the Shenzhen Huaqiangbei district, which had been famously providing a vast variety of copied products, has now evolved into a greater innovation hub for digital products. Producers at some point just stopped copying international brands like Samsung or Nokia and began copying each other, focusing on shared, intellectual property. Ultimately, this led to the rise of the present open collaborative digital ecosystem — the so called “New Shanzhai”. By now, well-known digital companies like Xiaomi, Tencent or Huawei have long overcome their image of being the Chinese Apple, Facebook or WhatsApp, but established an identity of their own.
There’s no doubt that the Far East has leaped from being known as the land of copycatting to getting its own economy off the ground, skipping development steps and building the new China.
By now, well-known digital companies like Xiaomi, Tencent or Huawei have long overcome their image of being the Chinese Apple, Facebook or WhatsApp, but established an identity of their own.
Innovation through sharing and collaborating
Today, China’s innovation powerhouse rests upon a business culture that fosters open-source systems through sharing and collaborating. Due to its cultural history and sheer masses of participants, Shenzhen’s makers and manufacturers work less ego-driven, caring most about continuous product improvement rather than holding property rights. Like Li Da-Wei, co-founder of the first makerspace in China, Xinchejian, and co-founder of Shenzhen Open Innovation Lab states in WIRED’s documentary:
“The innovation mindset is based on fun, not on profit. There’s no binary division between being a maker and building a start-up. You shouldn’t be forced to choose between openness and proprietary.”
These days, start-ups and companies like the renowned drone fabricator DJI, hardware giant Huawei or e-mobility manufacturer BYD all have chosen Shenzhen as the place for their headquarters. Naturally, not only young Chinese but also international talents feel attracted to the maker spirit, incredible velocity of innovation, and accessibility of high-tech resources.
Among leading players like Microsoft and Apple, who are influencing digital transformation processes globally, Elon Musk is a strong advocate for open-source as a driver of true innovation, creativity and efficiency. Already now, start-up accelerator programs like HAX and events like the Shenzhen Maker Week are leveraging the potential of digital innovation that is not only made, but engineered in China. It’s hardly surprising that Silicon Valley tech leaders like Mark Zuckerberg, Bill Gates and Tim Cook came to Shenzhen Maker Week to catch a glimpse last year — certainly not least because of potential competition such as Xiaomi, Huawei and WeChat.
Today, China’s innovation powerhouse rests upon a business culture that fosters open-source systems through sharing and collaborating.
An outlook: Open-source innovation from East to West
While the US strives to maintain its position as the global leader of technological innovation, it’s about time Europe and especially Germany cultivate and nurture a mindset of open innovation. The example of Shenzhen shows how to leverage available high-tech resources, enable rapid development, and co-create sustainably at a global scale. To inspire a fundamental mindset shift that challenges not only organization structures and processes but also business culture, German businesses — from start-ups to SMEs and large corporations — only have to look East. What does it take to establish and foster an ecosystem for open-source innovation? Surely much more than just developing another digital product. What it requires is a new business approach that puts purpose before profit, and that promotes a trustful environment conducive to knowledge-sharing and co-creation.
Looking towards the future, where the Trans-Asian railway, the so-called ‘Belt and Road Initiative’ will facilitate trade, it’s now the perfect time to leverage China as a platform for rapid technological innovation and the development of competitive, future-oriented business models.