Hardware Startups: Innovate from Shenzhen or Die

When you are working in a new technology field you feel like anything and everything is possible.

But suddenly when huge giants are entering your field with the same idea as you, then it becomes very hard to continue.

Alan Fletcher 2013

On the bright side, we are all in the learning curve when it comes to new industries. It doesn’t matter what age you are, it doesn’t even matter how much money you have. Everyone is on the same learning curve, we’re all equal at that point. So thinking this way even Samsung and Apple, when they’re entering a new market, are learners just like any startups.

The Battle of David and Goliath by Daniele da Volterra (1509–1566)

What’s most important for me is to work on something hard. What do I mean by this? I mean to work on something difficult to repeat. If you are dealing with hardware, it’s very hard to compete with Chinese companies once they replicate your idea, you have to make sure their job’s as hard as possible — then you buy yourself time to earn and capture the market.

For example, at Omate, we develop hardware and software for service companies as part of our WaaS — Wearable-as-a-Service — business model. We protect people and as a matter of fact we save lives every day since we launched that service in 2016.

At the same time we’ve implemented connection to call centres and insurance companies in the product itself. So we’re essentially selling a service along with our product. The complete solution is very hard to replicate.

Our customers, insurance companies and telecare assistance service providers don’t have the ability to replicate our wearable tech because first and foremost it’s not their business model just like Omate would not design a new LCD on its own; it’s easier for us to buy it from a legitimate company having its own credibility in the mobile display industry.

Maybe some of their competitors will go to Shenzhen to try recreating our products. But it doesn’t work that easily as they lack the establishment we have and so can’t create something as efficient, functional and competitive as we have in place already.

Our market is a small one, but it’s growing. The population here is ageing, people are getting older and more in need of security products.

On top of that, the larger companies like Apple, Samsung, Motorola, LG are targeting the mainstream market, the teens, the young adults, the middle aged — the 80% majority of the market. Yet the niche that we now occupied, the other 20% (kids and seniors), is too small for them to take interest in, and so we were able to thrive.

Hardware is Hard

Jawbone is going out of business. As a matter of fact, GoPro’s stock value fell from $35 at IPO to only $8 right now and Fitbit has a similar chart since its IPO in June 2015.

I do not see how they could strike back the Chinese competition which is innovating faster and offering more affordable products.

Keep Up With Shenzhen Speed

When I moved from France to Shenzhen in late 2007, most of our customers were looking for ODM to buy off-the-shelf designs, a product that is available immediately for production in which they could set their company name on it and distribute through their channels.

Shenzhen is still the Eldorado of these international buyers working for “local king” brands.

The problem is that we are not in 2007 anymore. Today, every factory has launched or plan to launch its own brand.

Shenzhen has already built so many International success stories in the mobile phone design industry with brands such as Huawei, ZTE, Meizu (Zhuhai), BBK with Vivo, Oppo and OnePlus, Tinno with Wiko in Europe.

As Maren Estrada wrote in his latest article on BGR «We’re not sure why anyone would buy a GoPro over this $64 waterproof 4K action camera

What can justify the premium of a $399 GoPro Hero 5 versus an unknown Shenzhen brand $64 Fitfort 4K Action Camera?

Today, Shenzhen brands are eating the whole Consumer Electronics World with stars in their own leagues from drone maker DJI, Insta360 camera, to programmable robot maker MakeBlock and many others.

One of the best example is Xiaomi which is the Chinese equivalent of Samsung.

Xiaomi got famous with its smartphone lineup but today they also design and sell TVs, laptops, cameras, fitness bands, drones, full HD laser projectors… and self-balancing electric scooters.

These disrupters are offering premium products at affordable price and by doing so, they are giving no chance to their foreign counterparts to survive in China.

They will dramatically affect the global consumer electronics landscape on the long term.

Chinese competition is insane

In the West for example, when you launch a new product, you may have a new competitor within a year of that product launch. But in China, you can end up with 10 in 1 month. The best example of that insane competition in China is what happened on the bike sharing segment. The first one to enter the market was Mobike (silver frame and orange wheels), it was followed by OFO (yellow bikes) a few months later then came Bluegogo (Blue bikes) and so on until we have got the whole rainbow covered + the golden bikes. Crazy!

Different brands of sharing bikes in Shenzhen Nanshan — July 9, 2017

Therefore, it is important for me to work on something hard by innovating from Shenzhen because the development speed is incredible and the competition is fierce so if you can succeed in Shenzhen, you are unbeatable.

What I mean by this is generating ideas with Shenzhen speed and hardcore competition in mind, but more importantly turning those ideas into something tangible, making them reality.