The document summarizes how Shenzhen, China transformed from a small fishing village to a major city and global leader in technological innovation. Key points are: - Shenzhen grew enormously from 30,000 residents in the 1970s to over 15 million today, with many residents starting their own companies. - Its young average resident age of 28 helps fuel innovation as residents grew up with modern technology and want to create the next big ideas. - Shenzhen was designated a Special Economic Zone in 1980 and received significant government funding, helping it become a hub for technology and innovation. - Its large population and embrace of technology provides a huge market and source of data to fuel new ideas from Chinese startups.

1. Why a Once Small Fishing
Town in China Is a Badass
Leader in Technological
Hardware Innovation
CHINA FUNK

2. Shenzhen, China. Once a small fishing community that
boasted a mere 30,000 residents in the 1970s has boomed
to over 15 million today. On top of that, there are over 3
million companies operating in Shenzhen.
That means one in five residents of this major Chinese city
is essentially a CEO.

3. The numbers are staggering, but what is even more eye-
opening is the average age of its residents (which may very
well account for its technological edge in global innovation
and hardware development).

4. A Young Demographic

5. The average age of a resident in Shenzhen is 28.65.
It is the true definition of a Millennial city and many of its
residents embrace modern technology like few other
locations in the world.
Growing up with smartphones, the Internet, social media,
and so many other technologies, it’s as though an innate
desire to find the next great idea and develop it is driven
and rooted in their DNA.

6. In 1987, Shenzhen accounted for 0.1 percent of Hong Kong’s
Gross Domestic Product (GDP).
Today, it is pumping out US$400 billion GDP.

7. Where Did This All Start?

8. In 1980, Shenzhen was the first city in China to be designated
a Special Economic Zone (SEZ). Officials aimed early on to
transform Shenzhen into a strong economic environment,
which meant considerable financial resources were poured
into this region.

9. A Mindset of Innovation

10. Partly because of its young demographic, but also because it
has become a technological hub, there is an underlying and
inherent mindset for innovation. In the past, though, China
was driven by a “copycat” mindset, especially as it pertained
to economic development and technological innovation.

11. Many products were copied and ‘fake’ imitations produced in
this region. Due to difficulty gaining access and because of
China’s laws, proving these cases was nearly impossible.

12. What that means is companies were essentially stealing ideas
or doing the same things that other businesses and
organizations around the world had been doing for quite
some time, eventually finding some degrees of success.
Today, that mindset is slowly evaporating, replaced by a
strong confidence in the nation’s ability to market and
generate ideas for tomorrow’s needs.

13. A Robust, Large
Population Certainly Helps

14. There are an estimated 1.3 billion people living in China.
Whereas the United States boasts a population just north of
300 million, China has 1 billion more people as a target
market.
There’s no need to look outside of its borders for feedback,
having to accommodate laws, rules, and regulations of other
nations, or wait for valuable feedback.

15. Much of China’s population has fully bought into technology.
In fact, the use of credit and debit cards is virtually obsolete.
Most people now rely on mobile payments for their
transactions.
If you were to travel to China and see somebody begging for
help on the side of the street, you might see a sign reading,
‘Hungry, please scan me.’ This refers to transferring funds
with mobile payments and making transactions using digital
technologies.

16. Inspiring Startups

17. If you had a desire to move to Shenzhen, China and start up
your own technological firm, you would probably find a very
difficult task and road to travel. While fully supportive of its
own residents, the ecosystem in this city is relatively closed
off.
You won’t find a lot of information online and it’s not easy for
an outsider to establish residence here, let alone start their
own company. It is a powerful market for technological
startups, though, and companies bent on innovation.

18. That’s because many of the residents here are constantly
clamoring for the next piece of hardware, the next generation
of Artificial Intelligence (AI), smart devices, and technological
tools that are cutting edge. There are numerous positive
feedback loops right in town among the 15 million residents
who live, work, and play here.
In short, there’s no shortage of people not just willing — but
enthusiastically hoping — to see what’s coming next and to
offer their insights.

19. Governmental Support

20. In China, there are numerous incentives that local and
regional officials offer companies for innovative ideas. There’s
also significant financial investment available at the private
level through what’s commonly referred to as venture capital.

21. By offering various incentives that — when a company creates
a workable piece of technological hardware — offers
numerous ongoing benefits, it inspires startups to strive
harder and even began collaborating with other firms to
develop ideas that will hold firm over time.

22. There is significant infrastructure investment in other major
cities throughout China, too, including in Beijing where an AI
development park is enjoying a $2 billion investment. In
Hangzhou, $1.6 billion USD is being funneled into its own AI
park. There are 19 cities investing in artificial intelligence that
is aimed at creating smart cities and new technologies.

23. A Vast Plethora of
Information

24. Another key benefit to technological hardware development
and innovation involves information and data. Big Data, as it’s
often referred to, involves tons of information, including what
people buy, what websites they surf, how often they purchase
items at a particular store in a week or a month, and so forth.

25. While U.S. tech giants enjoy reams of Big Data from their
users and customers, all of that pales in comparison to what
Chinese startup and technological innovative companies
have access to.

26. As mentioned earlier, most residents of this nation now rely
on mobile payments, which makes it far easier to track their
purchases, habits, and even where they travel.
Smart city technologies offer gold mines of real-world,
actionable information. This all comes from everyday users,
usually the target market or end user of new hardware
designs and innovations.

27. ‘Acceleration’

28. HAX, or HAX Seed, is a hardware accelerator program
developed in 2011. It is centered in Shenzhen and provides
investment for select startups to help increase the speed of
hardware development and innovation.

29. It was the first accelerator in the world that was strictly
focused on hardware. Being rooted in Shenzhen provides
that wealth of resources mentioned previously, along with a
$100,000 investment, all in exchange for 10% of the equity
produced by the hardware, once it’s completely developed
and manufactured.

30. Knockoffs

31. We would be remiss if we didn’t talk about Intellectual
Property Rights. For many years, the copycat mentality in
China meant numerous manufacturing sites could produce
knockoffs, or fake copies of more popular products, from
handbags to smartphones.

32. While few people would be fooled by a knockoff Apple
iPhone, a fake Gucci bag could fool the average layperson.
The Stikbox is another example of how China’s ability to
quickly steal ideas can undermine some great innovators
elsewhere in the world.
The creator of the Stikbox, Yekutiel Sherman from Israel, had
this idea for a smartphone case that had a built-in selfie stick.

33. When he sought funding through a crowdfunding campaign,
he assumed his idea would take hold. He simply never
counted on a company in China stealing the idea and
bringing it to market before he could even fully develop his,
and for a fraction of the price he would have to charge.

34. China’s Stated
Enforcement of IPRs

35. While China has long been lax on protecting Intellectual
Property Rights, because of its newfound technological
innovation, it claims to be far more serious about taking steps
to protect IPRs within its borders and from foreign innovators.

36. How that pans out is yet to be seen, but looking at Shenzhen
can provide an overview of not only the challenge innovators
have elsewhere in the world with copycats and knockoffs, but
also with its young, technologically savvy population eagerly
seeking the next technological hardware innovation.

38. BREAKING THROUGH THE NOISE!