Shenzhen as Innovative City:Hardware ecosystem and beyond

manufacturing创新型城市，深圳

Asei ITO (伊藤亚圣)

asei@iss.u-tokyo.ac.jp https://aseiito.net/

Associate Professor, Institute of Social Science, University of Tokyo

Visiting Scholar, China Center for Special Economic Zone Studies, Shenzhen University

Presentation materialAt Shenzhen University25th October, 2017

Self introduction

• Graduate from Keio University

(庆应义塾大学)

• Study abroad in People’s University of China(人民大学 2006-2007), and Sun-Yatsen University (中山大学 2011)

• Past research interests

Industrial clusters in China and Asia

Innovation policy in China

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My work 1: Economic Geography (经济地理)

• How does rising wage in coastal region in China affect agglomeration?

(成本上升对产业集聚有如何影响？)

• By analyzing regional-industrial data, shown both “agglomeration effect” and “dispersion effect” are observed (2007-2012)

“Industrial Agglomeration and Dispersion in China: Spatial Reformation of the “Workshop of the World”,” China Economic Policy Review, Vol.3 Number 1: pp.1-29, June 2014.

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My work 2: Innovation policy (创新政策)

• How do innovation policies stimulate firm-level innovation?

(中国政府的创新政策对企业的研发活动具体有多少影响？)

• Using firm-level survey data from Chengdu, we estimated causal effect of policy programs by employing propensity score matching (倾向匹配法).

• Result suggest that innovation policy positively affected innovation activities by increasing 2 patent applications in baseline, while some of programs show no significant effect or even negative effect

“Multi-level and Multi-route Innovation Policies in China: A ProgrammeEvaluation Based on Firm-level Data”, Millenial Asia, Vol 8, Issue 1, 2017 (with Zhuoran LI and Min WANG).

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My work 3: Industry case study (产业案例)

• China UAS (Drone) Industry Report 2017 (in Japanese, March 2017)

(在日本，第一本关于中国无人机行业的报告)

• Brief report on Drone industry in China, including R&D institute, Law regulation, and major companies

• Decided to stay in Shenzhen. 2018 will be the 40th

anniversary of Reform and Opening.(决定了在深圳做访问学者。恰好明年是改革开放四十周年，可以深入研究经济改革演变)

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Contents

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1) Shenzhen as emerging innovative city

(深圳作为新兴创新城市)

2) Hardware ecosystem and new generation startups

(硬件生态圈以及新一代创业企业)

3) How to co-create with Shenzhen: Case of Japan

(如何跟深圳一起创造：日本为例)

1. Shenzhen as emerging innovative city(深圳作为新兴创新城市)

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China is becoming a major player in global R&D

8Note: PPP and USD in 2010.Source: OECD.Stat(http://stats.oecd.org/), Main Science and TechnologyIndicators.

R&D expenditure

Germany

Japan

Great Britain

USA

EU (28 countries)

China

Billio

n U

SD

China is a major source of UNICORN (独角兽) as well

9出所： Visual Capitalist, “The World’s 200+ Unicorns, in One Giant Map”, 2017, 21st September (http://www.visualcapitalist.com/worlds-200-unicorns-map/)

In terms of international patent application,Shenzhen is new hot-spot

Source: The Economist, 7th April, 2017. “Jewel in the crown: Welcome to Silicon Delta Shenzhen is a hothouse of innovation”.

PCT application by district in Shenzhen(2016)福田

南山

龙岗

宝安

罗湖

盐田

光明

坪山

龙华

大鹏

全市

1761 10389 4534 1147 313 158 752 216 377 1 19648

11出所：http://www.szscjg.gov.cn/zscq/xxtj/zscqsj/201703/t20170316_6071608.htm

Nanshan accounted for approximately

25% of PCT application from China

Success of DJI

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• Founded in 2006 in Shenzhen

Mr. Wang studied flight-controlling system in HKSTU

• Phantom series (精灵) and other products dominated 70% of global consumer drone market

got 100 million USD investment from Sequoia Capital and AccelPartner

11,000 employees in globalincluding R&D center in US and Japan

Founder of DJI, Frank Wang(汪滔)

Source: Forbes.

Frank Wang’s statement(a little bit crazy, but great)

“追求卓越，需要无数苦思冥想的深夜，需要连续工作72小时的执着，更需要敢于大声说出真相的勇气。”

汪滔

from DJI’s officical HP, “About DJI”

（ http://www.dji.com/cn/company ）

View from outside （老外眼中的深圳）WIRED “Silicon Valley of Hardware”(July 2016)

http://www.wired.co.uk/video/shenzhen-full-documentary

Argument in Chinacomparing Shanghai and Shenzhen（August 2016）

魏达志教授（深圳大学产业经济研究中心）

上海的所有制结构为央企：地方国企：外资企业：民企比重为1：1：1：1，最具活力和最具创新能

力的民营企业的比重仅为上海产业结构的1/4，央企和地方国企的

由于机制问题创新的动力是不足的

上海本地品牌几乎微乎其微，深圳却走出了华为，中兴，腾讯，万科，大疆，比亚迪等一大批全球著名企业。就连前不久深圳

到2020年，上海的目标是万人发明专利达到40件，研发投入占GDP比重达到3.5%，新兴产业增加值占GDP比重达到20%。这些目标低于深圳目前水平。

深圳，它证明了市场经济的力量。它证明了越新越好，越高越好。

夜里两三点、三四点结束时，看看对面那个大楼，也都亮着灯，那可是腾讯游戏公司。

秦朔（自媒体人）

2. Hardware ecosystem andnew generation startups

(硬件生态圈以及新一代创业企业)

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Hardware ecosystem

1) Matured supply-chain(成熟的产业链)

2) Opened and modelized industrial organization (开放性、模块化的产业结构)

3) Factors behind creativity and entrepreneurship(创意以及企业家精神)

1) Matured supply-chain (成熟的产业链)

Electronicsmodule

SMT PCBA

Mold Injection

AssemblyPackaging

Design(Soft, Hard, Mechanic） Inspection and認証試験

Logistics Custom

HK Airport

HK/SZ port

Source: material from Mr. Junichi Fujioka, JENESIS(SHENZHEN)CO.,LTD(創世訊聯科技(深圳)有限公司).

Production volume in SZ (2016)Product Volume (1k unit)

Laptop PC 7,280

New Energy Car 60

Digital Camera 2,190

Mobile Phone 388,810(3.8亿台)

TV 38,830

Liquid display 786,420

Electronics parts 125,100,000（1251亿个）

Source：《2016年深圳市国民经济和社会发展统计公报》（http://www.sztj.gov.cn/xxgk/tjsj/tjgb/201705/t20170502_6199402.htm）。

2) Opened and modelized industrial organization(开放性、模块化的产业结构)

•公板(Gongban, Public Board)

PCBA board for specific product

you can make wearable or wifi speaker by assembling Public Board

•公模(Gongmo, Public mold)

Mold for existing PCBA board

These are rarely happen in outside China

•方案公司（Fangangongsi, Solution house）

Provide parts list(BoM) and supplier list (出所)『深圳今日快递』Intelligent

Wearable版A02面より。

Role of solution house(方案公司)

• Case of IDEA International

founded in 2009

specialize on development of Qualcomm (高通) chipset, designing PCBA board (电路板)

• Solutions of Qualcomm Snapdragon801

They can produce both Android smartphone and drone by developing Snapdragon801

21Source:深圳思路名揚(IDEA InternationalDevelopment）.

Role of matured supply-chain in PRD/SZ(智能手机产业链可以应用到其他产品)

Components

Products

SmartphoneTablet PC

AR, VRWearable

Unmanned Aerial System (Drone)

Supply-chain for smartphone can be utilized by other products such as drone, AR/VR, etc.

Hardware startup companies also can enjoy this electronics and open modulized supply-chain

Founded in 2011

Founder, Mr. Fujioka has long experience of manufacturing

Jenesis is an EMS for Japanese BtoB market and also they support Japanese startup for mass production

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Case of EMS for Japanese marketJENESIS(SHENZHEN)CO.創世訊聯科技(深圳)有限公司

Additional caseShenzhen and Automobile(汽车产业的电子化，逐渐发生)In the past, automobile industry in Guangzhou and electronics industry in Shenzhen were separated

But in the age of electronic car, automobile is becoming a large smart device

Interesting Chinese words:

智能车载, 车联网

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Flexible display dashboard by ROYOLE(柔宇科技, 2016 CES）

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Dashboard for BYD Qin 100（12.8 inch display ）

Automobile × Foxconn× Tencent

Foxconn (富士康) is alreadymanufacturing 128 parts for Tesla (特斯拉)

BYTON/Future Mobility, invested by Foxconn and Tencent, headquartered in Nanjing, is developing smart vehicle

“it’s not a car, it’s a smart device”

26BYTON https://www.byton.com/about.html

3) Factors behind creativity and entrepreneurship(创意以及企业家精神)

OMG! Demographic structure in SZ is totally different from any other cities in the world!

Registered population 11 million

20s accounted for 34%

30s accounted for 23%

0 500,000 1,000,000 1,500,000

女性 (千人）

0500,0001,000,0001,500,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85-89

90-94

95-99

100+

男性(千人） （歳）

Demographic structure in SZ(2010)

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MakeBlock王建軍(Jasen Wang)(born in 1985, Graduate from Northwestern PolytechnicalUniversity)

DJI 汪滔(Tao Wang)(born in 1980, graduate from HKSTU)

柴火創客/Seeed 潘昊(Eric Pan)(born in 1983, graduate from Chongqing Uni, Electronics )

New entrepreneurs from SZ(born after 80, engineer background, startup in SZ)

Accelerator from overseaHAX (加速器，HAX)Founded in 2012 by venture capital in Silicon Valley, US Operating office in Huaqiangbei in SZ

Accept 1,000 application from world annually, and select 30 projects and invest them, and accelerate their prototyping and mass-production in SZ

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Co-working spaces(联合办公)

Case of Simply Work(思微)

founded in 2015 in SZ

currently has 7 offices

900-1200 RMB for month

invested by IDG Capital and etc.

Makeblock(创客工厂):STEM education robot

Jasen Wang founded in 2011, a project from HAX

Developing open-source robot for education market. 400 employees.

Invested by Shenzhen Innovation Investment Group, Sequoia and etc. Company valuation reached 200 millionUSD

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Dobot (越疆科技):Robot-arm for education and consumer market

Founded in 2015. Currently around 100 employees.

Founder, Peizhao Liu graduated from Shandong University, Mechanical.

Successfully end Kickstarter, a crowd funding (620k USD)

Current company valuation reached around 50 million USD

QYsea（深圳鳍源科技）:Under-water droneFounded in July 2016

Founder, Zhang was engineer and marketer in Foxconn

Currently 22 employees (80% are engineer)

QYsea drone employs wide-range camera, can dive to 100m

Got Innovation Award in CES 2017 at Las Vegas

Got investment from 10 million RMB from Tahuoniao and Innovation Works（李开复）

These market is still small niche (compare to automobile industry or smartphone industry）But the number of startup does matterPost-Smartphone market can be cultivated by SZIncubating startup projects is what Japanese big companies can not do. In this sense, Japanese companies need to learn from SZ.

3) How to co-create with Shenzhen:Case of Japan

(如何跟深圳一起创造：日本为例)

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In June 2017, I saw this product inTech Crunch Shenzhen

Saying“Designed in Nanshan, Made in China”(南山设计，中国制造)

Obviously a modified note of iPhone’s statement

Shenzhen as “futuristic city”(未来性城市)

• Shenzhen as R&D city

Tencent and Nanshan Software Industry Base

BGI, Apple’s R&D center, and Malong, etc.

Shenzhen University applied international patent more than Qinghua or Beijing Uni.

• Shenzhen as Social Innovation City

Smartphone, E-payment, Young demographic structure

南山ソフトウェアパークの外観

What I saw last week in Nanshan

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AI recognition (人工智能识别：representation learning)

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Identify a ship

Identify people

Identifyanimal

Many countries are trying to co-create(近年来，不少国外对接项目落地于深圳)

1) Finland: Sino-Finnish Design Park (中芬设计园)

2) Korea: KOTRA (韩国贸易机构深圳办公室)

3) France: La French Tech Shenzhen (法国科技项目)

4) Great Britain: British Council “Hello Shenzhen” program (创客西游)

There are no clear answer for how to co-create with Shenzhen.

But many countries are now trying to connect own startup community to Shenzhen as well as China

My activities:working with Japanese Maker Community(我自己的小活动：对接日本创客团队)

• Niconico-tech Shenzhen Observation Group has around 1,300 members in Facebook

• Exchanging information about Shenzhen startup and tech events

• Rent 5 sheets from April at SEG Maker (赛格众创空间) in Huaqiangbei

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One company was born(一个企业诞生了)

• Babajoker Technology Ltd (丑角科技)

Founded in Sep 1st, 2017

Founder, Mr. Arai has passion for startup, and co-founded with software engineer

Current business are development of own hardware and accepting outsource development for hardware

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Mr. Shioiri, a Software engineer

Mr. Fujimoto’s comment (from Walkieslab/HAX)

In Japan, there are too many “watching fools”, but less “dancing fools”. Many Japanese have visited HAX but no following actions.

「日本には”見る阿呆”ばかりで、”踊る阿呆”がいない。HAXを見学に来る日本人は多いけれど、みんな見に来るだけで終わる。」

43Source：Forbes Japan 2017年7月1日記事「世界最速のスタートアップ育成所、中国深セン「HAX」の起業家たち」（https://forbesjapan.com/articles/detail/16800）より。

Over 150 people came to Segmaker(在半年的时间内，150个朋友来了赛格空间)

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Issues for Shenzhen

1) Software/Contents industry is still under developing

(软件以及内容方面等待发展)

2) Expensive living cost

(生活成本过高)

3) Entrepreneurship and regulation

(企业家精神以及市场经济机制和政府干预的关系)

Concluding remark for students in SZ(对经济学学生的建议)

Nietzsche’s saying (尼采的格言)

“你站在何处，你就深深挖掘，下面就是清泉！”

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谢谢！ありがとうございました！