Lessons from Shenzhen

“Give us just four to six weeks, and we can turn any idea into a product,” said David Li, who is helping transform Shenzhen into a manufacturing mecca in the age of the Internet of Things (IoT). Until recently, Li has been running a small maker space in Shanghai. Now, with other makers, he is engaged in a heated discussion on the impact of the 3-D printer on the manufacturing industry. In his dramatic rise to become a symbol of Shenzhen, the Chinese government played a big part.

Shenzhen was designated a leading city for economic reforms and opening to the outside world in 1980, but the first three decades were not very impressive. The city was infamous for low-quality “Made-in-China” products made from cheap labor and for pirated goods. Poor working conditions and pollution were two other dishonorable stigmas. But in 2008, the Chinese government announced an ambitious plan to integrate 11 cities along the Zhujiang River into the Pearl River Delta Economic Zone for further development, designating Shenzhen as the center for engineers and makers.

Shenzhen played a key role as a testing ground for China’s market-oriented economic reforms. As of 2014, the southern city had a population of 10 million and a per capita GDP of over $24,000, nearly on par with Korea. The sleepy, former fishing town with a population of 300,000 in 1980 has morphed into a tech capital of China in one generation. That’s an unprecedented makeover in the modern history of cities.

David Li is not intimidated at all in the center of the global hardware ecosystem and stronghold of the world’s leading IT companies such as Foxconn, Huawei and Tencent. Probably because of the encouragement from Chinese Premier Li Keqiang, who visited a maker space in Shenzhen earlier this year, or thanks to the start-up promotion policy of the Chinese government, the godfather of Chinese makers is still confident. Even when the Shenzhen Maker Faire, which he co-organized with the government, turned out to be a state-sponsored event without innovative items, he doesn’t care.

Under the bold banner “Innovate with China,” he boasts that there are 100,000 engineers in Shenzhen - most of them young, challenging and dreaming to start another Xiaomi. He bragged that Shenzhen serves as a bridgehead even for foreign start-ups, as ideas discussed over drinks at night become prototypes the next morning thanks to the abundant manufacturing workforce and affordable costs. An increasing number of Korean ventures also commission product development and prototype production from Shenzhen’s start-up incubators like Seed Studio.

As a mecca for start-ups, Shenzhen is something like a project that the Chinese government cherishes. Rather than being Silicon Valley’s unimaginative partner, it strives to become a city of innovation with autonomy, openness and agility. It would even dare to “reinterpret” the culture of imitation into “creative hacking” based on the open source spirit. The government announced that 100 hacker spaces called the “House of Innovation” will open soon.

As economic growth slows and wage increases undermine price competitiveness, China needs a new growth engine. In March, the Chinese government proposed “Start-ups and Innovation by the People” as a tool for economic growth. There is an amazing statistic that 2.14 million companies were founded in the six months between September 2014 and March 2015. While it is another issue how many among them will survive, China’s start-up campaign seems to work.

In Shenzhen - young, lively and a paradise for entrepreneurs - I thought of the Korean economy stuck in its deep rut. With its growth engines fizzling out, the prospects for Korea’s economy are not that bright. With conglomerate-driven growth facing limits and the current administration’s much touted “creative economy” initiative not functioning very well, where should we be headed?

What makes China different from Korea? With the understanding of the ecosystem of innovation, the Chinese government promotes David Li as it believes he’s the most suitable leader to make Shenzhen a maker city. He’s not a businessman or a bureaucrat; he is respected and revered purely as a maker.

When asked about his vision for Shenzhen, he succinctly said, “Shenzhen Institute of Technology.” In other words, that’s the very place of constant experiments and challenges for innovation.

Innovation, development and growth are all led by people. China’s leadership is excellent at placing qualified persons in appropriate positions in accordance with its national strategy. Rather than resorting to big corporate names like Foxconn or Tencent, the government tries to find young innovators. Also, instead of striving to resolve everything with indigenous technologies, they created a global ecosystem by partnering with Silicon Valley or MIT. English is not widely spoken in Shenzhen, but foreigners are working together in innovative spaces.

Can Korea’s ecosystem of “creative economy” focused on conglomerates really work? Unless the dinosaur business groups transform themselves totally, they can hardly thrive in a truly creative economy. While chaebol are built on a vertical structure, a creative economy is based on a horizontal culture. If innovation can be attained with money or organization, conglomerates would have been warehouses of innovation. But true innovation is a bottom-up revolution. It starts from one person with a pioneering spirit trying a radically different method from the past. My years of experience have taught me that such a person usually doesn’t hang around large companies.

Translation by the Korea JoongAng Daily staff.

*The author is the director of the Art Center Nabi.

by Roh Soh-yeong