Shenzhen Museum #4 – Shenzhen’s Reform and Opening Up 深圳改革开放史

Chapter 3 : Made in Shenzhen

It all started with contract manufacturing, when companies from all around the world made use of the cheaper labour and proximity to resources to lower the cost of their finished goods to get higher profits. Everyone came, the Taiwanese, Hong Kongers, Japanese, and then Europeans and Americans all brought their equipment and technologies to this sleepy town.

One of the earliest manufacturers was electronics. Many moved their base from Taiwan and Hong Kong, to an area promising bigger pieces of land for expansion and a possible access to the hinterland – Mainland China.

Shenzhen is the electronics powerhouse of the world in the 90s. Nearly every high tech that was “Made in China” came from Shenzhen and the surrounding areas.

And in order to do business with the world, the infrastructure was upgraded as well as the payment and banking infrastructure. This allow an explosive growth as fundings started flowing in.

Collaborating with the World

Shenzhen has made many strategic alliances with cities around the world to attract talents to this burgeoning city in desperate need of talents.

Shenzhen Mass Railway Transit was built with the help of Bombardier Transportation by Changchun Railways. This was one of the first MRT system built in China and the first JV between a foreign and local company to build the rolling stock. Siemens provided the signalling systems. This model of the train was given by Siemens for commemorating the award of the tender.

Hong Kong and Shenzhen have always had a very interesting relationship. In the beginning, most of the investors were from Hong Kong. Hong Kong people bought a second property in Shenzhen, and the border crossings amounted to millions daily prior to Covid. These days, Shenzhen has taken over the manufacturing of Hong Kong, and millions went to Shenzhen to escape the harsh Covid lockdowns in Hong Kong.

Started in 1999, the China Hi-Tech Fair has been going strong over the last 22 years even a pandemic cannot stop it from happening. On display were some of the exhibition items from the fair over the years and memorabilia from the first fair, and a congratulatory message from Premier Wen Jiabao for the 10th session 2009.

The UnionPay logo was designed by a computer engineer that was involved in the early stage of the development and trial operation of the UnionPay network system before the establishment of China UnionPay. The logo was first registered in 1997 and launched for trial use in Shenzhen. After the establishment of China UnionPay, it was handed over to China UnionPay. Today, CUP is the largest bank card network in the world.

Innovations from Shenzhen

In the beginning, brands from Japan and the west came for the cheaper manufacturing costs. As the supply chain moved to Shenzhen and the surrounding areas, innovations started to pop up among the manufacturers in Shenzhen. Like this AIWA AV combo was the first to include a VCD player within a full audio component with cassette, CD, radio and surround speakers (and a subwoofer).

And soon, the manufacturers moved from OEM to promoting their own brands. Among those that are still producing these days is Yihai Kerry. They started as a foreign cooking oil company, and over the years have become fully Chinese-owned entity producing one of the most trusted brand of edible oil in China.

Shenzhen became the biggest OEM/ODM manufacturing base for its speed of making the prototype to finished products. Typically in Shenzhen, a prototype can be made between 1-3 days, and the manufacturing volume can be done in smaller quantities than all its competition. That provided the “Factory of the World” for all aspiring inventors and industrial designers to come and make their dreams come true in “Shenzhen Speed“.

And innovations did not stop with just white goods. Shenzhen Sibiono became the first pharmaceutical company in the world to produce a genome-based injection based on gene therapy to be approved for human use. And Shenzhen is also the biggest producer of green energy cars and batteries.

But besides new, innovative technologies, Shenzhen is also one of the largest exporter for Chaozhow porcelain due to its proximity to my ancestral hometown. The Greater Bay Area that included Shenzhen, Chaozhou, Macao, Hong Kong and Guangzhou among others will become one mega Economic Zone that had a total population of over 86 million and the GDP of USD 1,668.8 billion in 2020.

Dark Clouds over the Horizon

A local Enterprise software developer, Kingdee was founded in Shenzhen in 1993. Over the years, they went from a follower of leaders like Oracle and SAP to become the leading ERP in China. Although made claims that they copied most of their functions and capabilities from the overseas companies, Kingdee became No.1 because of excellent conditions given by the state government (buy local policies) and compliance to local accounting practices.

Besides Enterprise software, Consumer software like social media and search engines/portals were all restricted from foreign investments for fear of a cultural dilution by foreigners. Chinese returnees affectionately known as Haigui 海归 brought back innovative ideas like Shenzhen Tencent (the local Yahoo/Google) which came up with QQ (similar to chatrooms), and started WeChat (vs WhatsApp), etc. Such was the sales conditions that foreign companies faced as the competition intensified for the local marketshare. This rang some alarm bells in the corridors of the White House.

Huawei started as in Shenzhen as a contract manufacturer for Cisco, and from that experience built the largest telecommunication equipment manufacturer in world. Given their advantageous access to cheap skilled labour and a large pool of Eastern European experts following the fall of the Iron Curtain, Huawei became a frontrunner in the adoption and manufacture of 5G technologies. Subsequently they became a target of an aggressive Trump administration that slapped a crippling embargo on everything Huawei and dissuaded US allies from adopting Huawei technologies.

Another local Shenzhen business, Zhongxing Telecommunications Equipment, known as ZTE, makes cheap smartphones that are mostly sold in developing countries. But ZTE is also one of two Chinese companies — Huawei is the other — that sells equipment for cellular networks. It had about 75,000 employees and conducted business in more than 160 countries at its peak. ZTE became a pawn that was sacrificed during the trade war between the US Trump administration with China.

Beyond Economics

Apart from the competitions and unfair trade embargoes, Shenzhen remained a city of opportunities for all those who come and seek them.

Shenzhen did not have the deep and strong cultural history of ancient cities like Nanjing or Guangzhou, but Shenzhen has the advantage of being a very tolerant city from the beginning because this loose fitting of people from all around the country. They were commanded multiple times by the central government from being the most integrated city of China.

The 2011 Summer Universiade, the XXVI Summer Universiade, was hosted in Shenzhen. In preparation for the event, Shenzhen built numerous infrastructure objects, including several new lines of Shenzhen Metro. The preparation cost was estimated to exceed 180 billion RMB, including 75 billion RMB spent on new subway lines, 12 billion RMB on facelifting buildings and streets and 4.1 billion RMB spent on the 60,000-seat stadium. Also added were 200 of BYD’s all-electric eBUS’s and 300 of BYD’s all-electric e6’s (a 5-passenger sedan that serves well as an eTaxi), making this new-energy fleet the largest of its kind in the world.

Shenzhen is an immigration city, and was built in the early years with much help from all around the country. And in the 2008 Sichuan earthquake, Shenzhen provided a lot of help to the affected areas in terms of donations of money and resources, and also resources to help rebuilt the electric and communication networks.

Besides physical help, Shenzhen people gave “the gift of life” with many of this kind of blood donation vans donated by the public to help with the rescue efforts.

The Ever-changing Shenzhen

Shenzhen rapid growth was given another boost by incorporating nearby cities into the Shenzhen Economic Zone. That basically tripled the land mass of Shenzhen for preparation for more population growth and economic growth.

In the past 30 years, Shenzhen has jumped from a small backward border county to a beautiful modern city. Its comprehensive strength ranks in the forefront of domestic large cities. Its rapid development and huge changes have attracted worldwide attention.

Shenzhen’s development and achievements are a wonderful microcosm and vivid reflection of China’s historic changes and great achievements since the reform and opening up. With her continued economic and social success, Shenzhen has shown the world the vigour and bright future of socialism with Chinese characteristics.