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Despite its reputation for fakes and cheap electronics, the Shenzhen tech scene is proving the city’s potential as a centre for innovation.

Shenzhen used to be a terrible place. Founded as China’s first Special Economic Zone in the early ’80s, and fuelled by cheap labour and a subsidized currency, it quickly grew from a small cluster of fishing villages to a city of more than 12 million. Focused primarily on the blunt economics of making things cheap, its mercurial rise did not lend itself well to great city making. A drive through Shenzhen just a decade ago would reveal an endless array of dusty, half-built streets, shoddy factory dormitories and a seemingly complete absence of culture.

Now, more than 30 years later, Shenzhen has matured, and with this some significant virtues are beginning to show. While it still wrestles with problems of growth and social inequity, a vast ecosystem of factories, supply chains and know-how has emerged, which many predict will bring a new wave of technological innovation to the region.

To get a sense of this potential, you only need to walk through the central electronics market. Huaqiangbei occupies several blocks, a dense network of buildings packed five storeys high, with tiny booths hawking everything from small electronic parts to finished products. Here, you’ll find the infamous shanzhai: fake versions of brand name electronics such as Bose speakers and Apple watches. The system is so prolific that it’s not uncommon to see a fake before the official product has even been released.

What makes all of this possible? David Li, director of the Shenzhen Open Innovation Lab, points to over a decade of cheap generic parts, circuit boards and casings that flooded the city. Small-scale producers don’t have to make things from scratch; they can mix and match parts from a large network of suppliers and assemble their inventions in small workshops.

Out of vice comes virtue. Next to the fake iPhones, you can find ori­gin­al cellphones that have revolutionized the global market by appealing to niche users. One simple idea is the seniors’ phone, featuring a larger display, bigger buttons, louder sound and an SOS button. Another example is the large battery phone, a chunky device packed with a long-lasting battery, which directly addresses the nuisance of low battery life and sporadic energy supply found throughout the developing world.

What is remarkable about these devices is that they have no identifiable maker. They arise from the primordial goo of Shenzhen’s vast supply chains and small-scale producers, who rapidly iterate an idea and test it for consumer demand at Huaqiangbei. Hundreds of versions of the same device will get produced until one takes off. It’s what many people are referring to as Shanzhai 2.0, and the global impact is impressive. In 2012, Shanzhai cellphones sold 300 million units, one quarter of total sales worldwide.

If Shenzhen offers all of the right parts for product innovation, it can all seem impenetrable to the uninitiated. This is where Cyril Ebersweiler comes in: the French angel investor felt that “what Shenzhen lacked was both guidance and mentorship.” In 2012, he founded HAX, the world’s first hardware accelerator, which invites 15 teams from around the globe to spend 111 days in a workshop in the heart of Huaqiangbei, to finalize their product concepts and learn how to scale their businesses. Here, they meet with advisors who can help them to navigate the market and negotiate with factories.

One advantage of the market is that most booths also operate as direct points of contact for manufacturers. If a team finds a materi­al they like, a type of casing or a circuit board, they can be in conversation with the manufacturer the same day to discuss prototypes. At the end of the program, each start-up creates a polished company pitch to present to the press, investors, and prospective partners at HAX Demo Day, held in the San Francisco Bay Area. Participants give six to nine per cent of common stock to HAX.

Ebersweiler hopes the investment will pay off; after the first year, a handful of companies have already launched. Makeblock, founded by Jasen Wang, was a part of HAX’s inaugural session. The company aims to make DIY-friendly robotic kits, and it has seen early success from selling to educational programs in Europe and North America. On a walk through the HAX accelerator last November, the projects being frantically developed were as diverse as they were exciting: a solar-powered smart beacon that collects soil data for farmers; a spray-on fabric system; an autonomous mail delivery robot; and a home kit for breeding and drying edible insects. These ideas might sound pie in the sky if the teams were not already talking with factories on a daily basis to find the best ways of getting them made.

The program’s positive results point to a growing flaw in how many products are launched today. Crowd-funding sites like Kickstarter have lowered the threshold for ideas to get to market, but not for actual products. Many designers have found it easy to build up support for an idea, raising millions of dollars online, but they lack the resources to properly prototype, test then quickly scale their products to reach their massive base of early backers. Dubbed “Kickstarter’s biggest failure,” a drone called Zano raised US$3.2 million on the site in 2015, but due to testing problems the company couldn’t deliver and filed for bankruptcy.

Among the enthusiasts of the dynamic Shenzhen tech scene, a common refrain speaks to the optimism of what’s happening. While most products we know come with the label Made in China, initiatives like HAX point to a new collaborative model, better characterized by the label Made with China – one you might just start to see more often.

Brendan Cormier is a lead curator for the Victoria and Albert Museum in London. He is currently in charge of establishing a new V&A gallery at the Shekou Design Museum in Shenzhen.

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