
An Insider’s Guide to Shenzhen Manufacturing - sohkamyung
http://makezine.com/magazine/making-in-shenzhen/
======
nakedrobot2
This is more like a guide for how to lose all your money, and have your
product design stolen, in the minimum amount of time.

I have seen too many Kickstarter projects crash and burn because they read
guides like this, speed dated some factories, and then lost all their money in
a bad production run, by a factory who doesn't really care about them.

Unless you work with a factory who you not only trust, but know that they have
an extremely strong motivation to not steal your product, they will both screw
up your product, and your design will be cloned in a matter of weeks.

Even friends I have who are Chinese, living in Hong Kong, have warned me that
even for them, it is hard to find trustworthy suppliers and factories in
Shenzhen.

We are going to be doing all our manufacturing and assembly here in Europe.
Luckily we're making a more expensive item and we have this choice.

" But if you’re undertaking a serious endeavor and you’re looking to make
mission-critical parts, you have to visit to really know the situation at your
suppliers, to establish relationships with factory owners and staff, and to
get a sense of their quality control standards. " NO NO NO NO NO. Unless you
are going to MOVE THERE AND LIVE THERE, then you need to absolutely forget
about manufacturing there. You WILL lose.

I don't want to sound down on Shenzhen - it is where almost all our beloved
electronics come from - but seriously - it is an environmental catastrophe,
there is ZERO intellectual property protection, it is full of scam artists,
there is a nearly insurmountable language barrier, and yes, there are in fact
plenty of completely competent, worthwhile, trustwothy electronics
manufacturing assembly companies in nearly every country of the world. Unless
you are going truly mass-market (>200,000 pcs) then you should absolutely not
even consider taking it to Shenzhen.

~~~
andrewmb
To provide a somewhat-contrasting anecdote, I've been dealing with Chinese
factories (mostly in the Pearl River Delta area) for the last 3 years,
manufacturing fairly high-tech products. We haven't had any of the problems
you describe. We did our first small manufacturing runs _sight-unseen_ with
our initial partners and everything went well. I think the story of cratered
Kickstarters has more to do with creators who have little experience in
manufacturing and no clue what they're doing in China, rather than some
intrinsic failing of Chinese factories.

There are plenty of ways to make your BOM work in your home country, but at
least in the US it's surprisingly difficult to get low volumes (<5k units)
manufactured economically.

~~~
powertower
> manufacturing fairly high-tech products. We haven't had any of the problems
> you describe.

Only because of the nature of your product...

It's all about the product type, its price range, and the availability of
reaching the customers.

A US company that made a general consumer-level (non-pro) 1 milligram scale
(e.g., accurate on the weight to within 1-3mg) outsourced its manufacturing to
China, which then had the same production lines make 2x the order, placed its
own brand/sticker on the additional units, got it into the US, and had the
various distributors provide it at a price that was 80% less than the company
was selling them.

I bought one off Amazon. Why pay $200 when I can pay $20-$40?

If this is legal or not it does not matter - if it can be done it will be
done.

In your case, the time is not just right. But the moment when everything
aligns and they think they can compete with you...

~~~
contingencies
So what do you want, patents?

~~~
nakedrobot2
Patents won't save you. Trademarks can help you prevent imports like this, but
nothing will ever stop your product from being sold in other places,
especially mainland china.

~~~
contingencies
Right, so ... you've just re-iterated my point. Whinging about the nature of
reality aint gonna change it.

~~~
nakedrobot2
No, my point is you need to find people who won't steal from you, not because
you have patents, but because they're not scumbags. Going to Shenzhen, the
odds are very much stacked against you with this.

~~~
contingencies
Do small fly-by-night factories care about reputation? No, probably not. Does
having your stuff produced elsewhere given this reality protect against its
copying? No. Realistically, we just have to recognize that the exclusive right
to produce something does not exist, except as vaguely enforced at retail
through certain developed markets' monopoly-assisting enforcement
arrangements... _if_ you have enough dosh for lawyers to back it up. _From a
business standpoint, the cold hard truth is that producing anything physical
is more about the object 's distribution and marketing than the design and
production_, which can be monopolized only temporarily.

------
option_greek
It's funny how "focusing on core competencies" usually reduces the set of core
competencies gradually till all that left is management.

~~~
gumby
That is funny (though sadly common) because it's a good idea early on: focus
on what really sets you apart when you start; then gradually expand your core
competency so you can better control your fate.

Unfortunately building big companies is not really in fashion these days.

------
cherls
I was in Shenzhen a few weeks ago. It's indeed a wonderful city.

Originally the massive manufacturing industry was accelerated by the large
amount of people from rural areas flocking into the city due to reform and
opportunities. The increase in population resulted in a large unskilled
workforce and thus very cheap manual labour and large factory assembly lines.

It's a lot better now given a much more competitive market. Salaries are
higher and quality of living is better than the rest of the country. A lot of
people became very rich in Shenzhen within the last decade.

~~~
sachingulaya
I pay my Chinese employees in shenzhen the same wages I pay my workers in LA.
The cost of living, from what I can tell, is fairly comparable.

~~~
dataker
No, it's not.

[http://www.numbeo.com/cost-of-
living/compare_cities.jsp?coun...](http://www.numbeo.com/cost-of-
living/compare_cities.jsp?country1=United+States&country2=China&city1=Los+Angeles%2C+CA&city2=Shenzhen)

~~~
titanomachy
That is actually much closer than I expected it to be.

> Prices Including Rent in Shenzhen are 36.96% lower than in Los Angeles.

To compare,

> Prices Including Rent in Los Angeles, CA are 36.34% lower than in Zurich.

~~~
contingencies
LA is basically the same price for rent as third tier Chinese cities. (Source:
I lived LA 2010, China before and after) However, you don't need a car in
China, other aspects of cost of living such as food, utilities, transport and
appliances are a lot cheaper, and the government doesn't really try to tax you
(and certainly not on foreign earnings). Plus, you get to learn a new
language. Flip side, no LACMA and it's a bitch to get decent avocados or
orange juice, and a lot of alcohol is cheaper in LA.

------
snake_plissken
Ah Shenzhen! Such a wonderful and interesting city. If you are there, make
sure you get to the Lo Wu Baby Factory AKA The Luohu Commercial City. I jest,
it's actually not a baby factory, that's just what we called it for some
reason. It's a humongous mall where you can buy pretty much anything in any
quantity, of the lowest or highest quality, you just have to know what you are
doing. I bought a 64 GB USB drive there in 2007. I knew it was fake, but I
wanted to see how they were doing it. There was also the memorable time when I
found a DVD shop, all pirated stuff, where they literally had every movie and
TV show ever put on DVD, Like The Complete MacGyver . You peruse through a CD
binder to find the DVDs you want and then a few minutes later a little kid
pops out of the ceiling with your DVDs and the scampers back up into the
ceiling. There are legit products there, don't get me wrong, but I was
fascinated with the fake and knockoff stuff.

~~~
thearn4
> I bought a 64 GB USB drive there in 2007. I knew it was fake, but I wanted
> to see how they were doing it

Out of curiosity (if you remember), what was its actual capacity?

~~~
wlesieutre
Check out [http://www.neowin.net/news/fake-chinese-500-gb-external-
driv...](http://www.neowin.net/news/fake-chinese-500-gb-external-drive-is-one-
clever-paperweight-literally) for an impressive one of these.

It reports as a 500 GB drive to the computer and you can copy small files
to/from it. But it's basically a ring buffer; once the actual (much smaller)
capacity is full it goes back to the beginning and starts writing over the
earlier data.

------
asymmetric
Interesting article, but I get the impression it was downplaying environmental
and social concerns quite a lot. A lot of "promising signs" but in the
meantime you get heavy metals in your food, and workers' conditions are just
bearable. It's probably better than most other parts of China but still, the
situation seems to be quite bad.

~~~
DanielBMarkham
Meta: It's obviously a puff piece. It is also true that there are folks that
enjoy the city.

I was going to flag it and file it under "why the heck did that appear on
HN?", but if it generates some useful conversation about hiring and startups,
it's worth it. A lot of puff pieces on HN (and elsewhere)

It makes for an interesting exercise to take all of the criticism that you see
elsewhere and note how it is handled in the article. "...Labor practices are
still a concern, but..." and "...environmental issues are still a major
concern, there are hopeful signs..."

Note the use of the passive voice and the elimination of the subject of the
sentence. It's never "I made a mistake" or "China's labor practices concern
others", it's "mistakes were made" and "labor practices are a concern" (I also
love the word "concern". What does that mean? If you're driving in your car
and the radio doesn't work, is that concerning? If the car catches fire, is
that concerning? "It's a concern" simply says that you thought about it.
Brownies are a concern)

We could use a lot more China articles -- huge market, lots of really cool
stuff going on there. But we would be remiss if we read any article on HN
without a critical eye to context, style, and agenda.

------
briandear
Can someone explain why "Maker" is capitalized and "Factory Owner" or
"Engineer" isn't? It seems that there's a certain amount of pretense among so-
called "makers." How is a maker any different than any other kind of
manufacturer? I am not trying for snark; I actually don't understand what
distinguishes this 'maker' label from any other kind of manufacturer. Did we
start calling chefs "Cookers?" It just seems like this attempt at being
"Makers" rather than manufacturers smacks of pretentious hipsterism. How is
this scene any different than people fifty years ago who manufactured
toasters?

~~~
falcolas
It's a brand. It's "Make" magazine who wrote this article, and so they branded
folks of similar mindsets along the same lines: "Makers".

For better or worse, they have acted as a force to bring together folks with
similar interests, so I have a hard time being critical of their choice of
capitalization in their branding.

------
sjtrny
Not really a guide. I was expecting names of people and businesses or how to
actually make the connections with factories etc. Going to Shenzen is not by
itself enough. You could wander around the city for a week and get nowhere.

------
primigenus
Highway1 ([http://highway1.io](http://highway1.io)) is doing a great job of
helping startups figure out how to get their manufacturing strategy set up.
The advice and insight the two companies I worked with in their most recent
cohort (Spinn Coffee and Game of Drones) received was absolutely essential to
getting off the ground, so I'm expecting to see more of this kind of
incubator/accelerator in the future.

------
hundunpao
I wish we would not need Shenzhen.

~~~
kw71
I think that we had it in the past in the USA.

Almost a hundred years ago an electronics market sprung up in New York City,
and electronics manufacturing factories in the city and suburbs. I think it
was Robert Moses who decided to raze Radio Row to build WTC. After the war,
our electronics industry was mostly driven by the government's war on
communism. When consumer electronics innovation picked up again, US companies
were already looking to buy from or build in Asia (Japanese CB radios) or
Asians were already here doing business themselves (Sony Walkman).

~~~
briandear
Try to open a factory in Marin county or build a house in Malibu. THIS is why
manufacturing has left the U.S. In the U.S., people want jobs but they don't
want the factories that create the jobs. To build a house in Malibu for
example, It can take 2 years, just for permits! You can even hire someone
called an "expediter" who can speed it up slightly, but not by much. ..and
that's to build a house. Imagine trying to build a computer factory. Apple has
a Mac Pro factory in California, but only because the margins are high enough
on the Pro that they can absorb the huge differential for the California
factory. If they attempted to make MacBooks in California, it would likely
double the price.

The reality is that U.S. Corporate taxes are too high, the EPA often acts like
the Gestapo, state and local permitting makes filing papers in India seem like
ordering from Uber.

Don't misinterpret, I am not hating the EPA, however their obsession over CO2
is killing US industry. Taxes are killing growth and NIMBY politics has pushed
the factories across the oceans and over the border. Obamacare is also a large
disincentive to business.

You may agree with the above things, however when you can't even convince
people to buy a useful app for $1.99, you certainly cannot convince consumers
to pay hundreds of dollars more for electronics to have US manufacturing.

~~~
eitally
You make valid points, but the way you couch them comes across as being from
someone who doesn't directly have manufacturing experience. I do, and have
worked in electronics manufacturing my whole career (15 years). My company is
based in the US (San Jose) but the two largest campuses are in Mexico & China,
each of which contains >10,000 employees.

Yes, making electronics in the US would cost more, but you'd be surprised at
what "cost" is most important to corporations when making those kinds of
decisions. Depending what is being built, time to market & location of
profit/revenue can be more critical than labor cost. At this point, Chinese
wages in the first mover cities of Shenzhen/Guangzhou and
Shanghai/Hangzhou/Kunshan have increased to the point of being noncompetitive
with other regional options (Malaysia, Vietnam, Bangladesh), but because the
Chinese domestic market is so huge, many companies are just relocating to
cheaper places like Dalian, Fujian or Chengdu. Having the entire supply chain
in one country is hugely compelling.

Factory labor in the US, even in high skill, high tech manufacturing, is still
typically <$15/hr, with starting pay closer to $10/hr in many places. It
doesn't make a bit of sense to build things like mops & brooms here, nor does
it make sense to build extremely low margin electronics (like many consumer
goods), but the manufacturing economy in the US is actually thriving now. It
just happens that it's lately been high margin, complex stuff, military
equipment, and a few other select types of goods.

US corporate taxes are too high, but the EPA isn't strong enough (in my
backyard, just look at how Duke Energy got away with throwing coal ash into a
local river for yeeaaaarrs). Most electronics factories produce nearly 0 CO2
emissions anyway. That's mostly limited to heavy industry & raw materials
refining. State governments make stupid decisions, too, like offering short
term tax breaks for companies to invest in factories there, but with no
consideration for what happens when the company leaves immediately after the
tax incentives disappear. Again in my backyard (North Carolina), we lead the
nation in solar farm investment in 2014 ... but it was 80% due to tax
incentives and 20% due to Apple & Google building data centers here.

I don't think the problem is NIMBY politics in most cases. The problem is
short sighted politicians and greedy consumers.

------
unexistance
good read, love the part on how to choose among the factories by meeting
directly with their boss(es)...

If this is the norm for other type of factories in China, I don't mind
settling there too

------
rebootthesystem
Well, despite all the complaints here if the USA continues on this ridiculous
path of trying to dictate a $15 an hour minimum wage the "Shenzhen Effect"
will continue and grow. All kinds of businesses will continue to be forced,
through regulation and artificial wage floors to get their work done outside
the US. And this will lead to accelerating the loss of job, technology,
intellectual property, independence, growth, etc.

Once you destroy your industrial base recovery could take a hundred years (or
it could be impossible). The Chinese know this and happily do whatever the can
do to effectively destroy US, European and other manufacturing centers by
manipulating currency, ignoring environmental pressures, stealing intellectual
property and more.

The lunatics (that is, those in government) are running the asylum.

The funny thing is that the world can actually force a change by hurting the
Chinese where it counts: Business. We need to start a movement that is very
vocal about having China be accountable for all of the violations they commit.
And we need to refrain, as much as possible, from buying Chinese made products
when possible. I know this is nearly impossible, but if we start somewhere
they'll get the message.

Here in California I'd much rather dump 100 billion dollars into a tax free,
relaxed regulation, flexible wages (meaning, market driven not minimum wage)
manufacturing zone than on the stupid fucking joke of a high speed train we
claim to be building. We can show the world how to do manufacturing
efficiently, effectively, competitively and without destroying the
environment. We can do so if we commit to creating a zone where government
stays the fuck out other than to setting some basic rules and lets private
enterprise take it from there.

If we don't do something like that as a State and a Country we are absolutely
utterly doomed to be destroyed by a thousand cuts, and they all come from
China. The same is true of European and any other countries where a reasonable
manufacturing and industrial base exists that is being eroded by what China
has been doing for decades.

Governments and politicians are only interested in their own survival
--keeping their jobs-- and escalating in power. This interest has been proven
to be diametrically opposite the idea of doing what is best for a country in
the long term. Very often doing what is best is accompanied by some pain and
the need to make concessions.

Using California as an example, we need to kill off all these stupid lawns in
front of our homes that suck-up water frivolously. We have an intense drought
to deal with. Yet, you drive around my neighborhood and you'd think we have no
problem. I am one of the only homes that's taken out all grass and replaced it
with a super low water utilization rock and flowers landscape. So, yes, some
regulations are required and they also require the balls to make the case for
them and enact them.

In other words, the problem with the way we do things is that we don't look
far enough into the future. The drought problem isn't new. We could have been
in a serious water conservation mode three years ago. Yet, three years ago it
would have been political suicide to push for it. Being that politicians only
care about their own survival and whatever advantages they can engineer
through legislation rather than what is right, nobody made the hard decision
that lawns had to go. And here we are.

This is exactly what is going on with China. Nobody in politics wants to
attack this problem anywhere in the world. Why? Because having prices go up in
Walmart isn't good for any politician. It takes balls and it takes not being
guided by political ambition to swim completely against the current and push
forward an agenda who's results could only be appreciated by the population 10
or 20 years later (or even as far as the next generation). Those are HARD
decisions to make. I have seen no politician anywhere interested in tackling
those problems, in becoming really unpopular today for the benefit of future
generations.

And that's the problem.

------
fown9
China has an authoritarian government that produces pollution that threatens
the entire world, uses the great firewall to attack tech companies in other
countries, prints up to 282% of GDP [1] in order to buy their way into other
countries real estate and companies, ignores human rights and free speech, and
supports dictators in Russia and Africa. If China gets anymore powerful, the
world is doomed. We need to curb commerce with China.

[1]
[http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/11/c...](http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/11/chinas-
increase-in-debt-is-massive-and-unsustainable/)

~~~
binarray2000
Sadly, everything (literally, every little singe bit) you've written can be
said for the USA. Sadly...

~~~
fown9
Please show me where US

1.) artifically keeps dead and poisonous factories alive to produce massive
pollutions that harms other countries 2.) has a great firewall that inhibits
free speech, and use it to attack other countries 3.) is a authoritarian
government

