I recently returned from Shenzhen, a vast city in the southeast of China, where nearly all technical goods in the country are manufactured, from exceptionally bad copies of iPhones, iPads, BlackBerries and other popularized gadgets to up-to-date telecommunications infrastructure bought by the world’s biggest carriers.
Landing in Shenzhen, a view of the skyline can be seen — oceans of uniform, tall skyscrapers meet the eye along the horizon, with modern, mostly glass facades without any green areas in between and without any monumental buildings to break the endless rut.
It is hard to believe that less than three decades ago this was an ordinary fishing village. Today, Shenzhen’s urban centre includes a population of over 10 million people. Steel-glass lines of 50-story buildings are not business complexes — even though they look like it due to the monotonous corporation look — but are instead housing buildings where the citizens of this city spend what little free time they have once they are finished working.
Huawei: a Cornerstone of Shenzhen
I visited the development laboratories of one of the most prestigious technological companies in Shenzhen, as well as all of China — Huawei. There are two main reasons why Shenzhen grew so rapidly: back in the 1980s, the part of the Guangdong province where this city is located was declared by the Chinese government to be an economically liberalized zone, and Huawei was founded here in 1987. Company headquarters are located inside a campus at the edge of the city — it has its own streets, trees, skyscrapers, stores, and even playgrounds and entertainment areas where employees can gather while at work.
Over 20.000 employees come here to work every morning, and over half of them work at the development labs where the technology of the future is created. Logically, the biggest work force segment in Huawei is engineers. The beginner’s pay is around $800, which is far above the Chinese average, and sufficient for a good start of one’s career — utility rates, interest rates of housing loans, fuel, food and other daily expenses in China are substantially lower than in Europe or U.S.A.
Those who manage to get ahead in the company have the opportunity of working in Huawei divisions opened across the globe — this company does business in 140 countries with a total of 120,000 employees. Strict travel limitations outside state borders and similar absurd rules imposed by the Chinese regime on the “regular” citizens of China do not apply to them. The business card bearing the red nenuphar logo opens all doors in China.
The fact that 45 out of 50 biggest telecommunications carriers in the world use Huawei equipment for their networks makes it clear that working for this company means having greater power and freedom than the average. In 2010, Huawei enjoyed a hilarious income of $28 billion, which is money that enables the growth of not only this company, but the rest of Shenzhen, Guangdong, and all of China as well.
Bring on the Knock-Offs
Unfortunately, such success includes certain negative side effects. Riding on Huawei’s coattails, dozens of small technological equipment factories have appeared near Shenzhen which are trying to make a quick buck using the special economic circumstances of the region and high concentrations of engineers in the vicinity. It is in such miniature, almost family factories that replicas of iPhones, iPads, BlackBerries, Nokias, Galaxy Tabs etc. are manufactured. These devices actually seem like original Apple or Samsung smartphones and tablets from the outside, but are made out of cheap plastic, with equally cheap and dated electronic components on the inside.
Sale of such equipment is illegal in most parts of the world, but still, Shenzhen manufacturers manage to find their way to customers. It is possible to obtain them through eBay and iOffer in Europe and the U.S.A. (iOffer is an Internet service similar to eBay, where bargaining with the seller is possible), while Chinese authorities let the grey economy slide because, in the long run, it still contributes to employment rates and the state treasury through taxes.
Thus, it is possible to buy electronic goods in Shenzhen for the least amount of money in the world — of course, not the original products. Luohu Commercial City has been opened along the very border of Hong Kong — a building looking like any shopping mall, but with Shenzhen products being offered in its stores. “Luohu” translates from Mandarin as “enclosed mountain estate”, which is a bitter euphemism when you consider the tiny factories in which these devices are created. Luohu and Shenzhen are so intertwined that visitors from Hong Kong often say they are going “to Shenzhen” when they are looking for cheap shopping in the Luohu Commercial City, “across the border”.
Just like any other flea market in China, bargaining is a mandatory part of the shopping ritual, thus it is possible to lower the price of replica iPhones to 10% of the asking price. This ritual is not the least bit brief or harmless, and those who have more patience and convincing negotiating skills are better off. A replica of the latest iPhone 4S — a device which actually looks identical to the original and has software that looks like the recognizable icons and user interface of the Apple smartphone can be purchased for some $50, after bargaining.
It is possible to buy a laptop for under $200 and replicas of less famous cell phones can be bought for under $20. Similarly, visitors to Luohu can purchase copies of iPads — however, these tablets do not work with any known operating system and contain poorly written software by a local Chinese manufacturer. Furthermore, there are tablets with Android OS available which are not replicas of any familiar tablets, but include poor, slow and dated hardware — and therefore, are practically useless.
Interestingly enough, replicas of the iPhone 5 can be purchased in Luohu Commercial City – a device which does not yet exist in reality.
It is not difficult to assume that Shenzhen manufacturers interfere with the business of serious companies like Huawei and ZTE, which produce their own smartphones and tablets equipped with modern electronic components and up-to-date operating systems. As they come from the same region, products by these companies are often seen as cheap “Chinese goods”. Indeed, these are Chinese products, however not in the Shenzhen sense — but purely geographically speaking. These devices are equally Chinese products as the real iPhone is, given that it is physically manufactured in… you guessed it, China.
About Dragan Petric
For the last fifteen years, Dragan Petric (www.draganpetric.com) has been working as an IT journalist, editor and analyst, with special interests in telecommunication technologies and services. In addition, he authored five books and published over 2,500 articles in many magazines and newspapers in Europe. He has attended about 30 telecommunications and IT congresses around the world and won several journalists awards for his work.