Shenzhen's Role in the Maker Movement

This is a market we're going to. Walking in, I really highly suggest you just hold the camera down by your side like it's off. They're very strict about no camera policy. It's so busy. A lot of the parts here are remanufactured, recycled. Some are new, some are fake. Replacement batteries and screens for Samsung tablets. Backings for Samsung tablets. And then you see back over there, see those big chests of safes over there? All cash. If you want to buy cases for your iPhone to sell like new, you can buy empty boxes. These are just empty boxes they're selling. So this woman is selling iPhone 5Cs. Those are not new, but authentic. They're used and recycled. Another guy here is swapping out parts casually. The tools you need to repair phones, like the vacuum chambers, the wire cutters to remove the screens, jigs to hold everything in place and align up the screens, the incessant cracking of packing tape. That's a sign of a deal closed. And then you pop out here in a suburbia. Welcome to the suburbs. Oh my gosh, I love Shenzhen. You can't talk bad about Shenzhen. Shenzhen started from a fishing village. From 300,000 to 10,000. 14 million. 20 million. No cities in the history of human civilization as we know was able to do this. Shenzhen is created. more billionaires than any other cities in China. I mean, they can do everything. It's a factory of the world. People don't understand this. It could be Europe, US, anywhere else. You're about nine months behind us when it comes to technology, and that's just a fact. The model that is being developed each and every gen can actually be quite threatening for models that have already been established and very successful in other parts of the world. I do think that the core tenets of sharing IP... that they have is extremely enabling. It's a cultural change. It will take a while, but the future is possible. It's not that Silicon Valley got divorced from technology. They're very much about technology. They just kept moving up the stack. And the key thing that drove that, In my opinion was Moore's law. Moore's law is named after Gordon Moore, who was one of the founders of Intel. In the 1960s he came out with a paper. He predicted that every two years, I believe it was, the number of components that could fit in the same piece of silicon would double. And so in one year you could fit 10 transistors in here. Two years later it would be like 20, then 40. A decade on you're talking about like millions and then billions. Imagine you have a printer and you're printing pages. and you want to be more efficient. Well, you go from a 12-point font to a 6-point font, feeding twice as many characters in one page, and you're getting twice as much information out of your printer all in one go. And that's literally all Moore's Law has been, is reducing the font size of circuits. In the 70s and 80s, there were many failed research attempts to build parallel computers. Computers that were like the Cray machines and the Thinking machines, 60,000 processors and scale up. And what you found was that if you spent more than two years of research time to try and double the performance of your computer, it was by far cheaper just to sit back and wait and let guys like Intel just... Move Moore's Law ahead and buy the next fastest processor. And so what you found was that actually being in hardware wasn't profitable. And so what really sold products back in the day was features. One of the things you can do with Windows 98 is similar to the web. You can navigate on your hard drive using the backwards and forwards buttons just like you would on the web. The first generation Windows that would come out and the new generation would be so slow. It would be completely unusable. And then... Two years later, like, oh, it's actually kind of okay. And then four years later, it's like zipping along. It's not because Microsoft made it faster. The computers got faster for free. And so people are able to now not have to worry about writing detailed stuff in C code. They could use high level languages. They're able to use like web pages and JavaScript comes along. And with all of that sort of fervor going on and people chasing that innovation, there was no value in soldering parts. There really wasn't. In 1983, Worldwide sales of personal computers increased 76%. But last year, the increase was only 19%. And this year, analysts predict that sales growth will slow to about 4%. Losses among the two largest home computer makers through June of this year surpassed $600 million. And that building of stock had to go to an economy where people were paid a lot less. And what you see is now that... Silicon Valley, the whole tech ecosystem is sort of like driven as far as the road goes and now Moore's Law sort of is ending or ended and the car is still kind of gliding off the cliff right, but there's no more road underneath it and they're like huh, like computers just aren't getting that much faster anymore. And so now you're seeing people going through a phase of optimization, which is great, but at the same time people are like okay well how do we differentiate my product? Right, like optimization sucks, it's not a great business model. Because now we have super computers in our pocket, now the question is what do we do with it? Right, and what does that thing in my pocket not already do? And so people are realizing there's niche markets for hardware. We need to have a small accessory. I'm gonna have like my Fitbit, all these little things, my little digital locks, my smart phones, my sensor networks, the IoT sort of stuff coming up. And they say, great. We need to figure out how to build this and now they're coming back to this ecosystem and be like, oh you guys know how to solder. We forgot about that. That's really good. Can you help us build these things? When I was 18, the first time I go to the US, I use a trash can and a wood vacuum cleaner to build the very first ping pong robot. You want a robot that's just like you, but slightly better, so you always feel challenged. I dropped out from university after first year of college. I decided to go for this path. And it's really nice to be in HACS because HACS is the best educator and help you grow. HACS is a hardware accelerator, the world's first hardware accelerator. We take teams that come in with a proven technology and a prototype and help them to get ready for market launch. We provide 100,000 US dollars. We help them with electrical engineering, design for manufacture. industrial design, mechanical engineering, their market strategy, how they're going to launch. And for that we take 9% equity in the startups. I'm Thomas, co-founder of Ravenso. And at Ravenso we make big robots. kind of special joystick. It's usually used in surgery, this thing. It's a force-feedback joystick. The market that we targeted, the one of nuclear decommissioning, and what you can see here is a small version of a robot. And now at HACS, we are building the very big version. So you can compare the wheel size, that will be something quite huge. The bigger version of the robot, we transport a robotic arm to automate some of the part of the decommissioning work. Shenzhen's as everybody now knows the hardware capital of the world right so this has been our home ever since the start the reason we come come here and take the teams here is because of the ecosystem around which helps them to build products really fast and from initial concept all the way up to final product release into the market. Noora is a headphone company we're making the world's first tunable headphones they work out how you hear and provide the perfect music for you so I can show you here the hearing profiles of my colleague Luke and my hearing profile. What you can see is that there is this difference at certain frequencies between the way that Luke is sensitive to that particular note or sound, the way that I'm sensitive to it. What our headphones do is sonically mould the sound and make sure that what we hear is not too bassy, it's not too trebly, it sounds balanced, it sounds even and it sounds the way that it was recorded. Anybody who's going through research and development, they're better off doing it here because they can get things made so much quicker and so much cheaper. I mean, you try doing something like that in the UK, it'll take you around a month typically to make something which is a specialist from an engineering firm. Here you can do it in a couple of days. Let's say we completely designed a new robot. We can get it out pretty much in a week. Even if there's 10 parts, we can send it out or we can do it ourselves. So you get 10 3D printers that print at the same time and you get all the parts, put it. together and just fire. I've never seen any prototyping like that when we were in the States. For some of the standard parts we can order in the morning and then we get it in the afternoon or the day after. We can get manufactured parts in a few days. In Switzerland we were planning to do this robot in nine months and here we have the opportunity to make it in three months. So it's really a race. If you look back through the years, years, obviously Shenzhen became a manufacturing hub very, very quickly and not that long ago was literally rice paddies. Academic-wise and in popular media, it's usually summarized in one sentence, which is that Shenzhen was a small sleeping fishing village, and then because it was designated as a special economic zone, it became a metropolis overnight. That singular sentence is what I'm trying to demystify through my work. Today, exactly how many people live in Shenzhen is a mystery. The number 10 million is used more as a reference. So from 300,000 to 10 million, this population grows. No cities in the history of human civilization as we know that was able to do this. Prior to 1980s, China was in a very poor economic state. There was a stagnation of industry, there was a planned economy, no one was allowed to own business. It was a very poor country. The leaders in Beijing had been thinking of... What can they do to try to lead the country out of poverty? The economy in the mainland was under the control of the left. The economy was in a state of turmoil. This picture reflects the comparison between the income of the people in Shenzhen and Hong Kong in 1977. The difference is ten times bigger. People's lives are getting worse. This is a famous saying. When Deng Xiaoping came to the research center, he said that the policy was wrong. It's not something the army can control. So we have to adjust this policy to achieve a reform and opening up. They set up the four special economic zones, each of them next to a... already developed economy. The ambition was simply what can the country do to generate jobs, to generate economy, to feed the people, essentially. It was a very actually modest intention. Under the planned economy, there was a social safety net. Every person was rationed with food coupons, clothing coupons, electricity coupons. It was only in Shenzhen you can buy a piece of bread with money. to be willing to come to Shenzhen to the special economic zone to try to create something else, it attracted people who wanted to have more freedom. This photo is from a factory in Nanyang, Huaxiang. This photo is very good. The workers were about to go to work. This is the reaction of the people's life at that time. The people of Shenzhen had a deep relationship with Deng Xiaoping. Without Xiaoping, there would be no Shenzhen. In 1992, Xiaoping came to the Shenzhen market again to check the condition of the hotel rooms. This is the first ATM machine in Shenzhen. You put the money in and you will immediately get a deposit. After you have sorted out the money, you write a note and how much money you want to bring to the window. The postman will deal with it. It's not like now. The mission of the project was to introduce technology, knowledge and foreign policy. So, we first experimented in Shenzhen and then launched to other countries. As Xiaoping said, the stone crossed the river, and the stone became Shenzhen. What to me was remarkable about Shenzhen is that even the planners themselves would tell you that the city evolved in a way much bigger and faster than they would have predicted. I think it's overly generalized to think that Shenzhen was nothing and then with this set up special economic zone suddenly it became a city. It didn't. There is something else that's not answered simply by top-down planning. Yes, good morning. Thank you all for joining me in a discussion about innovation that is happening right here in China. We're investing with you, the developer community. We have been investing in open source solutions because we know that when there are standards and when there are open source offerings that the pace of technology innovation and the pace of technology adoption accelerates. I think for the past hundred years the Industrial Revolution put us into small cages. Consumerism has cured a lot of creativity, but for the post-industrial generation they should have more freedom. to create, to explore, to invent. I think through Maker Movement we are bringing it back. So we're here with the MakerBot Cupcake CNC, which is a 3D printer. You can build things like Tom York's head, because he actually open sourced the Dac... that was filmed for a video of his. Now what's also interesting about this whole scenario is that there's a whole thriving community of users who are taking these to build all kinds of different objects. They're sharing the objects online, and additionally they're sharing information on how to build and improve upon the design. Everything is completely open sourced. The software is open sourced. The hardware is open sourced. I just can't wait to see what people come up with. I think the recent emerging of the maker movement pretty much started around 2003 2004 in the US. Laser cutting and 3D printing is helping people to be able to build stuff and actually build it for fun rather than just having Right around that time, this guy named Dale Doherty, he was thinking about starting a publication called Make. Before Make came out, the only word we had was a hacker, right? And I think he didn't want to call the magazine Hack because it had a really negative... connotation at the time. And make was sort of the thing you would type to compile a program so it would resonate well with programmers. And maker was like sort of the demonym of people who would read the magazine. That sort of coined the term maker. I think in creating that publication he sort of solidified the movement and the Maker Faire created that phenomenon. In China, in the beginning nobody knows about makers. Nobody cared about Maker Faire, but because we go to the Maker Faire in New York, in the Bay Area, we're so jealous. So instead of waiting for someone to do it, we say, why don't we do it? When they told me they were bringing the first Maker Faire here, I was like, how do you have a Maker Faire in an area where people don't make for a recreational thing, they do it for a job, right? You know, because making in the West is something that you're using to remind people who are in service economies that there's a thing called manufacturing right when you have a manufacturing economy you want to remind them there's manufacturing that seems weird and what I realized is that actually China's middle class is the size of the entire United States population so even if a small section of Chinese people had risen to the upper middle class it's big enough to create a movement in China itself compared to the United States scale of making. We don't know if it's going to be successful or not. The first year we had over 60 makers, and last year we had over 200 makers. It's a huge number. Some interesting phenomena are also emerging out of this in the past years. What's happening is the open source hardware movement. Traditionally, the circuit board is closed and proprietary. You need to have a contract, a non-disclosure, and a huge sum of prepayment in order to get access. But with open source hardware, everybody can access to that information, and everybody can modify that to suit their need. People here they create a circuit board and just under expectation it is going to be open. It's going to be copied and evolved by someone else. There's no one running around in Shenzhen saying, okay well I should be credited for creating this. If someone else can make this, get someone else to use it, the merrier the better. Not having the ego attached to a creation and understand how actually an open source system works. The maker movement is at that juncture. I'm getting a little sick of hearing about the same people on TV over and over and over again, so I decided to do something about it. This Arduino project, which I called The Enough Already, will mute the TV anytime any of these overexposed personalities is mentioned. To mute the TV, I'm going to use an IR LED. Now anytime a keyword is mentioned, the TV will mute for 30 seconds. Our producers caught up with Kim Kardashian earlier today. It should do a pretty good job of protecting our ears from having to hear about the details of Kim Kardashian's wedding. Arduino is becoming the trigger point because it has too many millions of makers using that. This is a prototype he's trying to make. An aerobic arm for people who have Parkinson's disease. We want to make a spoon like this. And if you just shake here, it's stable. If we come... Two centuries, like 10 years ago, 20 years ago, it would be very difficult for a maker to tap into resources. But now you have so many resources. It's in the middle of reforming. So the big companies, especially the silicon providers like Intel, like Atmel, like TI, they look at that, oh, we have new customers. We have new possibility for new future applications of our technologies. So they make their own. Console report like Edison, like Curie. So they want to tap into the early stage of the development of the applications. Now this board is based on the Intel technology. It's a tiny dual-core computer system. It has Wi-Fi, Bluetooth, and it also runs a Linux operating system on it. I think part of the reason Intel is having to sort of turn that way, they know their roadmap as well as anyone else does. They kind of define Moore's Law. and they saw the bridge go out from underneath them before anyone else did. They've managed to drive technology like this and then the other foundries like TSMC and UMC have always trailed behind but now that's slowing down everyone's catching up. They're like, oh god we're looking for air and trying to find a place to move and so they've struggled to keep up with the phenomenon they created. They haven't made headway into mobile and those are the most ubiquitous computers today. They're missing out on a huge market opportunity and so to the extent that they're trying to figure out how to adapt. their innovation model to something more flexible. And so they really want to make sure the Intel brand is in front of the youth to make sure that they remember that Intel is actually like a thing that they want to design with later on and not just, you know, something out of reach. We have tried to introduce it to nine years old. This is a little bit difficult, but it's acceptable. You do not need to write any boring code. In a smart node, you can just drag and drop. and link them together. What they're doing is they're learning how to code on a computer, translate that into hardware, and they'll build a project on our laser cutter or 3D printer for something to accept a stimulus, light, motion, or sound, and then output some result. Last year, one kid built a key reminder for his mom so that when she left the house, a motion sensor would pick up her movement and say, Hey, don't forget the key. And it's kind of funny to hear. That a eight-year-old will know whether he wants to be doing mechanical circuits or just a purely software experience. So that's entry-level, and then we give them more systematic introductions how to build up the skills. Off you go, you can use the makerspace to create whatever you want. You are genius, you are young inventors. I've seen some great examples of open-source hardware being used to actually make a difference and create a better world. The difficulty is monetizing that. because I do believe that business solves a lot of the world's problems and people need to be able to make money. If you're providing value to the world, which is making the world a better place, then there should be compensation for that. In 2010, I started the first makerspace in China called Shintoujin. I got invited a lot to give a talk about open source hardware. The first question always comes out from people's minds. is how do you protect your intellectual property and how can you make money if you don't protect your intellectual property? I got that question in Shanghai. I got that question in Beijing. I got that question everywhere I go. But when I give the same talk in Shenzhen, the reaction I got is, so what's new about this? We've been making money on this for 20 years. This is the world's largest circular-shaped computer complex. There are 800 or more on the first and second floors. Nearly 900 of them are all made of IC. here in Machu Picchu Bay is literally because of the electronics markets. It's a fantastic resource of all different possible components and different devices which can kind of be Frankenstein together to make prototypes by the teams. It's a source of inspiration. It's a source of discovery. New products that could potentially be taken to the West. I see every month a different invention down there. Nine times out of ten, they're probably not going to make it to the West, but some of them do. How many times have I filmed? You can get a little bit of a feel here what's even upstream of what's going to hit the tech in the United States. You see a couple of things popping up here or there. A little shop will pop out of nowhere selling these things you hadn't heard of before. Like the hoverboards were here a couple of years before they hit the United States. And then you eventually sort of see them hit the states and other countries. This is the most special place in the North of China. Here are all small entrepreneurs. But what they do is the world's newest and the most exported. This is a 3D glasses, 3D phone case. After you take it out, this is the 3D effect of the movie. There's a number of different ways to sort of look at the market. For an engineer, you're sort of limited at thumbing through catalogs and looking at pictures and very slowly going through specification sheets. For example, if you want to put a switch in a product, you want to know how it feels. You want to kind of know the exact size and the little mountings and the fussy bits. And it can take a long time to find exactly the right part. You come here and there are stalls with hundreds of different types. And you can just reach in and just touch them and play with them. And you can walk stall by stall and see all the different variety. And it's not just a showroom. Once you find this which you like, you can be like, I'd like to buy a thousand of them. And then for a very low price, you can just over the counter buy it, carry it off and go into production. I've been practicing with my phone. I've been doing it for a long time. I've been practicing with my phone. I've been practicing with my phone. I've been practicing with my phone. I've been practicing with my phone. I've been practicing with my phone. It's got a huge amount of acquired knowledge and skills. There's electrical engineers there who solder up 50 PCBs for you in record time. You can go down there and piece together different components to make a new mobile phone. There's nowhere else in the world where you can do that. world you can do that. You can get a chipset that was in a notebook, for example, for less than $15, which can enable computing power and sell a new product. That's a fantastic resource for some of the startups. That kind of philosophy has spread out all around China. and the other parts will be made by another friend. So he can quickly make this thing. In Huaxiangbei, some people design, some people produce, and some people sell. So they are all partners. So here, it takes a very short time to produce and develop a product for the market. It only takes two or three months. It takes a long time. In the traditional industry, it takes a year. But in Huaxiang, it only takes three months. There are bubbles here. There are bubbles here. So I need to use a vacuum cleaner to help. They are basically the founders of the old generation. They learned to make clay. Some people first broke into the place and then they brought in the clay. After learning the clay, they would open another stall and open a small shop. So their techniques were learned from their masters. When we started to look at the maker coming to Shenzhen, there's this excitement on how open the system is. Like nowhere else, you can buy all sorts of stuff. Everything is available in volume, but in the West, there's a binary distinction. between the makers and the hardware startup. The maker, you do this for fun, you do this for your passions. But when you starting to make this into a business, you should forget about sharing, you should forget about all this open stuff and focusing on the business. But in here, there's very little differentiations between I want to make this for fun and I want to make this for profit. There's no binary division of the mindset of makers. versus startup. Maker and startup in China is a continuum. You shouldn't be stopped from making money out of the thing you love to do. And you should not be forced to choose between open and proprietary just because you want to become a business. Right now, it's just in the West. We haven't seen open source hardware system working. This is Apple's logo. It's made by itself here. But it's made exactly the same as the original. And the text on the back These text Can be made exactly the same The same place Yes Actually, the more terrifying thing is that the iPhone hasn't appeared in the mainland yet There is already a complete high-end here Exactly the same But in fact, its quality is not bad It's exactly the same The iPhone is more than 7,000 yuan, right? But in fact, the pure high-end of 1 to 1 is only 1,000 yuan In the West there's an idea that I can have a company that produces nothing, has a ton of patents, but produces money by suing everyone for rights to those patents. You don't even have inventors, you have lawyers making money off of buying intellectual property and trading it. That's weird, right? It's kind of weird that you produce nothing but make a lot of money. The idea that you can take an idea in a world that's this big and say exactly one person owns the right to it globally. Like Apple has the right to the phone with rounded rectangles. They're the only people who can produce that. Really? Like seriously? This is the world we're going to live in? We just give people monopolies through the IP system for 20 years for stupid ideas because they were first to file. That made sense back in the day when there were fewer people, less innovators, a less connected world. Now we have like this network of people where like we're empowered to do our things and we can almost trade our creativity. In China's ecosystem it is this network ecosystem of an idea for an idea like let's trade. Now you realize you're placing ecosystems, I need other people around me. You can't be a dick to all the other guys around you just because you have Pat Monopoly in this thing. Someday you're going to be on the bottom side of the chain and you're going to need other people's help. And so you build networks of collaborations with people by sharing in this open source philosophy. Oh yeah. we have our first copycat uh well that's not good let's say it's a fan so the guy reversed engineer from the video you've seen uh produced the plan of the uh of 3d models you can download and print your own one. What we want to do is we want to print it. All the hardware companies that come in here, of course we encourage them to patent all of their technology. But we don't expect them to fight anybody. who's copying them. We expect them to be moving much faster than anybody who's copying them and coming up with the next thing the whole time and building a brand. And then eventually those patents may get used when they get into a patent trade-off. That's the use of the patents, not to stop people copying you. The way to stop people copying you is to make whatever they're copying irrelevant because you've come up with something much better. A huge barrier, I think, to small companies in the United States is the patent system and the copyrights and just left and right. It's just legal challenges and you spend a huge portion of your money on lawyers and IP filings and all that sort of stuff. It's a drag. It really is. If you want to be making stuff, you want to be actually working with people and sharing ideas openly and getting things going. Hi, I'm Shui-Xuan. I like to invent things. This one is called a solar wave. You control speed by leading. This is my latest invention. It's called hover tracks. Yeah, the hoverboard story is a very interesting example. of somebody in America who came up with the intellectual property and then spent a long time fighting manufacturers who were actually creating something which was similar. That's a great example of a case where I would have encouraged somebody not to start like fighting around IP protection. It's better just to build a brand around a really great product, make sure you've got you know the leading product in the area. This is really the first time we have a technology product which become widely popular, which become a cultural icon, but we don't have a name for it. It just emerged. More people come in, evolve it, tweak it, evolve it, tweak it. Eventually, you will get to a form which will go viral. This is kind of point to the future of how things could happen. In Huatianbei you still find shanghai that are basically fakes, they are reproductions of established brands. I'll give you an example because this is a contemporary sort of shanghai smartwatch running on an Android system. The reproductions were really the items that were sought after by people who could not afford the real thing. My understanding is that the early Shanzhai were people who worked for the bigger corporations here like Nokia, Motorola, Foxconn and they were some very smart engineers who got sick of the management and they're like, look I can build a phone cheaper, better, faster than these guys can. I understand why they have all this process. I can make it for half the price if we just cut the fat. And they would quit, talk to their friends who they knew were all these upstream suppliers. And they would get together parts and they would build, you know, what were effectively, you know, copycat phones. The key innovations are able to do it at much, much lower cost. Just, you know, learning how to walk before they could run, essentially. The most similar things to the ideas of Sanjai in the West is the idea of Robin Hood. They try to empower the poor with the latest advancement in technology. Sanjai and the maker movement and startups, they have a very unlike. They are very much share the same spirit. Even though they are not from big companies, they feel powerful. When they talk about people who left the factories and copied a phone, well, that was kind of like the open source stuff that wasn't open source. They just sort of like, oh, the schematics are on the desk. I will conveniently help myself to them, make a photocopy. and then leave the factory with them, right? You know, was that stealing or was that open source, right? In the West, it's called theft, right? And out here, it's called sharing. This one of the devices that was a haul from the market. And you can see it has a number of markings on it. This one was the higher grade version. It was 70, 80 bucks, US. And when you power it on, you see that it's running a very well skinned flavor of androgel. Iconography is actually pretty good. And then the great thing is this one supports two SIM cards, a replaceable memory card and a replaceable battery, and it comes with two batteries, which is actually a feature that many local people really want to have. They're unhappy about it. about A, having no memory card slot, and B, having not a replaceable battery. The companies were able to access very easily the two basic components that you need to make a phone. One is the Goomban, which is basically a printed circuit board, and the other one is the Goomo, which is basically the shell. So there were companies specializing in making Goomban and Goomo that had slots for those printed circuit boards that were very easily accessible. accessible by companies. You know, people from the West who are used to sort of month-long development cycles, like, I mean, how did they do this? This is amazing. Like, this capability came out of nowhere overnight, but actually it's been honed over like a decade or two out of those roots of people, you know, coming out of the big factories and figuring this all out themselves. Shanghai, there is something that is still going on now, but it is a very small percentage of what is produced. in the market. There is a very strong emerging middle class in China that has the purchase power to afford original items that may be more expensive than the reproductions. It is not possible to target new markets just with imitating the established brands. There is a limit to what can be achieved in that sense. Once they kind of got in a position where they could now build a copy of a phone pretty well, they can now start innovating. They'll take like an Android phone and iPhone and mash them together and come up with this weird thing that is pretty cool and is different in some way. You know, if you go in the market in Huaxiangbei, you will find that many people distribute... this type of advertisements for company that are called white brand companies that will make it for you assembling very first different components and then you can add your your own brand your own name or whatever you want and distribute it as your own item yeah these are these are all white label ideas it's an empty sample and all these are different empty samples so they can go ahead and build it for you on the spot and then order I don't have her many want and later on you can actually You actually ask them to go ahead and put your graphic on the print, for example, or maybe these logos over here. In the West, our philosophy is to make sure that we're not just going to print a picture The philosophy is we come up with something really fantastically new that nobody's done before, become the market leader, and we're really successful. The Chinese mentality is slightly different. They look at something that's already on the market, and then they create a much better version of it, much quicker. It's not copying. It's evolution of products, which becomes much better than what was out there before. We grabbed another one on the market there. Looks like a smart watch, but you'll notice that it only has a single button. And the graphics are made for children. So this is a phone plus GPS module that you can use to sort of report a kid's location if the kid is... in trouble they can dial their parents you can see it has like SOS call features. I would bet that probably 80 to 90 percent of the design material in here is borrowed from other vendors who use these previously in other smartwatch designs but people are sharing the IP. The guy who probably shared the IP to them was someone who could sell them chips or motherboards or circuit boards. And so there was some factory backing up that sharing process. They want people to use these things. And that lets these guys try, try, try. Like there's many models of this. In fact, when we were buying this, the woman next to us was asking for these and then left on the table, she said, this one's too thick. Let's go find one that's thinner than this one over here. They probably have less features or less battery life or whatever it is, but the market here can build these different variants. and service it because of the phenomenal ecosystem. Something is really happening. Companies are realizing the importance of having new ideas and being different. So many companies who were involved in the Shanghai before are now looking at design, they are now looking at how to develop innovation in their own companies. The model that is being developed in Shenzhen can actually be quite threatening in other parts of the world and it's not surprising that many American companies are now looking at models that are developed in China to see how they can adjust themselves. Dreaming makes the world change constantly. Technology makes dreams come true. We creatively proposed a unique OPM business model. Through our own original design, we provide customers with a comprehensive solution for product differentiation, creating innovation, speed, value, and three core competitiveness. Where is the dream? Where is the future? OPM is a provider of original product planning and design. What advantages do we have compared to traditional OEM and ODM? First of all, we have the product's production rights. The laptop and tablet computers on this stage are OPM. So those are some of the products that we make. This is President Obama wearing my headphone with my business partner, Mitch Richmond. These people have been here, you know, Akon, What I Am, the Justice picture, my partner, Venus Brown. This here is signed by Venus Brown, What I Am. I forgot who signed this. It was somebody famous. I forgot. This is my office. Hi. And that's something I can't live without is my cigar. Like, I can't do shit without my cigar. Sorry. I just cussed. We are not your traditional, like a manufacturer, right? Which is, you know, give me a product, you manufacture. We manufacture stuff like a monster and all that. Harman Kardon, Creative, Altec, Lensi, JBL, all the biggest industries. We actually don't... anywhere between 8 to 12% of the US market on the audio side. But what we're doing so different is we have our own design house. We're able to create some really cool, incredible product. So here's like... design house, some inspiration about what we can do. We have like some instruments 3d printing, rapid prototyping. This team is designing some characters in 3d. This is a game, it's interactive learning. In China, a lot of factories are very traditional. So this is also a very new model. The CEO, he tried to break this model. And since 2005, they are producing now for 45 brands, mostly international and mostly in the US. This is a smart refrigerator for the future. You can see the content of the refrigerator, the value of nutrition, the production date, and the safety of food. At the same time, when there is insufficient material in the refrigerator, we can directly purchase it through the order. You know, most people don't realize that there's at least 26% of the technology from Silicon Valley actually comes from Shenzhen. So what they do is they hire kind of like a headhunter. so to speak, because there's so much innovation. We are about minimum of eight months to a year advanced when it comes to technology. For example, we have this incredible bed. You can sleep on there. And the moment you wake up in the morning, it will give you stats, how many times you roll over, how much sleep, how much rest you have. And then also can read your blood pressure, can kind of tell you if you have any problem that needs to be identified. And this is what we're going to do. This is technology existing already today, and we've done this almost two years ago. We say like 25% of innovation created in Shenzhen are bought by the Americans. They buy it, they go to Europe. And then they sell it here 100 times more expensive. China feel a little bit bored, I think, about this business model. We made it here, but all the credit is for somebody else. Ding dong ding dong. Shenzhen Tianqi. Today, during the day and night, the temperature of the rain is 28 degrees Celsius to 23 degrees Celsius. Ding dong ding dong. Stop the broadcast. Stop. His name is Ding Dong. Everybody is looking for the Chinese startup, made in China. Want the proof to show to the world like, look, we innovate. We have a lot of opportunity here. I think our focus should be, let's create a quality product. And you can be proud and say, this is made in China. So if you can just focus on that new technology, to focus on a branding, and to focus on a quality, and I think within the next five years, people have different perspective of made in China. I think that will happen. The Song people's rose is a fish-scented This is a slogan of Shenzhen's art workers'union Shenzhen, do art work If you have time, do art work If you have something, find art workers Success is to break through the barrier To break through the barrier of the reform and opening up So at the beginning, Shenzhen's industrial industrial level is relatively low This is the first half of the industry After 20 years In the last few years, Shenzhen has been facing a situation where the land, resources, population and environment are being chased after the former. Shenzhen has been abandoned. How can Shenzhen continue to lead economic development? What has happened in Shenzhen within 35 years of time, its uniqueness is fading because those same innovations, say policy innovation or industry innovation, now it's everywhere in China so it doesn't have that edge of being the only one or even the first one anymore. It's kind of a catch-22, right? It recognizes what it's been able to achieve but it's also inherent like how are you gonna make it better. People who come to Shenzhen get older and as the experience grows they start to develop something new rather than manufacturing. They become engineers, they become brands. Meanwhile the government is pushing out manufacturing to the out here of Shenzhen. This is actually a PC. You connect it directly to a monitor or a TV. Then the monitor and monitor become a computer. It has a 4G memory and 128G hard drive. A lot of confusion is happening right now. What am I going to do? What's next? Should I invest in branding or just close my company? I think it's a perfect moment for innovations because that can attract at least a portion of them to put the resources to innovate something new. He has his own research and development. It was made into a gold product. It no longer made into a three-duty product. It made its own research and various brands. But now, in terms of the ideology of intellectual property, it is very, very strong. People are plagiarizing me. and then it sells on Aliexpress, eBay, and Amazon, I can quickly complain about it. It will soon go down. I think this world should be an open world. Tesla, including Facebook, Amazon, they open up AI. Those in Android are open. Any kind of competition is based on a higher-end business model. This is Apple's business logic. I really don't like Apple. I've seen a change in the way that innovation in China happens. There's a fantastic number of Chinese startups that are doing really, really good products. Chinese startups are getting better because they want to learn from Europe. If you go to a conference with innovation speakers from France or from Germany or from England or whatever, most of the people will be Chinese in the room. They want to learn. Especially the community of Shenzhen people who work in the business of business. In the past, China and the government were in control of business. Foreigners didn't look up to business. That was many years ago. Now I think the principle of creation is the same as business. In fact, business is not a word, business is a spirit. Business is a spirit. The spirit of struggle to rise from the grass roots. In my opinion, I think it is the most creative and potential in China. In the past 20 years, everybody who wants to make it in the Silicon Valley has to go through this very tight and small selection process by a small group of people who are the venture capitalists. Young white males between 20 and 30 years old. to 30, controlling how technology will be developed, how technology will be applied, and how technology will be available to the general public. That is the very definition of control economy. like these massive settlement fights and epic legal battles like all the Supreme Court and stuff like that. If everyone were like you know actually we all do a good job let's just work and try to figure out how to innovate but it's a matter of getting critical mass of people to buy into it. Without a big brand dictating what kind of feature we can have the SunSight system is catering to everybody's needs. It's not a small group of people who determine what gets developed when and how. Right now we are still at the very early stage of this open-source hardware movement. If we trace back to the late 90s, the open-source software just got started. I mean Bill Gates was speaking publicly about how open-source is communism and it will destroy the software industry. And hey, today Microsoft is one of the most supportive of open source and even opened up the entire Windows 10. If the history of open source software is used as a benchmark, we are pretty much five years away from this being discussed in mainstream. It's a mindset change, but the future is possible. They talk about how China is authoritarian, there's strong rules and all sorts of stuff. People here have developed a way to coexist with the rule of law and the way life needs to run. They sort of look the other way at the right times, I think, when things need to happen. This is how we've managed to make sure that everyone gets fairly compensated, everyone's fairly rewarded, and it works through this system. Another thing to be clear is that authoritarian doesn't mean evil. It's just that there is one authority. I mean the Communist Party knows as well as anyone else that they have to keep the people happy. They're not just going to like kick people around because they want to and they want to be trivial and small about it. So they try really hard to put economic policy in place that brings prosperity. One of the things that the government has said is we need a service economy that's tech oriented and we need to get more young people interested in this, the maker movement. We want to graft that into our system and hopefully inspire another generation of young people to want to become, you know, hardworking factory owners and employers and innovators like their parents were. And now there's even like little maker spaces and cafes and innovation labs like popping up left and right. This is the input. What does it mean? After you cover it with light, it will move here. This is a recording button. You can press here, for example, welcome to Chuanba Coffee. Welcome to the Coffee of Creation The Coffee of Creation was founded by Shenzhen University and SAIG in September last year The photos of the opening day are from last year In 2015, Prime Minister Li Keqiang proposed a concept called National Entrepreneurial Innovation. Last year, the government invested 9.3 billion yuan in supporting the creative project. If we compare Shenzhen with other countries, the government should support us. Only the Chinese government can do that. On one hand, it's great that the national government has seen this emergence of new media, new technology, and I think it's genuine to want to support it. However, I don't think there's a very good track record so far of governmental involvement in these more bottom-up... activities. We take, for example, art districts, something that was emerging out of China 10, 20 years ago that really caught the imagination of artists'colonies, galleries. But as soon as the government started to support it, the inevitable process of gentrification happened. Rent went up, more notable galleries moved in. So the artists who really were trying to experiment had to move out. So I have a concern along similar lines for these tech sectors. The government in trying to support it inevitably will formalize it. It's interesting to sort of see the city evolve. And so there's a sort of wave of money and gentrification. You can sort of rolling from the east to the west and from the south to the north. The pace at which they do it is just crazy. You can walk from one end of the city. to the other and by the time you walk back to the other side enough the city will change and you won't recognize it. It's just tearing itself down and rebuilding itself as you walk through it. There's a region over there that was all these little electronic shops. They just leveled it, put up a luxury. mall and put a high-rise on top of it and you wouldn't recognize it. I mean we have more high-rises here than anywhere in the world. I mean honestly if you walk around Shenzhen right now we have over 278 buildings being built up to 74. I travel all over the world and when you look at everyone else I hate you know we are the fastest growing you know society around the industry today and that's just a fact. In China there is a general lack of awareness of the negative ramifications of gentrification just as you know in the 60s no one in New York thought that was a bad thing. The reason why the city has embraced this notion of new technology is trying to reinvent itself. My concern is that in this reinvention, it wants to very quickly rid of its even immediate past. A city that really struggled, really was dependent on a lot of things that government couldn't provide. Things happen by chance, accidentally, a lot of it was bottom-up. In fact, there was not one fishing village, there were 2,000. These villages have evolved along with the city. They have taken up very important roles in providing housing, providing a certain social structure, jobs, a certain stability to the city that was not planned. They simply evolved with the formal city. I would liken it more like, you know, sort of the bacterial colonies of a petri dish. Eventually you grow a lawn of... bacteria across it, you know, all the communities become interconnected. But that's sort of a natural growth curve. We are in Baishi Zhou, which is one of the more than 300 urban villages in Shenzhen. And here, no matter what, you don't need to go anywhere and you can find everything here. That's the amazing part of this. It provides everything you need for a community. When the government designated Shenzhen as a special economic zone, they left patches of land for the villagers themselves to build homes. This is the boundary line between the city and the urban village. This side is urban owned and this is urban village owned. These urban villages are also breeding grounds. for a lot of innovation. You can change the structure, you can change the facade, you can spill your workshop into the alleyways. The whole neighborhood was built in this kind of bottom-up way. Shenzhen really represents a new modern image. It's a modern city, it's a new city. The urban villages are complete opposites to that image. The mayor's office declared the necessity to rid the cancers of the society. In those words. Baishizhou is going to be redeveloped this month actually, April 2016. So this is how fast 150,000 people who live here need to be relocated. There's some rumors that the market here is eventually going to have to be displaced because as things gentrify, the rent on the shops are going to go up to the point where they can't sustain selling these small parts and whatnot. Just across the street there's much more urban village going on. That's where we're headed to. And I can't say if it's for better or for worse, but definitely things are changing. And so you transition straight out of the market into urban village area like this. Personally, I have a bias. I hope that it never goes away because I enjoy it so much and it's such a valuable resource to me. You'll see big districts where people are taking phones and tearing them apart. And then another area, putting them together into another phone. A lot of sort of recycling and upcycling going on. So you can see like down there, there's a person there with what looks like a pile of trash. But if you look closely, it's just that they're going through mobile phones and stripping out parts from them. It's like shucking corn almost. We'll just take a quick walk through one of these informal areas. This guy is selling iPhone recycled parts. He actually has big bundles of motherboards that he's pulled out of phones that were previously thrown away. And then what they do is they take out the motherboards and they take the chips off, and they eventually find their way back down the market. You can get your roast pig's feet and then iPhone cases. This market itself plays a critical part in the ecosystem in terms of being able to move goods around. If one factory did a build and they had some excess and they want to get rid of it, a lot of it will come through this market and get recycled through the system. This one's straight from a factory floor. You can see that the motherboards are even still on the carrier. So this one was one that didn't even pass out of Apple, fully fabricated, and it found its way into a scrap heap here. Well, people will go ahead and they'll... You can already see they've pulled off some ICs for recycling and reprocessing into fixing phones and so forth. On here is a, these here are blank motherboards. And the interesting thing about this is you see like no solder on it at all. They still have a gold color, which means that there's been no processing of the board at all. It's straight virgin boards from the facility. If you're going to move on, we're getting a crowd. I can get plenty of useful stuff for a fraction of the price that you would have to even in the markets on the main street. That's the stuff that's going away. Those guys will innovate no matter what. They innovated despite the government, right? They'll be there, they'll keep walking. They may have cut a path that looked interesting, and that path is now being paved into the road. They'll cut another path. You've never had a fox run over by a star. steamroller when they're putting a road over a forest. The fox knows how to move away, right? It can run and find another place. And as long as there continues to be green fields for these people to go to, I think things will be OK. And demilitarizing the Western IP ecosystem would be great. I think that's something we can do, right? But it's just as hard as bring us back from the brink of a Cold War. You know, everyone has to sort of ease off, universally agree that we need to have a new paradigm. And I think one of the problems in doing that is that the militarization of IP has really benefited big companies. And if they back off their stance of having huge caches of IP to nuke the little companies that come up, they're threatened by innovation. And so instead of seeing like this open... you're seeing exactly the opposite. You're seeing the system calcify. And maybe it will happen in days. Sure, they'll own their edifices, but they'll become so entrenched that they can't move on, right? Each of them is locked in their space. And then a very flexible ecosystem like China will just roll over them later on, and they'll wonder how that happened. It's because they did it to themselves at the end of the day. The beautifulness of Shenzhen is you come here with the talent, with your efforts With your intelligence, you can earn a place for yourself. The makers, the hardware startup, the Internet of Things, producing hardware, they all converge here in Shenzhen. And that's what makes Shenzhen the Silicon Valley of power. The power of the engineers'research and the power of Shenzhen's three-storied supply chain bring it to the world. Its mission is to introduce new technologies. Shenzhen is entering a new stage in history. It has a new mission. It's like a Chinese dream. Now, you look at this light switch. Are they straight? Every five-star hotel everywhere in China right now. This is a problem you can identify. This is a perfect example. If we can just have a person take two, three seconds to just make that adjustment, China will be a perfect place. DT. Are they going to be more like the UK in the sense that they'll just shed their manufacturing background as they gentrify and sort of just go straight for like, you know, a service economy? Or will they keep rooted in a sort of a manufacturing ecosystem and keep design parallel to it? Or will they just forever stay in manufacturing, right? Is that really just their core base and value and where they want to be? I mean, if China went from where they were. To where they are today in 30 years, they could do that again in 30 years. Within my lifetime, we could see the answers to this question. It would be interesting to see where the answer ends up.

This is a market we're going to. Walking in, I really highly suggest you just hold the camera down by your side like it's off. They're very strict about no camera policy.

It's so busy. A lot of the parts here are remanufactured, recycled. Some are new, some are fake.

Replacement batteries and screens for Samsung tablets. Backings for Samsung tablets. And then you see back over there, see those big chests of safes over there? All cash. If you want to buy cases for your iPhone to sell like new, you can buy empty boxes.

These are just empty boxes they're selling. So this woman is selling iPhone 5Cs. Those are not new, but authentic. They're used and recycled. Another guy here is swapping out parts casually.

The tools you need to repair phones, like the vacuum chambers, the wire cutters to remove the screens, jigs to hold everything in place and align up the screens, the incessant cracking of packing tape. That's a sign of a deal closed. And then you pop out here in a suburbia.

Welcome to the suburbs. Oh my gosh, I love Shenzhen. You can't talk bad about Shenzhen. Shenzhen started from a fishing village.

From 300,000 to 10,000. 14 million. 20 million.

No cities in the history of human civilization as we know was able to do this. Shenzhen is created. more billionaires than any other cities in China.

I mean, they can do everything. It's a factory of the world. People don't understand this.

It could be Europe, US, anywhere else. You're about nine months behind us when it comes to technology, and that's just a fact. The model that is being developed each and every gen can actually be quite threatening for models that have already been established and very successful in other parts of the world. I do think that the core tenets of sharing IP... that they have is extremely enabling.

It's a cultural change. It will take a while, but the future is possible. It's not that Silicon Valley got divorced from technology. They're very much about technology.

They just kept moving up the stack. And the key thing that drove that, In my opinion was Moore's law. Moore's law is named after Gordon Moore, who was one of the founders of Intel.

In the 1960s he came out with a paper. He predicted that every two years, I believe it was, the number of components that could fit in the same piece of silicon would double. And so in one year you could fit 10 transistors in here. Two years later it would be like 20, then 40. A decade on you're talking about like millions and then billions.

Imagine you have a printer and you're printing pages. and you want to be more efficient. Well, you go from a 12-point font to a 6-point font, feeding twice as many characters in one page, and you're getting twice as much information out of your printer all in one go.

And that's literally all Moore's Law has been, is reducing the font size of circuits. In the 70s and 80s, there were many failed research attempts to build parallel computers. Computers that were like the Cray machines and the Thinking machines, 60,000 processors and scale up.

And what you found was that if you spent more than two years of research time to try and double the performance of your computer, it was by far cheaper just to sit back and wait and let guys like Intel just... Move Moore's Law ahead and buy the next fastest processor. And so what you found was that actually being in hardware wasn't profitable. And so what really sold products back in the day was features.

One of the things you can do with Windows 98 is similar to the web. You can navigate on your hard drive using the backwards and forwards buttons just like you would on the web. The first generation Windows that would come out and the new generation would be so slow.

It would be completely unusable. And then... Two years later, like, oh, it's actually kind of okay.

And then four years later, it's like zipping along. It's not because Microsoft made it faster. The computers got faster for free. And so people are able to now not have to worry about writing detailed stuff in C code.

They could use high level languages. They're able to use like web pages and JavaScript comes along. And with all of that sort of fervor going on and people chasing that innovation, there was no value in soldering parts.

There really wasn't. In 1983, Worldwide sales of personal computers increased 76%. But last year, the increase was only 19%.

And this year, analysts predict that sales growth will slow to about 4%. Losses among the two largest home computer makers through June of this year surpassed $600 million. And that building of stock had to go to an economy where people were paid a lot less.

And what you see is now that... Silicon Valley, the whole tech ecosystem is sort of like driven as far as the road goes and now Moore's Law sort of is ending or ended and the car is still kind of gliding off the cliff right, but there's no more road underneath it and they're like huh, like computers just aren't getting that much faster anymore. And so now you're seeing people going through a phase of optimization, which is great, but at the same time people are like okay well how do we differentiate my product? Right, like optimization sucks, it's not a great business model. Because now we have super computers in our pocket, now the question is what do we do with it?

Right, and what does that thing in my pocket not already do? And so people are realizing there's niche markets for hardware. We need to have a small accessory. I'm gonna have like my Fitbit, all these little things, my little digital locks, my smart phones, my sensor networks, the IoT sort of stuff coming up. And they say, great.

We need to figure out how to build this and now they're coming back to this ecosystem and be like, oh you guys know how to solder. We forgot about that. That's really good.

Can you help us build these things? When I was 18, the first time I go to the US, I use a trash can and a wood vacuum cleaner to build the very first ping pong robot. You want a robot that's just like you, but slightly better, so you always feel challenged. I dropped out from university after first year of college. I decided to go for this path.

And it's really nice to be in HACS because HACS is the best educator and help you grow. HACS is a hardware accelerator, the world's first hardware accelerator. We take teams that come in with a proven technology and a prototype and help them to get ready for market launch. We provide 100,000 US dollars. We help them with electrical engineering, design for manufacture.

industrial design, mechanical engineering, their market strategy, how they're going to launch. And for that we take 9% equity in the startups. I'm Thomas, co-founder of Ravenso.

And at Ravenso we make big robots. kind of special joystick. It's usually used in surgery, this thing.

It's a force-feedback joystick. The market that we targeted, the one of nuclear decommissioning, and what you can see here is a small version of a robot. And now at HACS, we are building the very big version.

So you can compare the wheel size, that will be something quite huge. The bigger version of the robot, we transport a robotic arm to automate some of the part of the decommissioning work. Shenzhen's as everybody now knows the hardware capital of the world right so this has been our home ever since the start the reason we come come here and take the teams here is because of the ecosystem around which helps them to build products really fast and from initial concept all the way up to final product release into the market. Noora is a headphone company we're making the world's first tunable headphones they work out how you hear and provide the perfect music for you so I can show you here the hearing profiles of my colleague Luke and my hearing profile.

What you can see is that there is this difference at certain frequencies between the way that Luke is sensitive to that particular note or sound, the way that I'm sensitive to it. What our headphones do is sonically mould the sound and make sure that what we hear is not too bassy, it's not too trebly, it sounds balanced, it sounds even and it sounds the way that it was recorded. Anybody who's going through research and development, they're better off doing it here because they can get things made so much quicker and so much cheaper. I mean, you try doing something like that in the UK, it'll take you around a month typically to make something which is a specialist from an engineering firm.

Here you can do it in a couple of days. Let's say we completely designed a new robot. We can get it out pretty much in a week. Even if there's 10 parts, we can send it out or we can do it ourselves.

So you get 10 3D printers that print at the same time and you get all the parts, put it. together and just fire. I've never seen any prototyping like that when we were in the States.

For some of the standard parts we can order in the morning and then we get it in the afternoon or the day after. We can get manufactured parts in a few days. In Switzerland we were planning to do this robot in nine months and here we have the opportunity to make it in three months. So it's really a race.

If you look back through the years, years, obviously Shenzhen became a manufacturing hub very, very quickly and not that long ago was literally rice paddies. Academic-wise and in popular media, it's usually summarized in one sentence, which is that Shenzhen was a small sleeping fishing village, and then because it was designated as a special economic zone, it became a metropolis overnight. That singular sentence is what I'm trying to demystify through my work.

Today, exactly how many people live in Shenzhen is a mystery. The number 10 million is used more as a reference. So from 300,000 to 10 million, this population grows. No cities in the history of human civilization as we know that was able to do this. Prior to 1980s, China was in a very poor economic state.

There was a stagnation of industry, there was a planned economy, no one was allowed to own business. It was a very poor country. The leaders in Beijing had been thinking of... What can they do to try to lead the country out of poverty? The economy in the mainland was under the control of the left.

The economy was in a state of turmoil. This picture reflects the comparison between the income of the people in Shenzhen and Hong Kong in 1977. The difference is ten times bigger. People's lives are getting worse. This is a famous saying.

When Deng Xiaoping came to the research center, he said that the policy was wrong. It's not something the army can control. So we have to adjust this policy to achieve a reform and opening up.

They set up the four special economic zones, each of them next to a... already developed economy. The ambition was simply what can the country do to generate jobs, to generate economy, to feed the people, essentially. It was a very actually modest intention.

Under the planned economy, there was a social safety net. Every person was rationed with food coupons, clothing coupons, electricity coupons. It was only in Shenzhen you can buy a piece of bread with money. to be willing to come to Shenzhen to the special economic zone to try to create something else, it attracted people who wanted to have more freedom.

This photo is from a factory in Nanyang, Huaxiang. This photo is very good. The workers were about to go to work.

This is the reaction of the people's life at that time. The people of Shenzhen had a deep relationship with Deng Xiaoping. Without Xiaoping, there would be no Shenzhen. In 1992, Xiaoping came to the Shenzhen market again to check the condition of the hotel rooms. This is the first ATM machine in Shenzhen.

You put the money in and you will immediately get a deposit. After you have sorted out the money, you write a note and how much money you want to bring to the window. The postman will deal with it.

It's not like now. The mission of the project was to introduce technology, knowledge and foreign policy. So, we first experimented in Shenzhen and then launched to other countries.

As Xiaoping said, the stone crossed the river, and the stone became Shenzhen. What to me was remarkable about Shenzhen is that even the planners themselves would tell you that the city evolved in a way much bigger and faster than they would have predicted. I think it's overly generalized to think that Shenzhen was nothing and then with this set up special economic zone suddenly it became a city.

It didn't. There is something else that's not answered simply by top-down planning. Yes, good morning.

Thank you all for joining me in a discussion about innovation that is happening right here in China. We're investing with you, the developer community. We have been investing in open source solutions because we know that when there are standards and when there are open source offerings that the pace of technology innovation and the pace of technology adoption accelerates.

I think for the past hundred years the Industrial Revolution put us into small cages. Consumerism has cured a lot of creativity, but for the post-industrial generation they should have more freedom. to create, to explore, to invent. I think through Maker Movement we are bringing it back. So we're here with the MakerBot Cupcake CNC, which is a 3D printer.

You can build things like Tom York's head, because he actually open sourced the Dac... that was filmed for a video of his. Now what's also interesting about this whole scenario is that there's a whole thriving community of users who are taking these to build all kinds of different objects. They're sharing the objects online, and additionally they're sharing information on how to build and improve upon the design.

Everything is completely open sourced. The software is open sourced. The hardware is open sourced.

I just can't wait to see what people come up with. I think the recent emerging of the maker movement pretty much started around 2003 2004 in the US. Laser cutting and 3D printing is helping people to be able to build stuff and actually build it for fun rather than just having Right around that time, this guy named Dale Doherty, he was thinking about starting a publication called Make.

Before Make came out, the only word we had was a hacker, right? And I think he didn't want to call the magazine Hack because it had a really negative... connotation at the time.

And make was sort of the thing you would type to compile a program so it would resonate well with programmers. And maker was like sort of the demonym of people who would read the magazine. That sort of coined the term maker. I think in creating that publication he sort of solidified the movement and the Maker Faire created that phenomenon. In China, in the beginning nobody knows about makers.

Nobody cared about Maker Faire, but because we go to the Maker Faire in New York, in the Bay Area, we're so jealous. So instead of waiting for someone to do it, we say, why don't we do it? When they told me they were bringing the first Maker Faire here, I was like, how do you have a Maker Faire in an area where people don't make for a recreational thing, they do it for a job, right? You know, because making in the West is something that you're using to remind people who are in service economies that there's a thing called manufacturing right when you have a manufacturing economy you want to remind them there's manufacturing that seems weird and what I realized is that actually China's middle class is the size of the entire United States population so even if a small section of Chinese people had risen to the upper middle class it's big enough to create a movement in China itself compared to the United States scale of making. We don't know if it's going to be successful or not.

The first year we had over 60 makers, and last year we had over 200 makers. It's a huge number. Some interesting phenomena are also emerging out of this in the past years.

What's happening is the open source hardware movement. Traditionally, the circuit board is closed and proprietary. You need to have a contract, a non-disclosure, and a huge sum of prepayment in order to get access.

But with open source hardware, everybody can access to that information, and everybody can modify that to suit their need. People here they create a circuit board and just under expectation it is going to be open. It's going to be copied and evolved by someone else.

There's no one running around in Shenzhen saying, okay well I should be credited for creating this. If someone else can make this, get someone else to use it, the merrier the better. Not having the ego attached to a creation and understand how actually an open source system works.

The maker movement is at that juncture. I'm getting a little sick of hearing about the same people on TV over and over and over again, so I decided to do something about it. This Arduino project, which I called The Enough Already, will mute the TV anytime any of these overexposed personalities is mentioned. To mute the TV, I'm going to use an IR LED. Now anytime a keyword is mentioned, the TV will mute for 30 seconds.

Our producers caught up with Kim Kardashian earlier today. It should do a pretty good job of protecting our ears from having to hear about the details of Kim Kardashian's wedding. Arduino is becoming the trigger point because it has too many millions of makers using that.

This is a prototype he's trying to make. An aerobic arm for people who have Parkinson's disease. We want to make a spoon like this. And if you just shake here, it's stable.

If we come... Two centuries, like 10 years ago, 20 years ago, it would be very difficult for a maker to tap into resources. But now you have so many resources. It's in the middle of reforming.

So the big companies, especially the silicon providers like Intel, like Atmel, like TI, they look at that, oh, we have new customers. We have new possibility for new future applications of our technologies. So they make their own.

Console report like Edison, like Curie. So they want to tap into the early stage of the development of the applications. Now this board is based on the Intel technology. It's a tiny dual-core computer system. It has Wi-Fi, Bluetooth, and it also runs a Linux operating system on it.

I think part of the reason Intel is having to sort of turn that way, they know their roadmap as well as anyone else does. They kind of define Moore's Law. and they saw the bridge go out from underneath them before anyone else did.

They've managed to drive technology like this and then the other foundries like TSMC and UMC have always trailed behind but now that's slowing down everyone's catching up. They're like, oh god we're looking for air and trying to find a place to move and so they've struggled to keep up with the phenomenon they created. They haven't made headway into mobile and those are the most ubiquitous computers today. They're missing out on a huge market opportunity and so to the extent that they're trying to figure out how to adapt.

their innovation model to something more flexible. And so they really want to make sure the Intel brand is in front of the youth to make sure that they remember that Intel is actually like a thing that they want to design with later on and not just, you know, something out of reach. We have tried to introduce it to nine years old. This is a little bit difficult, but it's acceptable. You do not need to write any boring code.

In a smart node, you can just drag and drop. and link them together. What they're doing is they're learning how to code on a computer, translate that into hardware, and they'll build a project on our laser cutter or 3D printer for something to accept a stimulus, light, motion, or sound, and then output some result.

Last year, one kid built a key reminder for his mom so that when she left the house, a motion sensor would pick up her movement and say, Hey, don't forget the key. And it's kind of funny to hear. That a eight-year-old will know whether he wants to be doing mechanical circuits or just a purely software experience. So that's entry-level, and then we give them more systematic introductions how to build up the skills. Off you go, you can use the makerspace to create whatever you want.

You are genius, you are young inventors. I've seen some great examples of open-source hardware being used to actually make a difference and create a better world. The difficulty is monetizing that.

because I do believe that business solves a lot of the world's problems and people need to be able to make money. If you're providing value to the world, which is making the world a better place, then there should be compensation for that. In 2010, I started the first makerspace in China called Shintoujin. I got invited a lot to give a talk about open source hardware. The first question always comes out from people's minds.

is how do you protect your intellectual property and how can you make money if you don't protect your intellectual property? I got that question in Shanghai. I got that question in Beijing.

I got that question everywhere I go. But when I give the same talk in Shenzhen, the reaction I got is, so what's new about this? We've been making money on this for 20 years.

This is the world's largest circular-shaped computer complex. There are 800 or more on the first and second floors. Nearly 900 of them are all made of IC.

here in Machu Picchu Bay is literally because of the electronics markets. It's a fantastic resource of all different possible components and different devices which can kind of be Frankenstein together to make prototypes by the teams. It's a source of inspiration. It's a source of discovery. New products that could potentially be taken to the West.

I see every month a different invention down there. Nine times out of ten, they're probably not going to make it to the West, but some of them do. How many times have I filmed? You can get a little bit of a feel here what's even upstream of what's going to hit the tech in the United States. You see a couple of things popping up here or there.

A little shop will pop out of nowhere selling these things you hadn't heard of before. Like the hoverboards were here a couple of years before they hit the United States. And then you eventually sort of see them hit the states and other countries. This is the most special place in the North of China. Here are all small entrepreneurs.

But what they do is the world's newest and the most exported. This is a 3D glasses, 3D phone case. After you take it out, this is the 3D effect of the movie.

There's a number of different ways to sort of look at the market. For an engineer, you're sort of limited at thumbing through catalogs and looking at pictures and very slowly going through specification sheets. For example, if you want to put a switch in a product, you want to know how it feels. You want to kind of know the exact size and the little mountings and the fussy bits.

And it can take a long time to find exactly the right part. You come here and there are stalls with hundreds of different types. And you can just reach in and just touch them and play with them.

And you can walk stall by stall and see all the different variety. And it's not just a showroom. Once you find this which you like, you can be like, I'd like to buy a thousand of them. And then for a very low price, you can just over the counter buy it, carry it off and go into production.

I've been practicing with my phone. I've been doing it for a long time. I've been practicing with my phone.

I've been practicing with my phone. I've been practicing with my phone. I've been practicing with my phone.

I've been practicing with my phone. It's got a huge amount of acquired knowledge and skills. There's electrical engineers there who solder up 50 PCBs for you in record time. You can go down there and piece together different components to make a new mobile phone.

There's nowhere else in the world where you can do that. world you can do that. You can get a chipset that was in a notebook, for example, for less than $15, which can enable computing power and sell a new product.

That's a fantastic resource for some of the startups. That kind of philosophy has spread out all around China. and the other parts will be made by another friend. So he can quickly make this thing. In Huaxiangbei, some people design, some people produce, and some people sell.

So they are all partners. So here, it takes a very short time to produce and develop a product for the market. It only takes two or three months.

It takes a long time. In the traditional industry, it takes a year. But in Huaxiang, it only takes three months.

There are bubbles here. There are bubbles here. So I need to use a vacuum cleaner to help.

They are basically the founders of the old generation. They learned to make clay. Some people first broke into the place and then they brought in the clay.

After learning the clay, they would open another stall and open a small shop. So their techniques were learned from their masters. When we started to look at the maker coming to Shenzhen, there's this excitement on how open the system is.

Like nowhere else, you can buy all sorts of stuff. Everything is available in volume, but in the West, there's a binary distinction. between the makers and the hardware startup. The maker, you do this for fun, you do this for your passions.

But when you starting to make this into a business, you should forget about sharing, you should forget about all this open stuff and focusing on the business. But in here, there's very little differentiations between I want to make this for fun and I want to make this for profit. There's no binary division of the mindset of makers. versus startup.

Maker and startup in China is a continuum. You shouldn't be stopped from making money out of the thing you love to do. And you should not be forced to choose between open and proprietary just because you want to become a business.

Right now, it's just in the West. We haven't seen open source hardware system working. This is Apple's logo.

It's made by itself here. But it's made exactly the same as the original. And the text on the back These text Can be made exactly the same The same place Yes Actually, the more terrifying thing is that the iPhone hasn't appeared in the mainland yet There is already a complete high-end here Exactly the same But in fact, its quality is not bad It's exactly the same The iPhone is more than 7,000 yuan, right? But in fact, the pure high-end of 1 to 1 is only 1,000 yuan In the West there's an idea that I can have a company that produces nothing, has a ton of patents, but produces money by suing everyone for rights to those patents. You don't even have inventors, you have lawyers making money off of buying intellectual property and trading it.

That's weird, right? It's kind of weird that you produce nothing but make a lot of money. The idea that you can take an idea in a world that's this big and say exactly one person owns the right to it globally. Like Apple has the right to the phone with rounded rectangles.

They're the only people who can produce that. Really? Like seriously? This is the world we're going to live in? We just give people monopolies through the IP system for 20 years for stupid ideas because they were first to file.

That made sense back in the day when there were fewer people, less innovators, a less connected world. Now we have like this network of people where like we're empowered to do our things and we can almost trade our creativity. In China's ecosystem it is this network ecosystem of an idea for an idea like let's trade.

Now you realize you're placing ecosystems, I need other people around me. You can't be a dick to all the other guys around you just because you have Pat Monopoly in this thing. Someday you're going to be on the bottom side of the chain and you're going to need other people's help.

And so you build networks of collaborations with people by sharing in this open source philosophy. Oh yeah. we have our first copycat uh well that's not good let's say it's a fan so the guy reversed engineer from the video you've seen uh produced the plan of the uh of 3d models you can download and print your own one.

What we want to do is we want to print it. All the hardware companies that come in here, of course we encourage them to patent all of their technology. But we don't expect them to fight anybody.

who's copying them. We expect them to be moving much faster than anybody who's copying them and coming up with the next thing the whole time and building a brand. And then eventually those patents may get used when they get into a patent trade-off.

That's the use of the patents, not to stop people copying you. The way to stop people copying you is to make whatever they're copying irrelevant because you've come up with something much better. A huge barrier, I think, to small companies in the United States is the patent system and the copyrights and just left and right.

It's just legal challenges and you spend a huge portion of your money on lawyers and IP filings and all that sort of stuff. It's a drag. It really is.

If you want to be making stuff, you want to be actually working with people and sharing ideas openly and getting things going. Hi, I'm Shui-Xuan. I like to invent things. This one is called a solar wave. You control speed by leading.

This is my latest invention. It's called hover tracks. Yeah, the hoverboard story is a very interesting example.

of somebody in America who came up with the intellectual property and then spent a long time fighting manufacturers who were actually creating something which was similar. That's a great example of a case where I would have encouraged somebody not to start like fighting around IP protection. It's better just to build a brand around a really great product, make sure you've got you know the leading product in the area.

This is really the first time we have a technology product which become widely popular, which become a cultural icon, but we don't have a name for it. It just emerged. More people come in, evolve it, tweak it, evolve it, tweak it. Eventually, you will get to a form which will go viral. This is kind of point to the future of how things could happen.

In Huatianbei you still find shanghai that are basically fakes, they are reproductions of established brands. I'll give you an example because this is a contemporary sort of shanghai smartwatch running on an Android system. The reproductions were really the items that were sought after by people who could not afford the real thing. My understanding is that the early Shanzhai were people who worked for the bigger corporations here like Nokia, Motorola, Foxconn and they were some very smart engineers who got sick of the management and they're like, look I can build a phone cheaper, better, faster than these guys can. I understand why they have all this process.

I can make it for half the price if we just cut the fat. And they would quit, talk to their friends who they knew were all these upstream suppliers. And they would get together parts and they would build, you know, what were effectively, you know, copycat phones.

The key innovations are able to do it at much, much lower cost. Just, you know, learning how to walk before they could run, essentially. The most similar things to the ideas of Sanjai in the West is the idea of Robin Hood. They try to empower the poor with the latest advancement in technology. Sanjai and the maker movement and startups, they have a very unlike.

They are very much share the same spirit. Even though they are not from big companies, they feel powerful. When they talk about people who left the factories and copied a phone, well, that was kind of like the open source stuff that wasn't open source. They just sort of like, oh, the schematics are on the desk. I will conveniently help myself to them, make a photocopy.

and then leave the factory with them, right? You know, was that stealing or was that open source, right? In the West, it's called theft, right? And out here, it's called sharing.

This one of the devices that was a haul from the market. And you can see it has a number of markings on it. This one was the higher grade version.

It was 70, 80 bucks, US. And when you power it on, you see that it's running a very well skinned flavor of androgel. Iconography is actually pretty good. And then the great thing is this one supports two SIM cards, a replaceable memory card and a replaceable battery, and it comes with two batteries, which is actually a feature that many local people really want to have.

They're unhappy about it. about A, having no memory card slot, and B, having not a replaceable battery. The companies were able to access very easily the two basic components that you need to make a phone. One is the Goomban, which is basically a printed circuit board, and the other one is the Goomo, which is basically the shell.

So there were companies specializing in making Goomban and Goomo that had slots for those printed circuit boards that were very easily accessible. accessible by companies. You know, people from the West who are used to sort of month-long development cycles, like, I mean, how did they do this? This is amazing.

Like, this capability came out of nowhere overnight, but actually it's been honed over like a decade or two out of those roots of people, you know, coming out of the big factories and figuring this all out themselves. Shanghai, there is something that is still going on now, but it is a very small percentage of what is produced. in the market.

There is a very strong emerging middle class in China that has the purchase power to afford original items that may be more expensive than the reproductions. It is not possible to target new markets just with imitating the established brands. There is a limit to what can be achieved in that sense.

Once they kind of got in a position where they could now build a copy of a phone pretty well, they can now start innovating. They'll take like an Android phone and iPhone and mash them together and come up with this weird thing that is pretty cool and is different in some way. You know, if you go in the market in Huaxiangbei, you will find that many people distribute...

this type of advertisements for company that are called white brand companies that will make it for you assembling very first different components and then you can add your your own brand your own name or whatever you want and distribute it as your own item yeah these are these are all white label ideas it's an empty sample and all these are different empty samples so they can go ahead and build it for you on the spot and then order I don't have her many want and later on you can actually You actually ask them to go ahead and put your graphic on the print, for example, or maybe these logos over here. In the West, our philosophy is to make sure that we're not just going to print a picture The philosophy is we come up with something really fantastically new that nobody's done before, become the market leader, and we're really successful. The Chinese mentality is slightly different. They look at something that's already on the market, and then they create a much better version of it, much quicker. It's not copying.

It's evolution of products, which becomes much better than what was out there before. We grabbed another one on the market there. Looks like a smart watch, but you'll notice that it only has a single button. And the graphics are made for children. So this is a phone plus GPS module that you can use to sort of report a kid's location if the kid is...

in trouble they can dial their parents you can see it has like SOS call features. I would bet that probably 80 to 90 percent of the design material in here is borrowed from other vendors who use these previously in other smartwatch designs but people are sharing the IP. The guy who probably shared the IP to them was someone who could sell them chips or motherboards or circuit boards. And so there was some factory backing up that sharing process. They want people to use these things.

And that lets these guys try, try, try. Like there's many models of this. In fact, when we were buying this, the woman next to us was asking for these and then left on the table, she said, this one's too thick. Let's go find one that's thinner than this one over here.

They probably have less features or less battery life or whatever it is, but the market here can build these different variants. and service it because of the phenomenal ecosystem. Something is really happening. Companies are realizing the importance of having new ideas and being different. So many companies who were involved in the Shanghai before are now looking at design, they are now looking at how to develop innovation in their own companies.

The model that is being developed in Shenzhen can actually be quite threatening in other parts of the world and it's not surprising that many American companies are now looking at models that are developed in China to see how they can adjust themselves. Dreaming makes the world change constantly. Technology makes dreams come true. We creatively proposed a unique OPM business model. Through our own original design, we provide customers with a comprehensive solution for product differentiation, creating innovation, speed, value, and three core competitiveness.

Where is the dream? Where is the future? OPM is a provider of original product planning and design. What advantages do we have compared to traditional OEM and ODM? First of all, we have the product's production rights.

The laptop and tablet computers on this stage are OPM. So those are some of the products that we make. This is President Obama wearing my headphone with my business partner, Mitch Richmond. These people have been here, you know, Akon, What I Am, the Justice picture, my partner, Venus Brown. This here is signed by Venus Brown, What I Am.

I forgot who signed this. It was somebody famous. I forgot. This is my office.

Hi. And that's something I can't live without is my cigar. Like, I can't do shit without my cigar.

Sorry. I just cussed. We are not your traditional, like a manufacturer, right? Which is, you know, give me a product, you manufacture.

We manufacture stuff like a monster and all that. Harman Kardon, Creative, Altec, Lensi, JBL, all the biggest industries. We actually don't...

anywhere between 8 to 12% of the US market on the audio side. But what we're doing so different is we have our own design house. We're able to create some really cool, incredible product. So here's like...

design house, some inspiration about what we can do. We have like some instruments 3d printing, rapid prototyping. This team is designing some characters in 3d. This is a game, it's interactive learning. In China, a lot of factories are very traditional.

So this is also a very new model. The CEO, he tried to break this model. And since 2005, they are producing now for 45 brands, mostly international and mostly in the US.

This is a smart refrigerator for the future. You can see the content of the refrigerator, the value of nutrition, the production date, and the safety of food. At the same time, when there is insufficient material in the refrigerator, we can directly purchase it through the order.

You know, most people don't realize that there's at least 26% of the technology from Silicon Valley actually comes from Shenzhen. So what they do is they hire kind of like a headhunter. so to speak, because there's so much innovation.

We are about minimum of eight months to a year advanced when it comes to technology. For example, we have this incredible bed. You can sleep on there. And the moment you wake up in the morning, it will give you stats, how many times you roll over, how much sleep, how much rest you have. And then also can read your blood pressure, can kind of tell you if you have any problem that needs to be identified.

And this is what we're going to do. This is technology existing already today, and we've done this almost two years ago. We say like 25% of innovation created in Shenzhen are bought by the Americans.

They buy it, they go to Europe. And then they sell it here 100 times more expensive. China feel a little bit bored, I think, about this business model.

We made it here, but all the credit is for somebody else. Ding dong ding dong. Shenzhen Tianqi.

Today, during the day and night, the temperature of the rain is 28 degrees Celsius to 23 degrees Celsius. Ding dong ding dong. Stop the broadcast. Stop.

His name is Ding Dong. Everybody is looking for the Chinese startup, made in China. Want the proof to show to the world like, look, we innovate.

We have a lot of opportunity here. I think our focus should be, let's create a quality product. And you can be proud and say, this is made in China. So if you can just focus on that new technology, to focus on a branding, and to focus on a quality, and I think within the next five years, people have different perspective of made in China.

I think that will happen. The Song people's rose is a fish-scented This is a slogan of Shenzhen's art workers'union Shenzhen, do art work If you have time, do art work If you have something, find art workers Success is to break through the barrier To break through the barrier of the reform and opening up So at the beginning, Shenzhen's industrial industrial level is relatively low This is the first half of the industry After 20 years In the last few years, Shenzhen has been facing a situation where the land, resources, population and environment are being chased after the former. Shenzhen has been abandoned.

How can Shenzhen continue to lead economic development? What has happened in Shenzhen within 35 years of time, its uniqueness is fading because those same innovations, say policy innovation or industry innovation, now it's everywhere in China so it doesn't have that edge of being the only one or even the first one anymore. It's kind of a catch-22, right? It recognizes what it's been able to achieve but it's also inherent like how are you gonna make it better. People who come to Shenzhen get older and as the experience grows they start to develop something new rather than manufacturing.

They become engineers, they become brands. Meanwhile the government is pushing out manufacturing to the out here of Shenzhen. This is actually a PC.

You connect it directly to a monitor or a TV. Then the monitor and monitor become a computer. It has a 4G memory and 128G hard drive. A lot of confusion is happening right now.

What am I going to do? What's next? Should I invest in branding or just close my company? I think it's a perfect moment for innovations because that can attract at least a portion of them to put the resources to innovate something new. He has his own research and development.

It was made into a gold product. It no longer made into a three-duty product. It made its own research and various brands.

But now, in terms of the ideology of intellectual property, it is very, very strong. People are plagiarizing me. and then it sells on Aliexpress, eBay, and Amazon, I can quickly complain about it. It will soon go down.

I think this world should be an open world. Tesla, including Facebook, Amazon, they open up AI. Those in Android are open. Any kind of competition is based on a higher-end business model. This is Apple's business logic.

I really don't like Apple. I've seen a change in the way that innovation in China happens. There's a fantastic number of Chinese startups that are doing really, really good products.

Chinese startups are getting better because they want to learn from Europe. If you go to a conference with innovation speakers from France or from Germany or from England or whatever, most of the people will be Chinese in the room. They want to learn.

Especially the community of Shenzhen people who work in the business of business. In the past, China and the government were in control of business. Foreigners didn't look up to business. That was many years ago. Now I think the principle of creation is the same as business.

In fact, business is not a word, business is a spirit. Business is a spirit. The spirit of struggle to rise from the grass roots.

In my opinion, I think it is the most creative and potential in China. In the past 20 years, everybody who wants to make it in the Silicon Valley has to go through this very tight and small selection process by a small group of people who are the venture capitalists. Young white males between 20 and 30 years old.

to 30, controlling how technology will be developed, how technology will be applied, and how technology will be available to the general public. That is the very definition of control economy. like these massive settlement fights and epic legal battles like all the Supreme Court and stuff like that.

If everyone were like you know actually we all do a good job let's just work and try to figure out how to innovate but it's a matter of getting critical mass of people to buy into it. Without a big brand dictating what kind of feature we can have the SunSight system is catering to everybody's needs. It's not a small group of people who determine what gets developed when and how. Right now we are still at the very early stage of this open-source hardware movement. If we trace back to the late 90s, the open-source software just got started.

I mean Bill Gates was speaking publicly about how open-source is communism and it will destroy the software industry. And hey, today Microsoft is one of the most supportive of open source and even opened up the entire Windows 10. If the history of open source software is used as a benchmark, we are pretty much five years away from this being discussed in mainstream. It's a mindset change, but the future is possible.

They talk about how China is authoritarian, there's strong rules and all sorts of stuff. People here have developed a way to coexist with the rule of law and the way life needs to run. They sort of look the other way at the right times, I think, when things need to happen.

This is how we've managed to make sure that everyone gets fairly compensated, everyone's fairly rewarded, and it works through this system. Another thing to be clear is that authoritarian doesn't mean evil. It's just that there is one authority. I mean the Communist Party knows as well as anyone else that they have to keep the people happy. They're not just going to like kick people around because they want to and they want to be trivial and small about it.

So they try really hard to put economic policy in place that brings prosperity. One of the things that the government has said is we need a service economy that's tech oriented and we need to get more young people interested in this, the maker movement. We want to graft that into our system and hopefully inspire another generation of young people to want to become, you know, hardworking factory owners and employers and innovators like their parents were.

And now there's even like little maker spaces and cafes and innovation labs like popping up left and right. This is the input. What does it mean?

After you cover it with light, it will move here. This is a recording button. You can press here, for example, welcome to Chuanba Coffee.

Welcome to the Coffee of Creation The Coffee of Creation was founded by Shenzhen University and SAIG in September last year The photos of the opening day are from last year In 2015, Prime Minister Li Keqiang proposed a concept called National Entrepreneurial Innovation. Last year, the government invested 9.3 billion yuan in supporting the creative project. If we compare Shenzhen with other countries, the government should support us. Only the Chinese government can do that. On one hand, it's great that the national government has seen this emergence of new media, new technology, and I think it's genuine to want to support it.

However, I don't think there's a very good track record so far of governmental involvement in these more bottom-up... activities. We take, for example, art districts, something that was emerging out of China 10, 20 years ago that really caught the imagination of artists'colonies, galleries. But as soon as the government started to support it, the inevitable process of gentrification happened. Rent went up, more notable galleries moved in.

So the artists who really were trying to experiment had to move out. So I have a concern along similar lines for these tech sectors. The government in trying to support it inevitably will formalize it.

It's interesting to sort of see the city evolve. And so there's a sort of wave of money and gentrification. You can sort of rolling from the east to the west and from the south to the north.

The pace at which they do it is just crazy. You can walk from one end of the city. to the other and by the time you walk back to the other side enough the city will change and you won't recognize it. It's just tearing itself down and rebuilding itself as you walk through it.

There's a region over there that was all these little electronic shops. They just leveled it, put up a luxury. mall and put a high-rise on top of it and you wouldn't recognize it.

I mean we have more high-rises here than anywhere in the world. I mean honestly if you walk around Shenzhen right now we have over 278 buildings being built up to 74. I travel all over the world and when you look at everyone else I hate you know we are the fastest growing you know society around the industry today and that's just a fact. In China there is a general lack of awareness of the negative ramifications of gentrification just as you know in the 60s no one in New York thought that was a bad thing.

The reason why the city has embraced this notion of new technology is trying to reinvent itself. My concern is that in this reinvention, it wants to very quickly rid of its even immediate past. A city that really struggled, really was dependent on a lot of things that government couldn't provide.

Things happen by chance, accidentally, a lot of it was bottom-up. In fact, there was not one fishing village, there were 2,000. These villages have evolved along with the city. They have taken up very important roles in providing housing, providing a certain social structure, jobs, a certain stability to the city that was not planned. They simply evolved with the formal city.

I would liken it more like, you know, sort of the bacterial colonies of a petri dish. Eventually you grow a lawn of... bacteria across it, you know, all the communities become interconnected. But that's sort of a natural growth curve. We are in Baishi Zhou, which is one of the more than 300 urban villages in Shenzhen.

And here, no matter what, you don't need to go anywhere and you can find everything here. That's the amazing part of this. It provides everything you need for a community.

When the government designated Shenzhen as a special economic zone, they left patches of land for the villagers themselves to build homes. This is the boundary line between the city and the urban village. This side is urban owned and this is urban village owned.

These urban villages are also breeding grounds. for a lot of innovation. You can change the structure, you can change the facade, you can spill your workshop into the alleyways. The whole neighborhood was built in this kind of bottom-up way.

Shenzhen really represents a new modern image. It's a modern city, it's a new city. The urban villages are complete opposites to that image. The mayor's office declared the necessity to rid the cancers of the society. In those words.

Baishizhou is going to be redeveloped this month actually, April 2016. So this is how fast 150,000 people who live here need to be relocated. There's some rumors that the market here is eventually going to have to be displaced because as things gentrify, the rent on the shops are going to go up to the point where they can't sustain selling these small parts and whatnot. Just across the street there's much more urban village going on.

That's where we're headed to. And I can't say if it's for better or for worse, but definitely things are changing. And so you transition straight out of the market into urban village area like this.

Personally, I have a bias. I hope that it never goes away because I enjoy it so much and it's such a valuable resource to me. You'll see big districts where people are taking phones and tearing them apart. And then another area, putting them together into another phone. A lot of sort of recycling and upcycling going on.

So you can see like down there, there's a person there with what looks like a pile of trash. But if you look closely, it's just that they're going through mobile phones and stripping out parts from them. It's like shucking corn almost. We'll just take a quick walk through one of these informal areas. This guy is selling iPhone recycled parts.

He actually has big bundles of motherboards that he's pulled out of phones that were previously thrown away. And then what they do is they take out the motherboards and they take the chips off, and they eventually find their way back down the market. You can get your roast pig's feet and then iPhone cases. This market itself plays a critical part in the ecosystem in terms of being able to move goods around.

If one factory did a build and they had some excess and they want to get rid of it, a lot of it will come through this market and get recycled through the system. This one's straight from a factory floor. You can see that the motherboards are even still on the carrier. So this one was one that didn't even pass out of Apple, fully fabricated, and it found its way into a scrap heap here.

Well, people will go ahead and they'll... You can already see they've pulled off some ICs for recycling and reprocessing into fixing phones and so forth. On here is a, these here are blank motherboards.

And the interesting thing about this is you see like no solder on it at all. They still have a gold color, which means that there's been no processing of the board at all. It's straight virgin boards from the facility. If you're going to move on, we're getting a crowd.

I can get plenty of useful stuff for a fraction of the price that you would have to even in the markets on the main street. That's the stuff that's going away. Those guys will innovate no matter what.

They innovated despite the government, right? They'll be there, they'll keep walking. They may have cut a path that looked interesting, and that path is now being paved into the road.

They'll cut another path. You've never had a fox run over by a star. steamroller when they're putting a road over a forest. The fox knows how to move away, right?

It can run and find another place. And as long as there continues to be green fields for these people to go to, I think things will be OK. And demilitarizing the Western IP ecosystem would be great. I think that's something we can do, right?

But it's just as hard as bring us back from the brink of a Cold War. You know, everyone has to sort of ease off, universally agree that we need to have a new paradigm. And I think one of the problems in doing that is that the militarization of IP has really benefited big companies. And if they back off their stance of having huge caches of IP to nuke the little companies that come up, they're threatened by innovation.

And so instead of seeing like this open... you're seeing exactly the opposite. You're seeing the system calcify. And maybe it will happen in days. Sure, they'll own their edifices, but they'll become so entrenched that they can't move on, right?

Each of them is locked in their space. And then a very flexible ecosystem like China will just roll over them later on, and they'll wonder how that happened. It's because they did it to themselves at the end of the day. The beautifulness of Shenzhen is you come here with the talent, with your efforts With your intelligence, you can earn a place for yourself. The makers, the hardware startup, the Internet of Things, producing hardware, they all converge here in Shenzhen.

And that's what makes Shenzhen the Silicon Valley of power. The power of the engineers'research and the power of Shenzhen's three-storied supply chain bring it to the world. Its mission is to introduce new technologies.

Shenzhen is entering a new stage in history. It has a new mission. It's like a Chinese dream. Now, you look at this light switch.

Are they straight? Every five-star hotel everywhere in China right now. This is a problem you can identify.

This is a perfect example. If we can just have a person take two, three seconds to just make that adjustment, China will be a perfect place. DT.

Are they going to be more like the UK in the sense that they'll just shed their manufacturing background as they gentrify and sort of just go straight for like, you know, a service economy? Or will they keep rooted in a sort of a manufacturing ecosystem and keep design parallel to it? Or will they just forever stay in manufacturing, right? Is that really just their core base and value and where they want to be? I mean, if China went from where they were.

To where they are today in 30 years, they could do that again in 30 years. Within my lifetime, we could see the answers to this question. It would be interesting to see where the answer ends up.

Transcript for:Shenzhen's Role in the Maker Movement

Transcript for:
Shenzhen's Role in the Maker Movement