Johan Nylander, an award-winning Swedish author and correspondent, has spent much of his time over the last few years traveling around China from his base in Hong Kong – and in particular visiting that area around the southern part of Guangdong province known as the Pearl River Delta. In that time, he has seen the city of Shenzhen, almost entirely undeveloped as recently as four decades ago, evolve from being a manufacturing dynamo in the early years of this century to becoming what is one of the most, if not the single-most, innovative and tech-forward city in the world today. Many of those he interviewed for his new book, Shenzhen Superstars: How China’s Smartest City is Challenging Silicon Valley, are in fact adamant that Shenzhen is now ahead of America’s tech Mecca in terms of both hardware and software, and much else besides.
Nylander, a former Asia Times contributor who writes about affairs in China, and elsewhere in Asia, for Sweden’s leading business daily, Dagens Industri, and whose work has also been published by CNN, Forbes and others, took some time out to tell us why those who dismiss Shenzhen do so at their peril.
Your book is part-history, part-journal, part-guidebook. To give some context to your treatment, can you briefly describe Shenzhen’s journey over the last four decades and tell us what makes its story so unique?
It’s the story about how a small Chinese fishing village became a global economic powerhouse of innovation and technology. Just 40 years ago, Shenzhen was a backwater area, populated by fishermen and rice farmers. Today, it’s home to 20 million people and some of the world’s leading technology companies and most innovative tech startups.
What I find interesting, which is partly why I decided to write the book, is how Shenzhen today challenges Silicon Valley and other Western innovation hubs in terms of new cool technology companies. In some areas it has already outsmarted the West. There are some truly remarkable companies here that totally redefine their respective industries. Compared with the Chinese internet giant Tencent and its WeChat app, Facebook and Twitter are stone-age.
You write quite a lot in the book about how Westerners just aren’t aware of what’s going on in China in terms of the tech industry’s re-orientation there. Do you think there’s an extent to which people are actually too afraid to acknowledge it?
Most people in the West don’t have a clue what’s going on here. Recently I took part in an organized press tour for Scandinavian tech journalists in Shenzhen, and I was shocked to realize that these journos – who are experts on technology gadgets – know absolutely nothing about the region that produces the stuff they write about. Don’t get me wrong, we can’t all be experts on everything. But there is definitely a harmful lack of understanding of China and Asia in general. I believe it’s a combination of lack of interest and ignorance. And yes, perhaps even that people are afraid of acknowledging that there’s a new kid on the block.
Actually, several American venture capitalists interviewed in the book raise concern about how little Americans know about what’s going on in China and its booming tech scene. At the same time, Chinese startup entrepreneurs closely follow trends and news in the West. It’s rather alarming, wouldn’t you say?
There’s a consistent thread running through the book of Shenzhen rivaling Silicon Valley. Is it already ahead, and in what areas?
First, both the Valley and Shenzhen are amazing at what they do. I don’t primarily see them as rivals, more like they are in symbiosis with each other. There are many startups, researchers and VCs active on both sides. But yes, it’s clear that Shenzhen has a clear advantage in some areas – especially hardware. A major difference is that people in Shenzhen have access to the world’s most advanced supply chain for manufacturing and distribution in the Pearl River Delta. Working from Shenzhen makes it easier to work out technical problems by liaising directly with suppliers, according to several Western techies I’ve interviewed. The turnaround time for prototyping is light-speed and way cheaper compared to the US. That’s why you will find many American accelerators for hardware startups, like HAX, based in Shenzhen.
I love how Edith Yeung, general partner of Silicon Valley-based venture capital firm 500 Startups, put it when I spoke with her: ‘If you’re not already in Shenzhen, you’re crazy.’
You make Shenzhen sound like the most dynamic place on earth. Can you describe its allure on a personal level? Could you ever live there?
It is indeed dynamic, sometimes crazily dynamic. During one of my most recent visits to the city, I suddenly noticed how a new mega-tall skyscraper had shot up. It turned out to be the fourth tallest in the world. It might sound bizarre, but for many people living in the city it’s nothing to get excited about; it’s just another tall building. Last year, more skyscrapers were built in Shenzhen than in the entire United States. This is just one example of the city’s incredible dynamics.
If you like high speed, constant change and a ‘go go go!’ attitude, Shenzhen is the place to be. The energy is just mind-blowing. Besides, there are tons of really good craft beer bars, cocktail lounges and music clubs opening up. So yes, I’d love to live there.
Tencent is one of the companies that seems to impress you the most. What is so special about that company? After all, a lot of what they do is copycat stuff, no?
The initial days of Tencent were more about adaptation than innovation, true. But the company’s CEO and co-founder, Pony Ma, put the company through some institutional self-reflection to increase innovation levels. That make-over paid off. Today it’s China’s king of patents. More than half of its staff belongs to the R&D department, and the firm has the country’s biggest number of patent applications.
More importantly, its WeChat app is totally transforming daily life in China, and increasingly so globally. Tencent is probably the world’s most interesting internet company right now.
I like the journalistic quality of the book – there are so many great anecdotes that speak louder than facts and figures could. What is your own favorite story about Shenzhen?
I have so many good memories from Shenzhen. But my favorite anecdote in terms of being a journalist is when I did an undercover investigation for a story, for CNN, about tech pirates in the city’s main gadget market district. I met with owners and sales executives of factories who were happy to supply me with any kind of tech rip-off, in bulk. They were all really friendly and professional. What I found interesting was how the counterfeit products sometimes had better quality than the original, and how the pirates quickly could determine which new gadgets from global brands, like Apple and Samsung, would be a hit or not. In the book I try to show the readers how this notorious yet highly fascinating world of tech-pirates works and what we can learn from them.
Johan Nylander’s Shenzhen Superstars: How China’s Smartest City is Challenging Silicon Valley is available now for Kindle.