Shenzhen leads in innovation, robotics
Electronic powerhouse in South China shifts focus to high-value-added industries
Producing a Redmi smartphone requires hundreds of steps but it takes just a brief moment for its circuit board to be glued, soldered and packaged at Shenzhen Zowee Technology Co Ltd, a major electronics manufacturer for smartphone vendors including Xiaomi Corp, Huawei Technologies Co and Oppo.
By applying its own cutting-edge robotics and technology, over 50 percent of the manufacturing process for Redmi’s handsets is now performed without human participation.
Despite the COVID-19 pandemic still affecting supply chains for all industries worldwide, more than 50,000 Redmi smartphones are being produced on average each day in a single workshop at Zowee.
Zowee is not alone as several companies in the information technology sector have striven to quickly resume production and managed to leverage technological innovation into a fresh growth engine.
“Despite challenges brought by the COVID-19 outbreak, China gained sound momentum in the electronic information industry in the second quarter. With both upstream and downstream industries resuming normal operations, the IT industry has shown a strong recovery,” said Qiao Yueshan, head of the electronic information department at the Ministry of Industry and Information Technology.
In the first half, the IT manufacturing industry earned an income of 5.14 trillion yuan ($748 billion), the ministry said.
For AAC Technologies, a world leading solutions provider of smart devices and a major manufacturer of miniaturized components used in Apple’s iPhones, iPads and watches, its business enjoyed strong growth during the period.
While the pandemic greatly affected the IT industry in the first quarter, the company recorded first-quarter revenue of 3.56 billion yuan.
Jiang Nan, senior vice-president of AAC Technologies, said the company and its supply chains managed to resume work immediately since the outbreak of the contagion. The firm has poured 5 million yuan into providing staff and workers free nucleic acid tests.
“The negative impact of the pandemic on the domestic IT industry is mainly due to a diminished labor force, interrupted delivery of raw materials, delayed processing of terminal products and weakened market demand,” said Wen Xiaojun, head of electronic information at CCID Wise, a think tank.
With the gradual control of the contagion domestically and the coordinated resumption of work and production in the IT industry chain, Wen said the self-sufficiency of the market will gradually recover, and market demand for consumer electronics suppressed by the outbreak will gradually bounce back.
Research firm CINNO said demand for Apple iPhones has soared in China, with a 225 percent sequential growth in sales volume in the second quarter.
“Therefore, the negative impact of the outbreak on the domestic IT industry is expected to be concentrated in the first and second quarters, and related production, investment and consumption will gradually recover in the second half,” Wen said.
In order to weather the storm, Jiang from AAC Technologies said the company, as a high-end electronics manufacturing firm, has been investing significantly in innovation.
Jiang said the company poured more than 1.7 billion yuan into research and development last year, which accounted for over 10 percent of its total global sales revenue.
At present, six of the top 10 smartphone brands in the world in terms of sales use AAC products. Its MicroElectro-Mechanical Systems chips for handset sound systems allow better signal-to-noise ratios and help reduce costs by over 50 percent.
“As a globally focused and internationally
diverse company, AAC is leveraging global resources wherever talent and expertise can be leveraged to improve competitiveness,” Jiang said.
The Shenzhen-based company has set up 19 R&D centers in the United States, Finland, Denmark, the United Kingdom, Singapore and other regions, with 4,177 R&D personnel worldwide.
Its R&D center in Edinburgh, Scotland, for example, can help expand the company’s global footprint and reinforce its leadership position in the design of next-generation soundsystem solutions.
Companies like Zowee and AAC are representative of a group of Shenzhen-based companies that have transformed from manufacturing-only to
high-tech companies that own proprietary technologies.
As a pioneer in the reform and opening-up drive, Shenzhen used to rely on the processing trade. After enjoying a high economic growth rate of nearly 40 percent annually from the 1980s to the early 1990s, Shenzhen — due to limited land resources and rising labor costs — gradually turned its focus to developing high value-added industries such as IT, biotechnology, new materials and highend equipment manufacturing.
Now it has become a magnet for technology startups and serves as headquarters for famous high-tech companies such as Huawei, Tencent, and one of the world’s largest drone makers, DJI.
“While other regions are also competing to become the front-runner, you must think outside the box,” said Wang Weizhong, Party secretary of Shenzhen. “We should not just focus on the 1,997 square kilometers of Shenzhen. We must look at Shenzhen from a broader view.”
The local government aims to build Shenzhen into a core engine, in terms of both technology innovation and financial support, driving development of the Guangdong-Hong KongMacao Greater Bay Area and, by 2035, into a global technology innovation hub.
The Greater Bay Area is part of the central authorities’ mega-plan for coordinated regional development, along with the Beijing-Tianjin-Hebei region and the Yangtze River Economic Belt. The Greater Bay Area consists of 11 cities and regions with a combined population of 67 million.
While local companies are striving for higher development, changes in the international trade environment have placed some pressure on firms like Sunwoda, a local provider of lithium batteries, as its export business accounts for a large proportion of total sales.
However, Liang Rui, vice- president of Sunwoda, said that China has launched policies in support of the manufacturing industry, which has allowed Sunwoda to access more funds and boost resilience.
“The government’s policy of reducing taxes has helped the company save a total of 10 million yuan since the beginning of this year,” Liang said.
In the first half, Sunwoda’s battery business gained traction with eight new models being added to its national promotion catalog. “While we are keeping our business stable, we are also considering offering a hand to small and medium-sized enterprises,” Liang added.
Sunwoda is developing a third-party financial platform to help finance SMEs. It only takes an hour to complete risk assessment for loans to SMEs, which has greatly alleviated financing problems for SMEs.
“The country’s IT sector also continued to develop because leading companies in the sector have made remarkable efforts in driving the development of upstream and downstream SMEs,” Qiao, from the ministry, said.
With local electronic companies and related industrial chains maintaining stability, foreign tech giants are showing strong confidence in continuing to develop in the nation.
“Though faced with changing economic uncertainties and the pandemic, Dell insisted on our aim of ‘in China and for China’ to make contributions to the nation’s IT sector,” said Huang Chenhong, global vice-president of US tech giant Dell Technologies and president of Dell China.
Huang said that Dell is encouraged by the country’s efforts in driving new infrastructure and believes that the scale of investment in new infrastructure such as big data centers and 5G will bring new momentum to the country’s economic development.
Dell has poured on average $33 billion into China each year since 2015. It has two global service centers, three factories, eight R&D centers, and 12,500 staff in China, and performs 64,000 hours of charity work per year, Huang added.