Inside China’s own ‘Silicon Valley’

Shenzhen is probably the world’s youngest megacity. Four decades ago, Deng Xiaoping, then premier of China, tapped the dusty settlement at the mouth of the Pearl River to be a special economic zone (SEZ).

The location was picked due to its proximity to Hong Kong, one of Asia’s most important financial sectors and at that point under British rule. There were three more SEZs, each close to more developed areas on China’s border: Zhuhai, next to Macau (then governed by Portugal); and Shantou and Xiamen — both a short hop from Taiwan.

The SEZs became havens where Communist China could dip a toe in the waters of capitalism. In Asia, there was hardly a better place to build a city than next to Hong Kong.

Some would compare it to San Francisco and its surrounds in California, which in the 1970s got a shot in the arm thanks to venture capital floating around in the area. It created the Silicon Valley we know today.

Back in the 1980s Shenzhen was a backwater compared with Hong Kong. Still, it had the buzz of a boomtown and that was partly the reason Tencent founder Pony Ma’s parents moved there, says Ma biographer Leng Hu.

Shenzhen soon became an electronics manufacturing hub. Though estimates vary, it’s safe to say that a substantial part of the world’s hardware is made in the city. But cheap manufacturing is only a phase when it comes to building wealth. The real money is in the application of the hardware.

So it wasn’t long before the city started building tertiary education institutions in Shenzhen. Today, it has eight universities.

Ma, along with Zhang Zhidong, Xu Chenye and Chen Yidan all attended university in the city. They went on to start Tencent in 1998.

By then, some of the other big players in town were already up and running. Smartphone-maker ZTE, for example, had been established in Shenzhen in 1985, and Huawei followed in 1987. But Tencent took it to the next level, becoming the poster child for China’s internet economy, and turning Ma and his cofounders into billionaires many times over.

In 40 years, the city has grown from 300,000 people to more than 12-million. Shenzhen, these days, has more skyscrapers than New York. One of those belongs to Tencent.