The thing to understand about China is that domestic alternatives to international products, especially in 'sensitive' industries (basically anything technologically significant) is ALREADY a core government goal and a major cornerstone of their tech, IP, and political policy. The CCP has stated on many occasions--going back years--that their goal is to eliminate any reliance on non-Chinese firms. This has more urgency in some industries (eg semiconductors) than others, but the ultimate goal is the same.
The other thing to understand though is that in a dictatorship people do not have economic freedom or the incentives to truly do the hard work necessary to build this industries. If the United States cuts off support for China and these industries, China will fall far behind unless it can steal the technologies. This is the fate of most dictatorships.
That seems incredibly naive. of course they do have the incentives, wanting to get rich. They do have the economic freedom, at least enough to do very creative software and hardware engineering. The evidence is there.
> in a dictatorship people do not have economic freedom or the incentives to truly do the hard work necessary to build this industries.
At the end of the Ming dynasty, there was a commercial family dominating the sea trade out of the southern coast. When the Qing took power, they told the family patriarch he could keep everything, as long as he was willing to swear loyalty to the new dynasty. He immediately did so.
His son, however, issued a rousing formal denunciation of his father, questioning how anyone whose oath to the Ming had been sincere could betray them at the drop of a hat like that. It was so persuasive that it convinced the Manchus, who threw the patriarch in prison -- devolving control of the whole enterprise onto the Ming-loyalist son. He went into open rebellion, took his hundreds of ships and thousands of seamen to Taiwan, and waged war on the Qing for decades. His rebellion was only ended when the Qing took the dramatic step of fully evacuating the coastline to prevent anyone from supporting him from the mainland.
They have the incentive. Despite having a totalitarian gov, the economy is still largely capitalistic. The issue is that environments which lack freedom of expression also tend to lack the creativity needed for great leaps of innovation.
If I were to guess, a large percentage of China’s captains of industry spent a decent amount of time living abroad
To provide more of a direct answer, I think that Shenzhen has really great long-term prospects as a tech/innovation hub. Very large number of investors, existing and large tech/innovation/industry cluster (consumer electronics), and long-term government incentives. You can already start to see the momentum building. I've seen major changes since first doing business there (Feb 2012) and even over the past ~2years that I've lived there.
However, the prospects of moving there are not significantly better than the US. China is opening up new classes of visas and making certain business licenses more accessible, but my general impression from being in the ecosystem and talking with locals and foreigners is that it's difficult to get a sustainable business off the ground. The immigration situation (if that is a goal) is bleak.
As another user mentioned, this idea (stationless bike share/rental) has been white-hot in China since the past summer, with a lot of extreme incidents occurring in the past couple months. The article doesn't exaggerate about 10ft tall piles of bicycles. Vandalism is a major part of the competition between companies as well--it is a regular sight (in Shenzhen) to see bikes with spray paint over QR codes, falsely reported damage, missing seats, etc.
Overall, the system works extremely well and is super convenient, but Shenzhen has very good public transportation to begin with and most of the sidewalks in the city are very wide compared to those in San Francisco. Those are two of the key things that have enabled this type of service to emerge and take off in China--it's really just solving a "last-mile" problem of getting to a point that's too far from a metro station to comfortably walk but not far enough to take a cab.
Can you back out $12?? I would put the BOM closer to $6 if I'm going with the high estimate, and more than half of that cost will be driven by the ATMEL and OLED.
You're absolutely right, I was far too generous. For a sensible size of production run, your $6 figure is much closer to the mark. I made some faulty assumptions about the amortized cost of tooling for the plastics and over-estimated the cost of both the OLED module and the li-po.
In my (pointless and lousy) defence, I'd say that I'm used to making extremely conservative estimates, because nobody ever got fired for coming in early or under budget.
I'm currently working on a company that could just as easily start in China as the US: anything you can share regarding where and how to find investors? No "Chinese AngelList"?
There are many local networks. We are currently in touch with a few, and may even start one as an adjunct to the current round's raising process. I've sent you an email.
As others have mentioned, nothing is even close. For certain types of industries there are cities in the US and Europe that are competitive (eg mil/aero in Los Angeles and DC metros), but for general product development and especially consumer electronics nothing is close.
What do you hope to gain out of living in these places? There are plenty of foreigners who have been in Shenzhen for over a decade and are only marginally more interesting or successful now than when they arrived. The location rarely changes what's inside. If you find Shenzhen interesting, just come! It (and the rest of the HK+PRD megalopolis) is not even close to peaking in terms of creative or engineering output. Just bear in mind that there will always be a barrier. If you're thinking of turning into a local you need to be either (A) a skilled Chinese (B) an extremely well capitalized foreign company (C) an extremely skilled foreigner willing to spend years in the city and learn the language to fluency.
All that being said, you want to look for cities with strong population growth trends, very low wages, and huge levels of government investment. India is probably your best bet, though I know nothing about it other than what's in the news that they want to be the next China. That will be tough since India is missing some absolutely fundamental pre-requisites to the kind of growth China has had.
1> Infrastructure - You can't get China-like public utilities (road, transport, electricity, water ...)
2> Blatant corruption -> While corruption in China is at the communist party level, every step you take in India requires a bribe, or things move at snail pace.
3> No hardware ecosystem - both the design and manufacturing skills and resources are considerably weaker than China
India Pros -
1> IP protection laws are stronger and more enforcible.
2> English fluency is high - hence communication is less of a barrier
3> Well established software and back-end-office sector.
4> Government policies are not as protectionist.
5> More conducive to free speech, so a Facbook/Google can actually thrive in India
Conclusion - Bangalore/India is the Shenzhen of software, but definitely not close in hardware.
Have any suggestions as to which companies might be in point B? Currently planning on going to China or Taiwan to work (Computer/Electrical Engineering and/or Software).
Is this true? I know that as a US Citizen I'm required to pay taxes on worldwide income; but any lawful resident of the USA has the same burden? I'm a little skeptical that someone not on a permanent immigration path would be subject to this, but I'm neither an attorney nor an accountant so...
Yes; in addition you might want to ask your accountant about FBAR and FATCA reporting requirements. Those usually kick in if the sum of maximum balances of your foreign holdings over the year exceeds 10k (including retirement and market accounts, and yes, this does apply if you move one dollar between ten thousand accounts over the course of the tax year).
Edit to add: As a US citizen you are required to pay taxes on worldwide income even while not living in the US. As a US tax resident, you are required to pay taxes on worldwide income only as long as you remain a US tax resident, i.e. you file a US tax return.
You should download and explore WeChat (微信）. It seems like facebook at this point is now chasing functionality that's been present in Chinese apps for several years. WeChat lets you order food, buy train tickets, etc in addition to the messaging. The comparison I've heard is that in software B2C China is ahead by 5 years, B2B USA leads by 5 years. And China is defining new C2C and O2O. Hardware is a toss-up.
I'm working on a project automating tasks around physical product development, and eventually leading into a SaaS/platform with some intelligence to take advantage of new directions in digital manufacturing. I have a feature roadmap and connections to some early users for sales/testing, but my background is not software engineering (MechE, manufacturing, and some EE/embedded systems). Currently I'm evaluating freelancers to get an MVP built since I have a small amount of money to work with.
