The Middle Kingdom beckons

China continues to amaze with transformation at scale

It was truly refreshing to return to Shenzhen, my first visit since the pandemic. The city's transformation isn't as rapid as in its early years, when change seemed to happen at a dizzying pace, but Shenzhen continues to grow and evolve impressively. This summer, we spent three weeks traversing China, exploring Beijing, Yinchuan, Guilin, and Chengdu. Now, with this trip to Shenzhen, I feel reacquainted with the country.

In recent years, geopolitical tensions between China and the West have escalated, often mixing undue allegations with some legitimate concerns. It's my hope that we can collectively bridge these divides, coming together as a global community to tackle the pressing challenges we all face.

A glimmer of optimism emerged from the recent meeting between Presidents Biden and Xi Jinping in San Francisco, suggesting a possible easing of these tensions. The two leaders discussed several critical issues, including the restoration of military-to-military communications, joint efforts in curbing the flow of fentanyl, and cooperation in panda conservation. President Xi’s assurance that China seeks neither a hot nor cold war with any nation, coupled with his decision to overlook President Biden's remark about dictatorship, may signal a step towards mutual understanding and diplomacy.

While this edition of the newsletter is China-focused what I can cover in this short note is just sliver of all that is to see and experience in China. I would encourage anyone who can to visit China to do so – so much there that we can learn from.

Each week, I curate insights that have sparked my curiosity. Your perspectives and feedback are the compass guiding this journey. If you come across an 'edgy' concept or a novel discovery, I warmly invite you to share it with me at [email protected].

1. Where are the makers?My recent return to Shenzhen was timed perfectly with one of my annual favorites – MakerFaire. After a four-year break, MakerFaire made its much-awaited comeback, organized by Chaihuo Makers along with primary sponsors Seeed Studios and Make. It was an honor to join a cohort of global maker-enthusiasts, including the CEO of Raspberry Pi and leaders from Make, Kickstarter, Fab City, and others at the Maker Forum. We delved into discussions about the trajectory and future of the Maker Movement, an ‘edge’ we began exploring and advocating for over a decade ago. Through our platform, we’ve been bridging communities worldwide, accelerating the Maker Movement by connecting makers with industry and governments.

Reconnecting with the Maker community in Shenzhen offered some insights:

• Despite global tensions and connectivity challenges with China, the global maker community remains robustly interconnected, especially with Chinese producers key to many global electronics projects.
• There’s a noticeable pivot in China from consumer-focused to industry-oriented projects, particularly in niche industrial IoT.
• Technologies like 3D Printing have matured remarkably, now offering high-quality, affordable consumer equipment.
• Shenzhen continues to be the prime hub for cost-effective electronics, essential for small-scale production.

As part of the trip, we also managed a quick visit to the electronics markets in Huaqiangbei.? The markets have evolved with the customer needs but these markets continue to thrive as the ultimate destination for any electronic component. And yes, I bought lots of LEDs and gadgets that I likely don’t need. :)

2. Chips for China

We also visited Intel's innovation center in Shenzhen, which just opened a few months ago.? The center highlights its continued engagement with the Chinese market (27% of global revenue for Intel), defying the US government's push for tech decoupling. This center marks a significant stride in fostering collaborations with Chinese partners, focusing on areas like AI, chip application, and edge computing.

Despite geopolitical tensions, Intel's move mirrors a broader trend among US tech giants seeking to maintain a foothold in China. Essentially, these firms are bifurcating their business to serve China and serve the rest of the world. This approach, also seen in adaptations by firms like Nvidia and AMD, underscores a delicate balance between complying with government policies and tapping into the lucrative Chinese tech landscape.

3. EVs galore

Another striking observation was the surge in electric vehicles (EVs). Their presence was unmistakable, marked by green license plates, a contrast to the blue plates of traditional combustion vehicles. At a glance, it seemed EVs made up at least half of the cars on the road. Speaking to some locals about this revealed a significant factor: obtaining a 'green' plate for EVs is much simpler than the months-long lottery for a 'blue' plate.

A bit of research confirmed this trend: In 2022, 57% of new private vehicles sold in Shenzhen were EVs. By the end of that year, the city had about 740,000 EVs, with plans to boost this number to 1.3 million by 2025. Zooming out to a national perspective, New Energy Vehicles (NEVs), primarily EVs, account for nearly a third of all new car sales in China, totaling around 9 million units. By 2035, this figure is expected to hit 25 million annually, making up 80% of all new vehicle sales – a testament to China's status as not just the world's largest auto market but also its leading EV market with over 200 manufacturers.

Our visit with Huawei was quite impressive for their size, scale and scope, and one of the highlights was their showroom where they showcased NEVs built on Huawei Technology.? Amazing machines that are half the price of an equivalent in the west.

Given this rapid expansion and scalability, it's not far-fetched to envision Chinese automakers leading the global EV sector in the next decade, particularly in developing nations aligned with China's Belt and Road Initiative.

4. Tang Ping ?躺平

"Tang ping," a Chinese term meaning 'lying flat,' represents a growing societal shift where individuals are consciously rejecting overwork and over-achievement, epitomized by the infamous 996 working hour system. This passive-aggressive resistance echoes the American hippie movement and Japan's herbivore men, emphasizing a preference for minimalism and psychological well-being over materialistic gains.

This trend aligns with the West's Great Resignation and has given rise to similar concepts like 'quiet quitting' in the US, where minimal work effort is the norm. It's also related to "bai lan," which signifies a more active acceptance of challenging situations instead of chasing unattainable goals. Far from being a withdrawal from society, those adopting 'tang ping' are seeking a balanced life, focusing on essential needs rather than excessive professional and economic achievements.

During my visit, I took the chance to explore this phenomenon with locals. Many younger individuals resonated with the concept, expressing skepticism towards the traditional work system and its rewards. In contrast, some older, established individuals dismissed it as western propaganda, citing examples of Chinese youth eager for opportunities and willing to go the extra mile.

These conversations, while not a comprehensive study, hint at a global youth trend seeking an alternative to the current norm. I find myself in agreement with this pursuit of something different, something better.

There is so much more to investigate, digest and cover from this short trip to Shenzhen. But not in this edition.? Got to ship this one out and look to incorporate the rest later as relevant.

Special thanks to old friends and new who I met on this trip and helped me with all the above and more.? Hat tip to Peggy Choi, Henry Chan, Eric Pan, David Li, Dan Han, Ellie, Peter and many more!

Quote of the week:

It is difficult to catch a black cat in a dark room, especially when its not there

I hope you enjoyed the eigth edition of “From the Edge” and found something that piqued your interest. I will look to post 3-5 such insights each week.

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