Made in China - A deep dive into the world’s most advanced hardware ecosystem

Jenny Baur BLOG

A few weeks ago, Adrien Desportes and I visited the Shenzen area to understand the Chinese manufacturing ecosystem. It was also a good time to explore various opportunities to produce some of our products in China.

During this trip, we saw and experienced an ecosystem most of us already benefit from. A lot of the products (not only high-tech!) we use on a daily basis come from the area.

During these 5 days we visited various types of companies:

  • electronics manufacturing service (EMS) producing PCB and PCBA
  • injection molding and plastics finishing plants
  • assembly factories assembling both of the above

Some of these companies have design houses to help you do design-to-cost optimisations or even entirely design your product if needed.

We also went to the Huaqiangbei, one of the biggest electronics markets in the world and we looked into the human and IP aspects of that ecosystem.

Electronics Manufacturing Service

We visited a relatively small EMS with ~ 350 employees and a 10,000 square meter plant.

The factory was full of Surface-Mount Technology (SMT) machines: solder paste dispensers, pick-and-place, reflow and wave soldering ovens… In addition to the rows of SMT machines, there were lots of factory workers setting up the lines, programming the equipment, testing the results using X-rays, cameras and eye balls.
Parts of the process that made economical and technical sense to be done manually happened on the other floors. This includes assembling some thru-hole connectors and other exotic components.

Modern and high-tech assembly machinery. The entire plant was very clean and neatly organized.

At each step of the process, there is a thorough quality control (QC) involved guaranteeing very low failure rates. Overall the entire process is very smooth with PCBs being transferred from one machine to the other mostly automatically.

The most interesting part of the visit, in my opinion, happened at the upper floor where the products were finished to be assembled and tested. We’ve seen test jigs and fixtures like we’ve never seen before. Although it seems very artisanal at first, it is very efficient. They hack all sort of things to do the testing: tablets with custom Android apps to generate various stimuli and signal patterns to interact with the PCB, cashier printers for traceability, cashier keyboards, cheap LCD screens and multimeters, Raspberry Pi and even Arduino when it makes sense. We’ve seen some crazier test jigs in other factories as well using a lot of analog multimeters in combination with some digital electronics to flash the firmware.

 Cashier machines all teared down with keyboards, LCD display and printer for building test jigs

Cheap Android tablet with a custom app to interact with the product

Analog test fixtures

Developing test procedures is hard. The entire challenge is to keep it as simple and quick as possible while maintaining a high test coverage keeping failure rates low.
This approach of building test fixtures has the advantages of being very low-cost and allows fast and easy(ish) development (we’re talking around 10 days including mechanical enclosures depending on the device’s complexity). This also ensures very fast deployments of multiple test stations to enhance the throughput of the manufacturing lines if needed.

 

 

We’ve also seen some pretty exotic test environments like a human-sized Faraday cage where operators can go inside and manually test RF devices.

When you have hundreds of BLE devices being burned-in somewhere in the building, these cages can come in useful for some specific measurements.

 

Human-sized Faraday cages

Injection molding and plastic finishing factory

Although not our primary expertise (we have experts helping us for that), we were curious to see injection molding and plastic finishing factories. We visited a fairly big factory that has tens of large injection molding machines capable of producing high-quality pieces for white goods. The most striking thing is that apart from the injection molding process, most of the work is manual. In fact, we’ve been told that the automation of some processes can be very tedious and produce very bad results. Human dexterity is much more efficient.

Example of an operator manually applying paint to each screw to ensure they don’t loosen overtime

Huaqiangbei market

One of the most interesting parts of this visit was the Huaqiangbei area. The electronics market is spread over several very large buildings with stalls packed into each floor. It is one of the biggest in the world. We spent an afternoon in the Huaqiangbei area and only saw a tiny part of the huge network of buildings, stalls and marketplaces.

Thousands of a few square meters stalls in those buildings!

You can find all sorts of things in this market: brand new electronic components as well as scrap components, LCD panels, assembled phones and other tech items, test equipment, components rejected parts from the factory lines that were then repaired, or sheets of PCBs in which only one of the components had failed a test… You can buy all those items individually or in bulk.

We’ve launched ourselves a little challenge while being there: find a specific a component we had a hard time finding (20 weeks lead times in Europe in the regular distribution network or $9 from certain European brokers with little availability). In less than 30mn we found a shop having it stocked in volume for $4.50 delivered within 3 days.

It’s part of the ecosystem’s strength: immediate availability of components either for prototyping or manufacturing. When in Europe, we need to wait days in the best cases and weeks in the worst, with the risk to get the wrong component, in Shenzen you would just go to the market and get whatever you need immediately. That’s why you can find HAXLR8R (a hardware incubator) or seeedstudio in the middle of the market district.

To get a better sense of some of the stuff you can find there, I suggest the video of the guy who built his own iPhone from components found in the market. You can also take a look at Bunnie’s Essential Guide to Electronics in Shenzhen to prepare your visit.

Human aspects

Beyond the technological aspects, there are humans. In all the factories we visited, the factory workers lived in dorms surrounding the factory and lived together. All of their living expenses were supported by the factory and their salaries are entirely savings or disposable income. The minimum monthly wage in the Shenzen area is between 1500 RMB and 2030 RMB (~ €190 and ~ €260) for 40 hours a week. The factories not being able to provide the workers with paid extra-hours have struggled to keep their employees. Most of the workers come from remote provinces with one goal: make money and leave. In fact, after the Chinese new-year the worker turnover is around 40%. It takes 2 to 3 weeks to get back to full production speed after that period (which is still insanely fast!). We were probably picking good factories to visit but overall, from what we’ve seen, working conditions were good and everyone seemed happy.

Another interesting fact, most of these factories employ women operators. According to the employers, women are preferred for their better dexterity and they also tend to learn faster.

Communicating in China was not an easy part. English is not spoken by a lot of people and the accent makes it sometimes difficult to understand. We found ourselves using sketches on a whiteboard with a few technical trigger words and equations to communicate with the engineers there.
Compared to a few years ago, we now have powerful translation devices in our pockets and it was a life-saver in many situations. I think language is not a major obstacle to go to China anymore.

IP aspects

From an IP point-of-view, it’s true that there little consideration for patents, tradecraft and secrets are shared in networks of colleagues, family and friends. The Shanzai phenomenon is very real, but it has grown way beyond that. The free circulation of knowledge is making Shenzen a self-sustaining innovation ecosystem of its own. Bunnie calls it the Gongkai. There are more and more giant Chinese innovators like DJIXiaomi or Espressif completely disrupting their markets.
It is fundamentally different from the Western IP concepts. I personally think of patents as a way to slowdown copy and not stop it or use it to make tradeoffs eventually. The real way to fight is to be moving much faster, always having the next thing and building a strong brand.

Conclusion

Shenzen is one the most fascinating places in the world if you’re in the hardware business. What was at first just a giant factory for companies attracted by the low-cost labor became a very well-established and unique ecosystem for hardware not only capable of producing anything at scale but also innovating on its own. I am convinced that it is impossible to reproduce that ecosystem elsewhere. What makes Shenzen the best place in the world to build your product is the following:

  • The entire supply chain for hardware is concentrated in a radius of a few hundred kilometers.
  • You can get access to some components you won’t find anywhere else.
  • Factory workers are generally high-skilled.
  • There is a unique expertise in certain domains.
  • It’s not the lowest-cost place for manufacturing but it’s still pretty cheap.

Shenzen has achieved a critical mass that attracts more and more people, resources and knowledge. Trying to compete with it is a total none-sense, we should at the opposite, try to build networks and connect with the Shenzen ecosystem, learn and take the best from there.

That being said, there are a lot of parameters to take in consideration before going to China for your product, at Rtone, we can help you with that!


A propos de l'auteur

Badr Bouslikhin

Electrical Engineer, passionate about HW, deeply interested in the startups ecosystem, former Formlabs EE.