A NEW AGE: STARUPS ARE TAKING OVER

Working area and cafe at Beehive Space

Working area and cafe at Beehive Space

Out with the old, in with the new, goes the simple proverb. As much as we hate to see the past vanish, the pressure of innovation always remains, pressing society onward. Over the past few decades, countless villages and towns have been rapidly transformed into a broad collective of mega cities that already dwarf plenty of the most massive population centers on earth.

Still, large populations are just one metric that builds pride as the pressure of progression continues to expand. For many in China, improvements are unlikely to halt, but it is perhaps the speed of these advancements that are in danger of slowing unless drastic action is made—and quickly.

For some time, Dongguan has been well known both locally and internationally as the world’s factory. Countless products from the technological to textile industries often trace their origin to Southern China. Billions were made and the people cheered on a new era of prosperity.

For many in China, improvements are unlikely to halt, but it is perhaps the speed of these advancements that are in danger of slowing unless drastic action is made—and quickly.

While the riches were nice, new complications were an ever-growing side effect. Workers who were once used to earning less than a few hundred dollars each month had suddenly watched their income climb almost four-fold in a matter of 10 years. In short, workers in industrialized China are becoming dangerously unemployable simply because they earn too much money.

Generally, it should certainly be promoted as a positive that payrolls are breaking budgets—the opportunities for young Chinese today are, without a doubt, much richer than their forefathers—but for business leaders, the future is troubling in its expected path. As fewer workers are willing to work grueling factory jobs for pay comparable to better jobs in China, owners are left with a hard decision: move operations to more affordable places like Vietnam or interior provinces in China or bust.

Taking a lesson from highly successful business centers like neighboring Shenzhen, Dongguan appears to have one foot stuck in the past, while the previously trailing foot steps boldly toward the future.

A honeycomb of famous faces at Beehive Space

A honeycomb of famous faces at Beehive Space

The smell of fear blown away
Despite the dramatics, Dongguan still holds a respectable twenty-second place ranking among Chinese cities, generating a GDP of approximately 620 billion RMB last year, but it is a drop from eighteenth place (on an estimated GDP of 550 billion RMB) in 2013

Statistics aside, people are talking. A sense of confusion is in the air about what happens next. Can factories pay better? Do unsatisfied workers return to their faraway homes? Will Dongguan’s impressive growth finally hit a wall and begin a slow decline?

Both businesses and government entities alike have assuredly been monitoring these inevitable transformations already seen in plenty of Western and Eastern manufacturing powerhouses and a response is already in action.

Mr.Rickey Lin, COO at Inno17 Space

Mr.Rickey Lin, COO at Inno17 Space

In a way, this difficult shift can also be seen as a muted blessing as millions of people reach higher stages of income and quality of life.

After all, a social goal of development is to improve the lives of people. Inevitably, the danger of a freeing market is that prices are effectively set at a point that people are willing to pay and understanding the complex mechanics of running a successful business can entitle some to effectively diagnose the problem at hand.

“[Over time] whole prices went up, including labor, property, salary, rent. Materials will go up and down, for sure, but our biggest problem is not the rise of materials, it’s the labor cost. Labor intensive industries like the textiles and shoes will eventually leave,” said Dennis Ou, owner of ODennis Furniture.

Despite many companies closing up shop or moving away, many employers would like to stay—their friends, family and home have been here now for many years—and find a way to continue success in a different way, if need be.

Countless Taiwanese companies, for example, have already undergone this geographical shift and after so many years of stability in Dongguan, some aren’t ready to start all over again.

“As we know, Taiwan is an island and has a limited market to support a product or a brand. We all know that a market of at least 50 million people is necessary for the best success. So, the Taiwanese people needed to leave the island to find new customers,” said Daniel Lin, CEO at Inno17 Space at Songshan Lake.

As costs are going up and profits are declining, this time it’s not a matter of too few customers, but an excess of more affordable, globalized competitors. How can a company fight against cheaper prices? Simple: make something better.

Presentation room at Inno17

Presentation room at Inno17

What’s up with all these startups?
Practically anyone who reads this story will be familiar with the technical transformation that much of the world has experienced in the last few decades. Thanks to a pioneering series of trade and tax deals, dusty factory jobs were rapidly moved from their place of origin to far off lands like Bangladesh and China, where they transformed vast farmlands into industrial sprawl.

Can factories pay better? Do unsatisfied workers return to their faraway homes? Will Dongguan’s impressive growth finally hit a wall and begin a slow decline?

Plenty of people benefitted from outsourcing with increasingly cheaper clothes, cars and iPhones. As more and more jobs moved away, youth gearing up to enter the workforce began to worry what kind of positions would someday be available. New tools had to be invented as education changed and the average worker from the post-World War II era had become a human calculator.

Meanwhile, there were a few gifted minds that eventually grabbed hold of new technologies and made big things happen in increasingly smaller spaces. The result gestated numerous famous companies like Xerox, Microsoft and Google.

Mr.Chang Jianming,Operations Director at Roadshow Space

Mr.Chang Jianming,Operations Director at Roadshow Space

The notion of taking an interesting idea, working on the project at night with a couple of friends in a garage and hoping to later sell it for massive amounts of cash isn’t exactly revolutionary, but has become synonymous with innovation and occupational freedom in recent years. In a way, the whole scheme of creating a startup is a bit like a modernized redux of the American dream. It offers a small team of hardworking people an opportunity to build their operation into a megalith, if they have a little bit of luck and a decent product.

Where an interesting thought used to have to be either argued into academic texts or only built using a full-scale factory, some of today’s most successful firms are often producing powerful projects right from their bedrooms.

Yet, bright ideas aren’t free. Just as an egg needs a warm, protected place to slowly grow is the exact idea of a startup incubator. Investment—and plenty of assistance—is key to a successful company.

Display area at the Roadshow Space

Display area at the Roadshow Space

This is where China is today
“Right now, the global economy has been declining and the manufacturing industry in China is facing transition. Innovation has already been mentioned multiple times in top national conferences in the past few years. To really implement a new system [of innovation], the most efficient way is probably using incubators. Guangdong, as the most important economic zone in the country, is in a leading position for incubators,” said Chang Jianming, Operation Director of the Chinese Academy Of Sciences Cloud Computing Center and National Technology Business Incubator at Songshan Lake.

Was it the manufacturing drop-off or the greatly improving technical standards in China that have brought about the new age? Probably both.

Thanks to a pioneering series of trade and tax deals, dusty factory jobs were rapidly moved from their place of origin to far off lands like Bangladesh and China, where they transformed vast farmlands into industrial sprawl.

The Chinese government is now taking note of the fiscal imbalance building in Dongguan as a result of rising costs and companies leaving to reboot in other places. In order to boost growth and commerce in the city, a number of incubators have been popping up across Dongguan, but mostly at Songshan Lake.

The point of an incubator is to help a startup company develop their idea into full-fledged business. This is mainly done through legal, technical, administrative and financial assistance. Some places may also offer a free, Spartan office and accommodation where companies can reside. Typically, startups will remain in an incubator for one to five years, depending on the rules of the establishment.

Mr.Daniel Lin, CEO at Inno17 Space

Mr.Daniel Lin, CEO at Inno17 Space

One such place is Inno17 Space at Songshan Lake, run by Daniel Lin, with cooperation from the Taiwanese Business Association. As one of the most recent incubators to open, Inno17 quickly put itself on the map after it recently held the first Startup Weekend in Dongguan. This conference-type event is partly funded by Google and aimed to bring together entrepreneurs to share ideas and try to create new companies. After the weekend was over, a committee voted to choose the most promising participants. The winners were later offered a space at Inno17.

This event was a rarity, though, because normally, attractive startups first apply to join incubators and then leaders in the organization will typically choose a few new groups each year, depending on the size of the space. “In general, we want them to first find their core values that will be linked to an effective business model. Under this premise, we are happy to cooperate with these companies. If we accept the companies who we know will never be able to succeed, it will harm both of us. However, if a team has a special quality and we foresee that they will succeed despite a bad assessment, we will accept them anyway, trying to make them work,” explained Mr. Lin.

Office space in Inno17 Space

Office space in Inno17 Space

Another Songshan Lake incubator that’s both older and more prestigious, the Chinese Academy Of Sciences Cloud Computing Center and National Technology Business Incubator, run by Chang Jianming, offers his own take on choosing new entrants:

“[When we first started] we had to collect certain specialized startups because we are a Cloud Computing Center. As the Center developed, we realized that if we limit ourselves to one industry, what we can do is very restricted. We have to go with the economic trend,” he described, while presenting a few products of some of the various companies working at the facility.

Of course, during periods of transition, the future might seem rocky, but there’s a lot to anticipate in the next chapters of Dongguan’s history.

While neither incubator was the first in the city—officially that was one that opened way back in 2006—they are perhaps a pair of the most ambitious. Another smaller, but also long-lasting organization is the Beehive Space, which also is at Songshan Lake, focuses a bit more on education, in addition to supporting startups. After a while, it seemed like everything is happening at the lake.

“Songshang Lake has become the national high-tech industrial park and focuses on many forward-thinking projects and invite many international research institutes, organizations and universities to do research here. Dongguan is now promoting ‘robots replace labor’ and the research base is at Songshan Lake. Basically, this project will need a lot of science researching centers,” said Lai Wanli, Beehive Space CEO & Founder while discussing the obvious clustering of innovation at Songshan.

Teams working at Inno17's Startup Weekend

Teams working at Inno17’s Startup Weekend

Colorful office views at Inno17 Space

Colorful office views at Inno17 Space

 

 

 

 

 

 

 

Sure, if money is pooled in one area, people—and companies—will come to claim their piece of it, but it’s not just that. Many also claim Dongguan is a highly specialized zone for all kinds of futuristic development just waiting to be tapped.

Outside the Roadshow Space at Songshan Lake

Outside the Roadshow Space at Songshan Lake

“The startups in Dongguan, compared to the ones in Guangzhou, Shenzhen, and even Beijing and Shanghai, are probably the best ones because most of them are from businessmen who already had their first startups as factory owners. These people earned a lot of money building up Dongguan’s industrial space, but as resource and material prices went up, they had to find a solution to evolve their businesses. Since they have stable financial foundations and already have experience managing businesses, they are not afraid of failing. Plus, they are still in industry circles and have all the upstream and downstream resources. They have bigger chance to succeed,” mentioned Mr. Chang.

Turning the lights back on
Really, creating incubators and boosting investment aren’t the only things that matter for most. Talking to many people involved in this unique business community, there’s a clear impression that everyone’s in this together to help the people, city and country grow and evolve, as they build and create technologies aimed to change the world.

“I want to help give these startup owners the right idea. ‘Don’t work for money; work for your idea and make it happen. Let’s help you with money and accelerate into the future together.’ We want to help them to grow their careers. They have a dream, let’s go beyond that,” said Rickey Lin, COO at Inno17.

“I want to help give these startup owners the right idea. ‘Don’t work for money; work for your idea and make it happen. Let’s help you with money and accelerate into the future together.’ ”

Of course, during periods of transition, the future might seem rocky, but there’s a lot to anticipate in the next chapters of Dongguan’s history. The city just built its first of many subway lines—and will soon be connected to its hulking neighbors—taller and larger skyscrapers are going up and property prices are higher than ever. Without a doubt, things are improving, just not in the same ways as before. Naturally, some may find that challenging.

Participants at the first Startup Weekend

Participants at the first Startup Weekend

“Investment will move to lower cost areas; this is the law of the market. It’s very clear now that if factories want to survive, they must have innovation and they must upgrade,” stressed Mr. Lai.

If there’s anything to be learned by looking at just a few of Dongguan’s very numerous incubators, it’s that the city isn’t quitting. The government, the companies and most importantly, the people aren’t going to give in to a few momentary setbacks.

“I’ve been here for 11 years and I believe that in 20 years, we’ll see the city become one of the leaders in the country. For many years, Dongguan has accumulated a wealth of prized resources in technology, investment and processing. Once they all come together in transition, things will succeed very fast. It’s also a tolerant place for everyone here, which is good for new ideas. For these things, I believe Dongguan will develop faster than many other cities,” Mr. Chang told proudly.

For all the people that call Dongguan home, count yourself lucky. You’re witnessing some incredible history being built right before your eyes that will take the old factory of the world and upgrade it to be the foundation for countless incredible technologies in the near-future and far, far beyond.

FEATURED STARTUPS

Dream Walker

Rockice Chen,Founder

Rockice Chen, Founder

What do you make?
A smart, wearable bra that monitors for cancer, among other things.

When were you founded?
August, 2016

Which incubator?
Inno17 Space, Songshan Lake

How big is your team?
Five people

Why did you choose this incubator?
We wanted to create here because we thought we could find a highly entrepreneurial team, plus a wide variety of individual interactions in a fertile place for growth.

What do you expect by working here?
We believe this space will bring us more positive energy and creative ideas. It will also be great to stand on Inno17’s public stage to give us more brand awareness and more international exposure.

Will you stay in Dongguan after you finish at the incubator?
Yes, our team will stay in Dongguan creating roots with the local culture and businesses. In the past, Dongguan used to have the reputation of being the world’s factory, but with the now increasing decline of traditional manufacturing industries, many companies are going through a transition. A number of those companies never met a crisis, so our goal is to share experiences and rebuild the traditional industry, combined with new creative concepts, for success in the world again.

Xitong Education

Huang Liang, Founder

Huang Liang, Founder

What do you make?
An after-school program that teaches children how to survive in both the city and the wild.

When were you founded?
In 2014, as the first startup for Beehive.

Which incubator?
Beehive Space, Songshan Lake

How big is your team?
10 people

How did you come up with the idea to make this school?
When I was in US, I learned about Boy Scout activities. In China, we have none, which is a problem with exam-oriented Chinese education. So when I came back from US, I thought this could have great potential in China.

What do you expect by working here?
Now, our company is working with Beehive, so we have flexibility to stay as long as we need. The whole team is here and it’s a good place to work.

Will you stay in Dongguan after you finish at the incubator?
The company and people are from Dongguan, so we will almost certainly stay here for the near future. Especially as the city and people grow larger.

YUN SHE

Wang Junwu, Brand Director

Wang Junwu, Brand Director

What do you make?
An e-commerce store to sell modern, urban-style Chinese Furniture.

When were you founded?
2014

Which incubator?
Roadshow Space, Chinese Academy of Sciences at Songshan Lake

How big is your team?
Eight people

How do you sell your products?
Now our sales platform is on popular websites JD and Taobao, but after we gather enough fans and have a stable product inventory we will build our own system. Still, no matter what, we don’t plan to ever leave these established sales websites, like JD and Taobao.

How did you choose to work at this incubator?
First, we like Songshan Lake because the environment is very good. Second it’s close Dalingshan, which is the number one furniture exporting town in China.
Will you stay in Dongguan after you finish at the incubator?
We will probably stay in Dongguan and Songshan Lake because we have the supplies and industrial chain in Dongguan. Many factories that require labor will move, but furniture doesn’t need much people, especially for wooden furniture.

CELARUS

1016_cs9What do you make?
Sub-micron metal material dislocation Chemical.

When were you founded?
June, 2016

Which incubator?
Inno17 Space, Songshan Lake

How big is your team?
Eight people

Why did you choose this incubator?
It has a very good platform and complete package at the juncture of Shenzhen, Guangzhou, Dongguan. It is also near a complete factory supply chain, which can support a complete production and enhance product advantages.

What do you expect by working here?
More opportunities for cooperation and creating new business opportunities, which should combine to create new products. In other words, sharing each other’s resources. We feel how you feel and want to make the world less painful. It is our company’s purpose.

Will you stay in Dongguan after you finish at the incubator?
Dongguan will become our roots as we grow to expand in China, the continent and even the world.

WORD DAILY

Qiu Jifu, Founder

Qiu Jifu, Founder

What do you make?
An app designed to expand vocabulary, similar to the US program called Vocabulary.

When were you founded?
2014

Which incubator?
Roadshow Space, Chinese Academy of Sciences at Songshan Lake

How big is your team?
20 people

How did you come up with the idea to make this app?
One big problem of English learning in China is over-emphasizing words memorization. We want to push speakers to learn how to use words in real cases by embedding videos and audio for each word.

What do you expect by working here?
I was in Shenzhen working the video game business. I came in 2014 especially for this incubator because of the reputation of Songshan Lake and Chinese Academy of Sciences.

Will you stay in Dongguan after you finish at the incubator?
I’ve been in Guangdong for 10 years and will stay here until the project succeeds. To finish this app will require at least three to five more years. My plan now is only focusing on our product development.

 

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