Manufacturing electronics in China (Part 2)

This article is the second of two, reflecting on a recent trip to China. As explained in article one, I joined a cohort from Eighteen04 in Newcastle, Australia, to explore the electronics manufacturing powerhouse in Shenzhen, China. The journey was a great success, thanks to the amazing guidance of Brinc.io.

Entering China

The Chinese border is 30km from Hong Kong Central. It takes about an hour by train including a couple of very quick line changes. The international train is just like the city train though - carriages are wide open with more standing than sitting and usually little room to move. The northern Hong Kong countryside, while giving way to more of the natural dense jungle, is still littered with the identical apartment skyscrapers and incomplete concrete overpasses that appeared closer to the city.

 

At the border we first had to pass through immigration to leave Hong Kong. It hadn't occurred to me at first that this was just as significant a process as leaving via the airport - it required a departure card and whatever mysterious passport checks apply. Some of our party passed through without issue while others drew serious looking officials and serious, prolonged Chinese conversations before also being passed through without further word. Having officially departed Hong Kong, we had a short walk through international no-mans land before restarting the immigration process at the Chinese checkpoint on the other side. There were more serious forms to complete that were never even glanced at, and more serious tapping on computer keyboards before we all finally arrived on Chinese land.

 

Many people live in Hong Kong and work in China, and complete this song and dance every day. Apparently many choose to drive instead because the immigration process via road is much swifter.

 

This photograph is of the river that forms the border - China on the left, Hong Kong on the right.

 

Huaqiangbei Electronics Markets

After checking in to the oriental Fortune Hotel, our first stop was the Huaqiangbei Electronics Markets. This phenomenal place is a must-see for any electronics enthusiast in Shenzhen. The pedestrian mall is lined on both sides by multilevel markets with hundreds of vendors occupying every floor. One of the biggest and oldest players is SEG, so the area is often known as the SEG Electronics Market.

Entering the markets is a bewildering experience. There are bumper to bumper stalls showcasing all manner of electronic wares from individual electronic components to completed products. But any order or reason is not apparent. There is no directory and no guidance, so finding particular components is a time-consuming process with a high likelihood of failure. Shopping for completed products is equally frustrating since many products have no brand name or even a model number, so it's a real lottery.

Amongst the markets are many more traditional shops selling completed products. In fact, within 500m there were at least four "Apple Stores" selling things like the "iPhone 6.5". If you asked especially, you could even buy genuine Apple products from these stores, but brand name products were generally at no discount to what you could find online anyway. Sometimes you didn't need to ask especially, as hawkers would approach you on the street with the genuine article in their hand, ready to show you that is really was the 128GB version and that you could buy it then and there.

Dominating the markets were purveyors of every electronic trend you can think of - iPhone cases, Lightning cables, powerbanks, hoverboards and drones were stacked to the rafters at every fourth or fifth store.

The repetition was exhausting. In-between were the dying trends of six months ago. Dusty boxes of superseded tech that rolled off hyper-efficient production lines and now desperately needs a place to go.

I asked several people why the markets were there. Clearly there is far too much stock piled in undiscoverable booths to be profitable. The most common explanation was that the market stalls are fronts for factories so the factory capabilities can be showcased. But if a customer is looking for a factory capability, I couldn't see how wading through shop after shop of charging cables to possibly discover some necessary part manufacturer would be anywhere near as efficient as simply searching online or using a directory.

 
 

After a bit of aimless exploring to get a feel for the place, I set myself a few targets to test some theories on using the markets for more than just an interesting experience.

  1. Buy a replacement set of Bluetooth headphones.
    I go through Bluetooth headphones at an alarming rate. I've had everything from $150 high-end units to cheap knock-offs that are identical to name brands except the logo is missing. I'm in the market for another replacement so gave the markets a whirl. On the 7th floor of the first building I finally found some. There was nothing I recognised so I moved on and found another dozen vendors on the 11th floor. Still nothing I recognised so I enquired about one that looked promising. Through broken English I was pointed to an alternative model that I was assured was perfect for me. I don't know what was wrong with the model I liked but the salesman assured me this one was good and excitedly pointed out that it had "Bluetooth" written on the box. He even unpackaged it, paired it with my phone and stuck the buds in my ears to show that it worked. "How much", I asked. "How many?", "Just one.", "Hmm". He thought about it for a minute and quoted about $30 Australian. Cheap for Bluetooth headphones but more than I'd put in a pokie too. I tried to do some research but there were no brand names and I could not find reference to the product anywhere online. I tried another shop, but was just shown another no-name alternative with no product identifier and went through the same rigmarole to find out the price. I eventually returned to the stall on the 7th floor and spotted a pair identical to the ones I had tried on the 11th floor. Figuring I wasn't going to do much better, I asked "How much?". About $50 Australian, but he was willing to barter. I offered about $30 Australian. He said no and turned away, conversation over.

  2. Source some SMA right-angle connectors.
    I buy a few of these specialist components and they're difficult to source in Australia. What better opportunity to find a more direct supplier? Sure enough, down a dark and crowded alley on floor 9 I found a booth with floor to ceiling boxes of SMA components. On the counter a makeshift production line was in progress - a lady removed antenna cable extensions from their plastic wrap and dropped them on the counter, while a young girl sifted through cardboard boxes of ferrules and used a hand tool to crimp them to the SMA connectors. The completed extension assembly then got dropped somewhere with available space - the floor usually - so the older gentleman could gather them up and put them back in plastic sleeves. I was amazed to see how these highly delicate, sophisticated pieces of electronic cabling come together, and here it was happening in front of me. I asked about the box of hundreds of right-angle connectors. The shopkeeper acknowledged me and kept on with his work. A minute or so later, noticing I was still standing there, he pulled the box off the shelf and dropped it in front of me. I confirmed they were the right gender and asked how much. "How many?", "I don't know - 10? 50? 100? What's the minimum?". He grumbled something in Chinese and returned the box to the shelf. After another couple of minutes I figured the conversation was over and left.

  3. Find a Chinese supplier of plastic enclosures.
    I find sourcing plastic enclosures very time-consuming. If you're not picky, Jaycar have plenty of small screw-shut boxes and stacks of aluminium extruded cases. But if you need plastic material, ingress protection, hinges, locks, mounting points or anything else specific, it can be very difficult to search and secure the right product. For my current needs I import from the USA at about $200 per shoebox sized enclosure. I know there's a lot of room for cost down there. I searched the markets for purveyors of plastic enclosures and found none. There were piles and piles of aluminium extruded cases, most of which are stocked in Jaycar in Newcastle. But none that I could see that had plastic. They might have existed, but who knows where?

The final score for my targets: 0 from 3. I did manage to buy a cute powerbank and a USB drive for presents, and a cheap infrared temperature probe for the lab, but I could not help but feel I still hadn't fully appreciated what the markets have to offer. It might take a few more days to fully appreciate what can be achieved there.

Factory Tours

Over the next two days, Brinc escorted us to four different factories in the Shenzhen countryside for a tour and a conversation with their teams. The first was Shenzhen Valley Ventures, or SVV, who had a huge welcome sign on an LCD TV waiting for us in the foyer.

That afternoon we visited Colinda, a plastic injection moulding and screen printing factory a good hour away by bus. We were taken on a noisy front row tour through the foundry, past each of the injection moulding machines and along the inspection and printing conveyor belts.

 

The next day we headed northwest and visited Vast-E, a small volume factory with PCB manufacturing capability and a production line busy pumping out assembled electronic hoverboards. And finally, we toured the immense ETL factory, where the proud owners demonstrated their extensive quality assurance processes and very well equipped production and testing facilities.

 

 

 

At most of the sites a welcoming party invited us to sit, brought us bottles of water and then carefully handed each of us a business card to introduce themselves. We were usually treated to a presentation slideshow. Our hosts were always extremely gracious. But the presentations were invariably cringeworthy. The mistranslations, the broken English narration and the corny mission statements were comically bad. Given the wonderful hospitality it seems unfair to criticise, but how do you look past such fundamental communication disconnect when trying to establish a business relationship? Their English was infinitely better than my Mandarin, but our common ground would barely support a well-meaning friendship with understanding replaced by awkward smiles.

Shenzhen Night Life

On our second night in Shenzhen we headed out to sample some night life. After a hair-raising taxi ride darting through Shenzhen traffic with an uncommunicative driver on a self-assigned mission, we arrived at the Coco Park region.

The scene was very lively with lots of culturally interesting restaurants and bars packed in nearby each other. We did our best to sample a proportion of the exceptionally broad range of craft beers at TAPS (many of which were Australian) before moving on for a hot pot dinner.

I thought I'd had hot pot before. It didn't sound particularly unusual. I couldn't have been more wrong. Hot pot dinner was extraordinary. We ordered a keg of beer and were then invited to select our "ingredients". Very few of them were recognisable and there were no English labels. Certainly nothing looked like a meal so we each grabbed a few different dishes, mixed up our own special sauces from the condiments stand, and brought it all back to the huge double table. Buried in the centre of each table was a bubbling cauldron of oil and spice. We took turns dropping cabbage, entrails, rare beef, frogs legs and all manner of unidentifiable edibles into the vats. Somewhere between a few seconds and an hour or two later, we did our best to retrieve our ingredients and sample our creations. Some of it was terribly spicy, some of it terribly cooked, but generally it was terrific!

Return to Hong Kong

With our suitcases packed with several more drones and a great deal more USB cables and fidget spinners than on entry, we began our departure. Back through the x-ray scanners that no one was looking at, back on to the hour-long standing train ride and back to the relative familiarity of Hong Kong.

Late that night we caught up for dinner together on Kowloon - the island immediately to the north of Hong Kong Island. From the tip of Kowloon we could look south across the bay at the famous Hong Kong light show. The laser lights were dwarfed by the monstrous illuminated billboards on the skyscrapers. They were staggeringly bright, and loudly proclaimed their particular form of comical Engrish in 40m tall lettering.

The next day was Friday and a chance to debrief, make use of a functional Internet again, learn a little more about Brinc and make plans for the homeward journey.

Brinc were very professional, very engaged hosts and provided an excellent China Trip. They clearly had done a tremendous amount of research and relationship building at the factories to be able to offer us such privileged access. And they did a great job of shepherding us through the chaos. We were free to gaze at the sights that took our fancy while they made sure we were on the right train or were going to have somewhere to eat. A month in Shenzhen on my own would not have given me the awareness and insight that a week with Brinc did.

I did find the Brinc culture off-putting. I've always found the American west coast melodramatic enthusiasm a little painful. I find it hard to trust someone who finds everything "super" and "awesome", and talks in acronyms and buzzwords. The fascination with high volume, low value consumer electronics is also something I don't share. This very popular fixation on forming urgent cults around transient trends by any means possible doesn't excite me a great deal. But these are personal objections. When I lay them aside, it's quite clear that Brinc is doing a stellar job of helping founders bridge the crucial chasm between idea and successful manufacture.

Epilogue

Cathay Pacific were great to fly internationally. Service was efficient and professional, and the free on-board entertainment unit was well equipped. In between movies on the way home, I came across a solitaire game called Vacancies (better known as Gaps).

The game had the terribly addictive quality of being tantalisingly winnable, with a hard to grasp optimal strategy. After playing many games with an average success rate of about 1 in 6, I was intrigued about the actual complexity of the game and whether there was a winning strategy. Not having access to the Internet on an international flight to draw upon the world's knowledge, I pulled out my laptop for a bit of DIY computer science instead.

By the time I landed in Sydney I had an algorithm playing a few million moves a second, performing a brute force search for the best way to play any particular hand. Turns out that's not nearly enough to adequately explore the solution space, so I added some optimisations on the train ride to Newcastle. By the time I arrived home the algorithm was multi-threaded and highly optimised, reaching about half a billion moves a second. Once home, even running flat out on four cores for days on end the optimal solution remains elusive.

That was enough curiosity piqued to warrant sharing with the world, so here's the sourcein all its brute-force, laptop-developed, Internet-free glory.

Manufacturing electronics in China (Part 1)

In early June 2017, I had the fortune to be part of a contingent of electronic hardware entrepreneurs from Newcastle, Australia, who spent a week exploring the culture, business and scale of the manufacturing Mecca in Shenzhen, China.

Our party of ten was represented by the Clean Tech and Smart City incubator, Eighteen04, and the trip was organised by one of its residents, Dr Andrew Mears of SwitchDin. Our tour guides and experts on the ground in Hong Kong and China were the exceptional team from Brinc.io.

Gaining Entry

To enter China for commercial and trade purposes we needed an "M visa". China has a long list of different visa categories, but they all seem to boil down to much the same requirements and identical costs. The requirements are laid out well on the China Embassy website. Supplying your passport and passport copy is pretty standard, but the additional photograph has some pretty strict requirements on size and framing. Not many places will guarantee compliance, but I took a punt at a 24-hour self-serve kiosk at K-Mart and got through, despite the friendly assistant's doubts. Given the cost and time constraints of getting passport photos done on short notice, discovering the 24-hour K-Mart kiosk was a big win.

The application form is long and ugly, and takes quite a bit of cooperation from your hosts in China. They must provide an invitation letter and details such as the itinerary must match. It's not possible to be ignorant of the Chinese details of your trip!

 

Six and twelve month visas are not available to first timers so we opted for double entry for $140. Proving that analog is not dead in the Middle Kingdom, the "Chinese Visa Application Service Center" that processes the application sticks the visa itself to a page in your passport. It's valid for six months and allows 60 day stays for each entry.

 

Arriving in Hong Kong

Our home base for the China trip was Hong Kong Island, Hong Kong. "Central", the CBD on Hong Kong Island, is a 30 minute ride on the MTR express train from Hong Kong International Airport. The trip costs 100 Hong Kong Dollars, or about $20 Australian, and WiFi is provided on board. The initial Hong Kong experience is relatively familiar for Western travellers, with lots of spoken and written English and a civilised system of trains and tickets.

Apart from the TVs blaring Cantonese ads on the train, the most striking feature of Hong Kong on first arrival was the elaborate construction activity. Low-lying artificial islands, visible on approach to the airport, littered the seascape. Enormous concrete span bridges, mostly incomplete, wound their way around the islands as if they were coaxing vehicles into the developing regions. The cargo handling facilities at ports stretched on for acres, well equipped for staggering levels of trade. And the feature that was to become iconic of my Hong Kong experience - towering apartment skyscrapers that erupted from the landscape, surrounded only by other identical apartment skyscrapers.

My hotel was not far from Central station so I took the opportunity to wander my way there, zigzagging across the city as sights took my interest and my bearings retuned. Not far from the station I came across a large group of people, comfortably occupying the footpaths as if they were at home. They were playing cards, combing their hair and painting their toenails, sitting on cardboard sheets that formed a continuous area along the path.

Having passed through Sydney Central Station earlier that day, the sight of homeless populations congregating around transport hubs was familiar. But this was different. The group seemed quite social and had all sorts of personal effects with them from phones to make-up kits. Puzzled, I snapped a photo and turned the corner. To my surprise, the congregation I had photographed was a tiny fraction of the phenomena. Along the next street the cardboard village stretched as far as the eye could see. There was food and drink, chatter and reading, elaborate string and cardboard constructions and even a few tents. The inhabitants were adult aged, of Asian appearance, and - it finally dawned on me - all women. It occurred to me briefly that I might have stumbled upon the line up of fans to some Asian heartthrob sensation, but it was a weak theory.

heath blog5.jpg

I discovered later that they are all foreign (mostly Filipino) domestic workers, aka "helpers", who work as live-in maids 6 days a week. On their statutory Sunday off, they congregate to get away from the isolation of living in their employer's homes. Many are educated professionals, but can earn three times as much as a maid in Hong Kong than as a professional in the Phillipines. It's quite staggering to think of the social consequences of disparate economies amongst geographic neighbours.

 

Getting Around Hong Kong

Hong Kong Island is hilly. There's even an elevated escalator that runs right through the center of the CBD to ferry pedestrians from the low-lying areas. The streets are narrow and the footpaths jut this way and that, which make the towering apartment blocks even more imposing. The climate is either hot and humid or very hot and very humid, and the city seems to run on constant A/C. The shopfronts are hard up against the footpaths and the apartments hang overhead, so navigating the streets is a sweaty affair with alternating bouts of cold A/C blasting out of a shopfront onto the footpath, or wet A/C condensation dripping on to your head. Despite this incredible density, traffic flows smoothly and the city is highly walkable. Clearly here the car is not king, and a system of subways, alleys and escalators keeps people moving.

For keeping in contact, navigating the city and discovering points of interest, there really is no substitute to having the Internet on a mobile device. The WiFi in the hotel was good, albeit intermittent, and while there was an above average smattering of public WiFi hotspots, they are really too unreliable, insecure and intermittent to justify the frustration of using them. Surprisingly, there was a large smartphone sitting in a cradle in my hotel room, lit up with a rich animation enticing me to take the phone everywhere I go. At first I was very sceptical about such a generous hotel inclusion, but came to really appreciate having an unlimited data, unlimited local call mobile during my stay. Not having to lurch from hotspot to hotspot, or buy and activate a foreign SIM, gave a great deal of freedom to explore without fear of becoming stranded. Now I'd really miss this feature if I were to travel to another foreign hotel.

The phone ran an Android based OS called Handy, bundled with a bunch of tours and deals type app, but also familiar apps like Chrome, WeChat, Facebook and Google Maps. There was even a function to secure wipe all your locally stored personal data that apparently would run automatically at the end of my stay. On the other hand the bundled guide apps were comically useless - I scrolled through looking for some dinner suggestions and found this gem, captioned with "The signature disk toast with scrambled egg is a must-have! The scrambled egg is made with fresh cream and sugar, which gives a creamy texture and strong milky taste". TripAdvisor probably doesn't need to worry about being displaced just yet.

 

Speaking of restaurants, Hong Kong's night time district is packed with bars and eateries. From eclectic hole-in-the-walls to underground beer halls and from Chinese to Lebanese cuisine, you didn't have to go far for a new experience. However, at an average price of about $14 for a beer and $30 for an entree, the Australian dollar didn't go far either.

 

 

 

Introduction to Brinc.io

After an evening to acclimatise, we all gathered for the first time at Brinc headquarters on the top floor of the old Police Marital Quarters (PMQ) in Central Hong Kong. We were grouped in a WeChat channel and this quickly became the primary method of organisation - everything from contact exchange to itinerary updates to restaurant map links and location sharing was handled within WeChat. In many parts of China WeChat is even the primary method of paying, but where we travelled cash was king.

We met a few members of the Brinc team, including the incredibly animated @BetaBay, as well as a resident of their accelerator, Antoine Markarian, CEO of Kello. We learnt Brinc's primary business was their accelerator, which involves a shortlisting pre-accelerator, and then a very hands-on intensive 12 weeks to get their cohort to market. Although Brinc was passionate about all aspects of the Internet of Things (IoT), their speciality was high volume consumer goods. Despite having Silicon Valley origins, their base in Hong Kong made a great deal of sense - time and time again they had seen founders hit a wall when it came to manufacturing - struggling to effectively cost, forecast, quality control and protect their inventions through the production process.

Shenzhen in China is the undisputed world powerhouse when it comes to mass manufacture of electronic goods, but for a foreigner, operating within China is very challenging.

The laws, customs, language and culture all provide complications for what is already a difficult time for a founder. Hong Kong has very effective trade logistics both with China and with the rest of the world, and has done an excellent job of positioning itself as the interface between Shenzhen and the Western business world.

Our primary contact at Brinc was Edwin Lee, who went above and beyond to ensure our travel experience was trouble free. From money exchange to organising translations to recommending restaurants to purchasing train tickets, Edwin was a very friendly, very attentive tour guide, host and all round good guy. Despite our best efforts at getting lost, Edwin managed to shepherd us all intact, from Hong Kong to China and back again.

 

Tune in for part 2, where we travel just 30km from Hong Kong Central, and enter a whole new world in China.


 

5 Essentials for Successful Engineering Consultancy - Part 1

After seven years working for a small electrical and electronics engineering consultancy, I’ve taken a keen interest in identifying features that best predict the outcome of a consultancy project. To maximise the potential for Newie Ventures' clients, I’m taking these observations public as our manifesto, our thought process, and as an open contract for success.