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Huaqiang North: A 1.45 square kilometer private enterprise protection zone

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Editor’s Note: This article is from the WeChat public account “Jia Ziguangnian” (ID: jazzyear), the author Liu Siyao, editors match Q, 36 氪 authorized to release.The original title “a 1.45 square kilometers of private enterprise protection zone | Jiazi Guangnian” winding wires, flashing LED lights, stacked circuit boards … Mexican girl Vasquez expertly walked around, looking for electronic components.In this office space of about 1000 square meters, there are scattered parts, semi-finished products, workbench, busy hardware entrepreneurs from different colors in the United States, Europe and Asia.From 2012 to today, there are 60 hardware startup projects, which are sold all over the world, such as head-mounted depression treatment equipment, small household yellow meal breeding equipment, liquid transfer robots… here is the home base of well-known hardware incubator HAX, gathered hardware entrepreneurs from all over the world.However, the dreamy HAX is not in Silicon Valley, Austin, and Tsukuba. It is located in Futian District, Shenzhen, a 1.45 square kilometer chaotic trade market.The Chinese public is actually very familiar with this place name – “Huaqiang North”.For a long time, Huaqiang North, which has a strong supply chain supporting ability, has always had a place in the national economic decision-making, but it has been unable to get rid of a series of stereotypes: plagiarism, follow-up, infringement, low-end low… This makes Huaqiang North the other side.Long-term neglect: In the eyes of HAX founder Cyril, Huaqiang North, which is considered to be low-end, is full of innovation. He calls it “hardware Silicon Valley.”Zach, the HAX director who always rides an electric car in the Huaqiangbei electronics market, said: “Drumstick hardware in Shenzhen is like a workshop that is as big as the whole city.” For many years, it was Huaqiang North.The free wild temperament that makes people “slowly toss” has created a strong supply system consisting of trade and production.If Apple’s press conference is an annual Michelin five-star feast, then Huaqiang North is a midnight chain of hardware products.All kinds of “steamed masters” of all kinds of teachings can satisfy all your fantasies about various consumer electronics including Apple: In April 2017, Silicon Valley programmer Scott Allen came to Huaqiang North, within one day.Buy all the components, DIY an iPhone 6s, only spent about 2,000 yuan.Allen uploaded the purchase and assembly video to YouTube, and the number of hits quickly reached 21 million.The highest comment is meaningful: “This may be the only iPhone assembled by Americans.” Just yesterday morning, Apple held a press conference to launch a new iPhone. The first three shots were ridiculed as “Bathmaster”.At the same time, the market was disappointed to miss 5G.But ridiculing Apple is someone else’s business, Huaqiang North still does not leave Apple.Once again, Huaqiang North’s mobile phone shell makers discovered the exact size of the new iPhone in advance through unrecognizable underground sources, and let go of the gamble’s heroic spirit a few months ago, let the production line go.horsepower.So at the same time as the press conference, when you open Taobao and search, Apple has not arrived at the shell, you can buy the latest version of the iPhone 11 mobile phone case (there are 436 people paying).The delivery location is not unexpected, Shenzhen.Cool HAX, a fast-moving iPhone and grasshopper mobile phone shell manufacturer, this is Huaqiang North.Yannan Road in the east, Huafu Road in the west, Hongqi Road in the north and Shennan Road in the south. Huaqiang North, which started 21 years ago, is the largest distribution center for electronic products in Asia.With strong logistics and capital flow, it affects the development of electronics industry in South China and even in China. The number of employees exceeds 200,000, and the average daily traffic is about 500,000. The annual transaction volume exceeds 300 billion yuan.It is said that a traffic jam in Huaqiang North can trigger fluctuations in the national electronic retail market and accessories prices.From the fish pond farmland, to the workshop, to the bustling business district where Wanshang gathers, what is the strength behind the refinement of Shenzhen and even China’s super supply chain?This article will focus on the development of Huaqiang North and the crisis it faces with the larger world. 1. The fateful turn: Two adventures spurred Huaqiang North 2. Trade made a fortune: Huaqiangbei’s road to prosperity 3. Several upgrades:The birth of a supply system 4. Reflections on the situation: How does the Shenzhen miracle continue?Regarding Huaqiang North, which attracts gold diggers and innovators from all over the world, you need to know that there is no low-end and “cottage”.1. Huaqiang North, which was born by two adventures, dialed back to 1978. Comrade Xiaoping opened the country. This is the starting point of Shenzhen and the starting point of Huaqiang North.After the establishment of the SAR, the central government opened a series of joint venture controls, export controls, and tax cuts, and foreign capital began to flood.A series of companies including Huaqiang Electronics, Aihua Electronics and Zhenhua Electronics have emerged in Shenzhen.Among them, the location of Aihua Electronics is the Aihua Road in the south of Huaqiang North in the future; the location of Zhenhua Electronics is now Zhenhua Road, which runs through Huaqiang North.By 1985, there were 178 electronic companies in Shenzhen, accounting for half of Shenzhen’s total industrial output.At the same time, a cadre from the south of Beijing began his story of Shenzhen’s “entrepreneurship”. At that time, he did not know that he would become one of the key players in the creation of Huaqiang North.He was Ma Fuyuan, the 54-year-old director of the Office of the Ministry of Electronics Industry.In July 1985, he was dubbed by Liang Xiang, secretary of the Shenzhen Municipal Party Committee. His original mission was to solve the problem of long-term leadership and multi-party approval of 178 companies.Through the integration of Ma Fuyuan, these complex electronic companies with complex relationships were integrated into a large-scale electronics group, Shenzhen Electronics Group, in the same year, managed by the Shenzhen State-owned Assets Supervision and Administration Commission.Three years later, Ma Fuyuan changed the name of the official “Shenzhen Electronics Group” to SEG Group, which corresponds to the entrepreneurial spirit he advocated: Saiguo Ge, Sai personality, Sai character, and competition style.In the actual operation of these three years, Ma Yuanfu found that sorting out the management relationship is only the first step. It is another thing to really curb the development of the throat of the Shenzhen electronics industry – the supply system.Under the planned economic system, components are production materials, and the docking of downstream manufacturers and upstream parts suppliers must pass the Ministry of Electronics Industry.By 1988, although the Shenzhen electronics industry had developed for ten years, the supply system was still dominated by the “coordinating deployment” in the planned economy era.The process is: At the annual meeting of the Ministry of Electronics Industry, the production company reports how many products to be produced this year, such as the color TV for the TV set and the movement for the VCR. These requirements are summarized and then distributed to the components by the electronics industry.manufacturer.This resource allocation method is extremely inefficient and has been unable to adapt to the rapid development of the Shenzhen electronics industry.At that time, many companies in Shenzhen often could not purchase the necessary components, so that for small things like resistors and capacitors, they had to travel far and wide to Beijing and Shanghai.In addition, imports are also a hurdle.Shenzhen electronics companies do not have the right to import. Imports must be approved at various levels. The procedures are extremely complicated. If the documents are not easy to come down, the components can be shipped to Shenzhen, but they have often missed the ever-changing market of the electronics industry.In order to solve this legacy supply chain bottleneck, Ma Yuanfu decided not to rely on the construction of the electronic supporting market in the name of SEG Group.He will vacate the 1,400-square-meter site on the first floor of the office building, use it as a showroom, and set up more than 100 trading booths.On March 28, 1988, the SEG Electronics Supporting Market was officially opened. This is the starting point for Huaqiang North as a distribution center for electronic products.The SEG electronic accessory market, which has been freed from coordinating the deployment of shackles, has developed a strong vitality. By the end of 1988, there were more than 200 domestic and foreign manufacturers entering the supporting market, and the turnover reached more than 4 million yuan.It is not easy to make this breakthrough. In the past, Ma Fuyuan still had a lingering fear: “This matter is generally not easy to approve. This supporting market is opposed to the national planned economic system. It is opposed to the work, not allowed.Big risk.” Huaqiang North, which started from the SEG market, was an unexpected product that broke through the planning system. Its subsequent prosperity also originated from this freedom.Only the market-oriented trading venues are not enough. The electronic supporting market can be built from scratch, and the backing depends on the industrial support of the electronics industry. This is inseparable from another adventure of 1988, another person, Guo Taiming and him.Foxconn.Foxconn chose to set up a factory in Shenzhen, which is quite accidental.In 1987, Taiwan opened to the mainland to visit relatives. Guo Taiming, a native of Shanxi Jincheng, was a member of the visiting family.Since there is no direct flight between the two sides of the strait, Taiwanese can only transfer to Hong Kong to the mainland, and Shenzhen is the first stop for Guo Taiming to enter the mainland.In Shenzhen, Guo Taiming saw the opportunity of reform and opening up.However, the Taiwan authorities at that time did not loosen the investment of Taiwanese enterprises in the mainland. However, Guo Taiming dared to go ahead and circumvent the declaration of the “Ministry of Economic Affairs” of the Taiwan authorities and directly invest in the mainland.In October 1988, Foxconn’s first mainland production base was established in Shenzhen.Since then, Foxconn’s product scale has expanded to cover almost all electronics industries.The third major event occurred in 1988: the National People’s Congress passed a constitutional amendment, and the reference to “private economy” first appeared.What really makes Huaqiangbei flourish is one of the main players of the private economy – ordinary individual traders.Huaqiang North is like a seed of hibernation. Those who dare to break through the system have given it freedom and market-oriented nourishment.2. In 1990, two years after the establishment of the “nature reserve” of private enterprises, the booth of SEG Electronics Market has expanded from more than 200 to more than 1,000. At the counter here, there are vigorous grassroots classes and diplomas.Intellectuals.These adventurers quickly became a sample of wealth creation that stirred Huaqiang North.In all kinds of wealth-creating stories, the first bucket of gold is often inseparable from trade.This is the case with Wu Haijun, the founder of Shenzhou Computer, in his early years.Initially, at the A218 counter of the SEG Electronics Market, he was just a vendor doing computer accessories business.By 1994, Wu Haijun, who witnessed the computer entering the homes of ordinary people, found business opportunities with his keen sense of smell and adventure.At the beginning of 1995, he swept all the inventory hard disks of Hong Kong suppliers and prepared for sales after the Spring Festival. Whoever thought that the market was hotter than he expected, a hard disk of more than 100 yuan soared to 400 yuan, even Lenovo had to get from him.Purchased in hand.When mentioning Huaqiang North, Wu Haijun’s praise is unsatisfactory: “If private enterprises are wild animals, Huaqiang North is a nature reserve.” Wu Haijun’s words are non-virtual, and Huaqiang North’s is always the market.For anyone with a commercial sense of smell and adventure, this is a paradise.Wang Laobao, chairman of Huaqiang North Online, recalls the grand occasion of Huaqiang North around 1995. He still remembers: “Everyone is making a difference, and everyone will bet on luck and see what new things are in Hong Kong. Think about the mainland.”After three years, it will definitely be used, and it will be bought and put at home.” With the trade, and the famous Huawei, during the initial period, Huawei was the agent of Kangli program-controlled switch.The base of Hong Kong Kangli Company in Shenzhen is located in Huaqiang North.By 1989, Ren Zhengfei saw that China had huge demand for program-controlled switches, and the market had long been monopolized by foreign products.In the end, Huawei introduced its own switch in 1993 and has since transformed itself into a telecom equipment manufacturer.In an interview with Xinhua News Agency, Ren Zhengfei said that a successful experience in Shenzhen is that the government can adhere to the principle of marketization and not interfere with the operation of enterprises: “The officials do not disturb the people, the people do not appreciate the officials.” Marketization and entrepreneurship are deeply engraved inHuaqiang North bones.Market-oriented Huaqiang North has attracted adventurers, adventurers have boosted prosperity, and prosperity has attracted more gold diggers. Huaqiang North has grown stronger in this cycle.Under the demonstration role of SEG Electronics Market, Shenzhen International Electronic City opened in 1995. Wanshang Electric City and Dabaihui Commercial City opened in 1997. Huaqiang Electronic World was born in 1998 and began to stand side by side with SEG..During the heyday, Huaqiang North once gathered 36 electronic professional markets, including the Taiping Anti-Planet, which is dedicated to security, the Sanda electronic communication market, which is a communication device, and the integrated electronic trading markets such as Xintiandi, Huaqiang, Jiahe and New Asia.From 2000 to around 2010, the former employee of a large-scale communication equipment manufacturer in Shenzhen recalled: Our IT men went to Huaqiang North on weekends, just like women shopping.“If you go shopping without a goal, you may not be able to visit the two buildings in one day, because there are too many things to see.” 3. The prosperity from trade distribution to Shenzhen manufacturing trade further supports upstream manufacturing.In 2000, there were nearly 1,600 manufacturers of computers, program-controlled switches, televisions, and mobile phones in Shenzhen.In terms of electronic components, semiconductors, display screens, display devices, optoelectronic devices, electronic components and components, and printed circuits are all available.In the Huaqiang North trading market, the most prosperous 2006 years ago, this piece of land of only 1.45 square kilometers, concentrated more than 700 “national package” – that is, the national agent, “provincial package” is countless.These manufacturers and the original Huaqiangbei trading system complement each other and develop spirally.From the end of the 1990s to 2010, a “golden decade” with trade support was formed.Huaqiang North has gradually formed a development path similar to that of Shenzhen: from trading to manufacturing, from the downstream to the upstream, from OEM to its own brand.Wu Haijun, who first earned the first pot of gold as a computer dealer, saw the huge potential of the Chinese computer market in the process of selling computers. So in 2001, he founded the computer manufacturing company Shenzhou Computer.Shenzhen’s unique manufacturing environment has enabled Shenzhou’s first-generation products to be launched at a price that is only 20% of the same level of competitors, opening up the era of affordable computers.In 2005, Shenzhou Computer shipped more than 30,000 units a month. Shenzhou Computer, which was out of the grasshopper environment of Huaqiang North, followed the Lenovo founded by 11 Chinese scientists, and took the second place in the Chinese home computer market.Put the chair.This is the golden age of Huaqiang North and the golden years of Chinese private enterprises.The Kivu mobile phone, also from Huaqiang North, is the representative of Shenzhen manufacturing from “OEM to own brand”.Kivu’s predecessor was a mobile phone mold manufacturing company, which took orders from some overseas mobile phone manufacturers for mobile phone shell parts, first made mobile phone parts, and later started the whole machine mold. In 2006, it was transformed into a mobile phone OEM (equipment manufacturer)., that is, the foundry), by 2007, in Indonesia with a population of 233 million, Kivu has taken over the founding of the top ten mobile phone brands.However, a major pain point of manufacturing foundry is that profits are thinner than blades. Although Kivu has gained a good market share in Southeast Asia, it feels the pain of price wars from time to time. In the second half of 2007, its profit margin fell from 15%.To 5%.Kevin Boss, the boss of the Kivu, was so painstaking that he started to make his own brand in 2008 and founded G’FIVE.At this time, Huaqiang North’s strong supply system and supporting capabilities provided support for such companies from Kivu.Here, behind each counter, there is a factory or agent.Taking mobile phones as an example, all the more than 200 components needed to produce a mobile phone can be fully assembled within two hours of Huaqiang North Round: the circuit board has old companies such as Shennan Circuit and Nantai;There are brand companies such as Tianma and Skyworth; the supply of batteries comes from the fact that you think it is a car company. In fact, it is also a famous battery company and BYD, the world’s second largest mobile phone foundry.This is the famous Huaqiang North “two-hour matching circle”.Under the escort of the “matching circle”, the transformed Kivu braved the South Sea and soon rose to another populous country, India.It is the battery capacity that makes Kivu win over India.Because the local power supply is unstable, frequent power outages have seriously affected the normal use of mobile phones. Zhang Wenxue thought of testing water with ultra-large capacity batteries.This overbearing setting immediately set off in the Indian market.According to estimates by Cyber ​​Market Research, an Indian market research company, Kivu has shipped 35 million units in the Indian market in 2010, with sales exceeding US$1.5 billion, becoming the king of Indian mobile phones with a market share of 21%, ranking second.The old company Nokia has more than 8 percentage points.In addition to creating a miracle of wealth and supporting the rapid development of local electronics companies and the battle for the sea, by 2007, Huaqiang North, which has been established for nearly 20 years, has gradually added more functions: indicating the development of the industry and even affecting industrial decision-making.In October 2007, the “Huaqiang North·China Electronics Market Price Index” was officially released. This is the only index in China that reflects the price changes of electronic components.In 2009, the monitoring scope of the Huaqiangbei Index was further extended to the whole country and upgraded to a national index.In 2011, this “thermometer”, which was completely born in the market and was longer than the market, and consisted of the trading and production behavior of thousands of electronic enterprises, officially registered in the General Office of the State Council of the People’s Republic of China, became the Chinese government’s macro policy for the electronics industry.Important reference data for regulation.However, for a long time, Huaqiang North, which has a strong supply chain supporting ability and has a place in the national economic decision-making, is not glorious in the eyes of the public. It has been unable to get rid of a hat–the cottage.Along with the cottage, there is a series of negative vocabulary: plagiarism, follow-up, infringement, low-end, low… This stereotype makes the other side of Huaqiang North long ignored.4. From the cottage city to Shenzhen to create Huaqiang North and the “cottage” form a binding relationship, starting in 2007 “cottage machine” boom.According to incomplete statistics, in 2007, the output of Shanzhai mobile phones was at least 150 million, almost equivalent to the total sales of branded mobile phones in the domestic market.In the CCTV “Economic Half-hour” program in June next year, the official media criticized the “cottage machine”: “It is like the ‘mountain king’ in the mobile phone market, not only does not follow the rules of the game, but also kills innocent, noThe bottom line is that if you have money, you will be jealous, and if you have milk, you will be a mother.” The cottage even went to the point of “destroying the nationality.” Xinhua News Agency reported in 2008 that cheap Chinese cottages poured into Pakistan, resulting in the image of China.Local damage.At this time, there was an unexpected person who stood up and said “fairy words” for Huaqiangbei’s cottage culture. He is a former senior strategist at Nokia, Jane Chips.In an interview with Wired magazine in 2010, Chip Chase said: “Imitated mobile phones usually have some unexpected features, such as genuine cameras, extra sockets, unusual connectors, etc., regular manufacturers.Unsatisfied requirements, the cottage manufacturers are satisfied.” From the plagiarism of the plagiarism, Jane Chippez saw the fascinating side of Huaqiang North: “micro-innovation” – cottage enterprisesIt’s not a simple copy, it’s making subtle differences.This kind of micro-innovation filled with “brain holes” has made many IT men and product control linger on Huaqiang North.“Every time I come out, I want to see things that challenge my understanding,” said Chip Chase. “I like to live in a place where it can change your perception of the world.” So tenA few years later, the aforementioned IT practitioners who walked around Huaqiang North, such as shopping, talked about Huaqiang North today and still remember many products.For example, at that time, there was a mobile phone with seven speakers. The common name was “Booming Thunder”, and the sound was huge.Its target user is a construction worker who created the “5-day floor” Shenzhen speed.Apple, Samsung, Nokia… Many international companies, who did not expect to design a mobile phone for construction workers, but Huaqiang North’s cottage manufacturers have considered.For migrant workers who have limited social relations and may not be able to call, every bell may be behind the hometown’s “100,000 fires,” and the “hit” that is very disturbing to the people will allow them to try their best in the noisy construction environment.Don’t miss every gathering and separation.In addition to the 7 horns of the thunder, the main functions of the cottage are various: resistance to fall, anti-theft tracking, watching TV, no need to listen to the radio on the headphones, dual Bluetooth, dual card dual standby, a call to put colorful lightThe LED marquee… This kind of micro-innovation even allowed some Chinese manufacturing to go abroad and defeat the international first-line brands.The mobile phone voice of the first market share in Africa is typical of it.The African user who has a deep skin tone has specially developed special beauty to ensure self-timer effect; other intimate designs include anti-sweat function for hot weather.The micro-innovation that responds quickly to the market can be achieved, and it is still inseparable from the foundation of Huaqiang North: a strong supply system.It takes only one and a half months for a cottage phone to go from development to launch.In addition to mobile phones, Huaqiang North’s strong supply capacity also supports the birth of various new categories and new species.In fact, from personal computers, to VCD, DVD, MP3, MP4, to the new wind in recent years – smart wearable devices, AR, VR glasses, smart speakers and even sci-fi brain-computer interface, Huaqiang North has always stood on the cuspIt has become an incubation platform for small and medium-sized innovative enterprises.Dajiang in the field of drones is a company that is nourished by such a supply system in Huaqiang North and Shenzhen.In 2006, the founder Wang Wei started his business in the dormitory of the Hong Kong University of Science and Technology, and then created Dajiang in a private house in the Lotus North Community of Shenzhen.At the beginning, Dajiang Company only made innovative research and development, and did not produce it by itself. All products were issued on the Internet to solicit bidders.In Shenzhen, which has Huaqiang North, Dajiang can attract 5, 10 or even more companies to compete for each component, module, component, and even screw.Emerging industries such as smart wearable devices and drones often face the problem of no mature component procurement platform in the small-volume production process at the time of startup, and Huaqiang North can have more flexible supply chain systems and complete Pearl River Delta.The industrial chain has become their best support.In 2008, Dajiang’s first helicopter flight control system, XP3.1, went on the market. The first batch of products had only 20 sets of poor scale, but it was well received by domestic model enthusiasts. Dajiang started from this and achieved a breakthrough from 0 to 1..Once the new intelligent hardware is trial-produced, tested and successfully sold in Huaqiang North, it will quickly form a perfect supply system, which further helps the innovative enterprises to achieve the development from 1 to 10.By January 2013, Dajiang’s “Dajiang Elf” incited the non-professional drone market. In 2014, the annual sales of drones in Dajiang exceeded 400,000 units.Last year, Dajiang’s sales reached RMB 17.5 billion, making it a super unicorn with a valuation of over $16 billion.The backlash of Dajiang against Huaqiang North is that it created a whole drone track: when Dajiang fired up in 2013, a variety of drones floated over Huaqiang North.Here, all the feedback from sensitive market feedback is so simple and rude.This is also why Huaqiang North can attract HAX to land here in 2012.Canine, the founder of Open Trons, which stands out from HAX, has a good impression on Huaqiang North’s supply chain system: “If you suddenly think of an idea, but wait five or even two weeks before you act, it is not innovation.You want to try it right away, then try another one, and then continue to the next one… The United States does not have this kind of vitality, you can only see it in Shenzhen.” Another high-tech electronics industry in China with Huaqiang North and North is also coming.Applause.In June 2015, Shen Xiangyang, the global executive vice president of Microsoft Research, said in a reception to the Shenzhen government delegation: “The hardware ecosystem in Shenzhen is unique in the world. Looking at Shenzhen Huaqiang North, the hardware is very complete and the cost isLow, coupled with open software systems and cloud services, in the future, many amazing intelligent hardware may be produced in Shenzhen.” Economist Fan Gang attributed the vitality of Huaqiang North to the persistence of marketization: “The back of Huaqiang NorthThe essence is a set of market-oriented mechanism in Shenzhen, free entry and exit, imitation, digestion and absorption, and gradually innovation, and then go to the forefront in some areas.” It is marketization, so that SEG chose the electronic supporting market and gave birth to Huaqiang.North traders, let the cottage manufacturers seek micro-innovation, but also make Shenzhen a hardware Silicon Valley.At the beginning of 2014, Liang Zhenying, then the chief executive of Hong Kong, asked Wang Hao, will Dajiang return to Hong Kong?Wang Wei said frankly that Dajiang cannot be separated from Shenzhen. Because Hong Kong does not have the developed conditions for labor division in Shenzhen, Shenzhen probably has the best hardware innovation environment in the world.5. Water network has become a market-oriented Huaqiang North, and it is precisely because of market competition that it is gradually declining year by year.The initial decline seems to have occurred from an accident: In 2013, Huaqiang North entered the four-year enclosure period due to subway construction, which led to a group of supply chain agents moving out as Huaqiang North, an electronic component trading market.Enter the pain period.According to data released by Huaqiang North Street in the same year, 13 of the 14 representative units in the business district have reduced their daily average traffic by 10% to 20%, of which 4 turnovers fell, 5 rents fell, and 6The occupancy rate has dropped, and Huaqiang North, which has been shouldering the shoulders, has begun to appear vacant.On the other hand, the rise of e-commerce companies such as Alibaba and Huaqiang Electronic Network has made it unnecessary for manufacturers to go to Huaqiang North to purchase goods in person, but to place orders directly on the e-commerce platform. Huaqiang North gradually lost its former enthusiasm.Large-scale hardware manufacturers with hard-working strength no longer need to travel in Huaqiang North, but can directly seek the support of professional supply chain service providers to obtain more stable and large-scale supply services.Today, Shenzhen’s supply chain management service industry has flourished and outperformed. More than 80% of China’s supply chain companies are located in Shenzhen, including five listed companies – Yi Ya Tong, Pluto, Pegasus International, Oriental Jiasheng andYear rich supply chain.In large-scale electronics companies such as ZTE and Huawei, mature and professional internal supply chain management departments have also grown.The Chinese supply chain system represented by Shenzhen has formed a well-developed “water network”.Huaqiang North, which is still active in a large number of “selling goods”, has become a “flexible reservoir” outside the mainstream water network.When the components are in short supply and the manufacturers are eager to complete the order, they will always go around to Huaqiang North.For example, in 2017, environmental storms across the country forced many of the main material foils of aluminum electrolytic capacitors to be reduced, which in turn led to a significant reduction in production by Japanese and Taiwanese companies that needed to use capacitor materials to make capacitor resistors.By the beginning of 2018, Taiwan’s Huaxin Technology, Qiangmao and other major capacitor resistance suppliers’ resistance and diode products all experienced large price increases ranging from 10% to 15%, resulting in a large number of downstream enterprises falling into a priceless market.For the crisis.But in Huaqiang North, you can still buy a small amount of goods to solve the urgent need.The hard-working hardware practitioners can almost always find “redemption” here.(Of course, those who do trade with roasted seeds and nuts can also earn a lot of money from the “Jianghu Emergency”.) Huaqiang North, with its own “declining”, annotated the improvement of the overall supply chain capacity of China’s electronics industry.It used to be a full-fledged player, but now it’s time to make it.6. Where is the living water?However, Huaqiang North and the entire Chinese supply chain system are untenable, because the supply chain itself cannot solve a problem: the source is living.The most basic materials, the most critical equipment, and the most core technologies are the hurdles for China’s manufacturing industry to be strong and strong.In the past, this seems to be a problem that is not a problem, because in the era of doing business, the global division of labor seems to be a market-oriented hand to efficiently allocate resource flows: Japanese materials, Dutch equipment, American design capabilities, South Korea, ChinaThe key components of Taiwan, China’s foundry manufacturing, everyone to work together to make money, peace of mind.In the book “Puzzle is flat” published by Pulitzer Prize winner Thomas Friedman in April 2005 and the New York Times bestseller list for 24 months, he was optimistic and appreciated.High-level global division of labor cooperation: “There has never been such a moment in human history: people will compete and cooperate with more and more people around the world in more and more jobs, and people will have more and more opportunities.Equality. In a certain sense, at this moment, HAX is still writing this kind of global competition and cooperation prosperity in Huaqiang North: in the office area of ​​HAX located on the 8th floor of Huaqiang Electronics Market, people of different colors talk and laugh, and cooperate and innovate.It is still like a small UN.But in a larger world, trade frictions are frequent, and the global division of labor is facing unprecedented challenges: the United States began to provoke global trade frictions at the end of last year, gradually adding tariffs to China and the EU, and including Huawei in the list of export control entities;In August of this year, the Japanese cabinet decided to remove South Korea from the white list of trade preferences, which made the Korean semiconductor industry relying on Japanese materials in a huge sense of crisis.Under adverse external conditions, China’s electronic information industry is still surrounded by core devices, equipment and technology.In terms of materials, China has been unable to independently produce the photoresist required for the development of LCD panels. Its core technology has been monopolized by Japanese companies such as TOK, JSR, Sumitomo Chemical, Shin-Etsu Chemical, etc. The high-end diaphragm materials required for the production of lithium batteries rely on Asahi Kasei.And Dongyan Chemical two Japanese companies; and the domestic lithium battery aluminum film market share of 90% is also monopolized by Japanese manufacturers such as Showa Denko.On the equipment, the lithography machine necessary for the development of the 7nm process of the wafer foundry can only point to the Dutch manufacturer Asma (ASML); the vacuum evaporation machine which is indispensable in the production process of OLED (Organic Light Emitting Diode), Japan’s Canon Tokki monopolizes the high-end market, its annual output is only between a few to a dozen, often with money and can not buy; as for high-end CNC machine tools, China’s self-sufficiency rate is less than 10%, long-term dependence on Germany, the United States and Japan.On the core device, the localization rate of high-end optical communication devices is less than 10%, and it depends on the United States or Japan; small screws, China can not produce all of them: the smallest model of China’s current national standard is M3, and M1 screwsImports are still needed.In addition, ultra-precision polishing processes, ITO targets, mobile phone RF devices and other devices and technologies, China must either import from abroad or simply be banned.When the upstream is intercepted, can the development miracle of Huaqiang North and China’s electronics industry continue?If it is said that giving more mature and professional supply chain services to Huaqiang North is a glorious communicator; then the whole Chinese electronics industry is clamped and martyrdom on the core technology reflects a sad sign: due to marketization and globalization.The formation of the Huaqiang North tough supply system has encountered the biggest challenge – globalization and win-win thinking itself is faltering.For Chinese companies, this brings some visible opportunities: domestic substitution, independent research and development.But for the whole world, from last year to this year, some precious things are breaking. We may be experiencing important water-dividing moments. Some major and common-sense issues have been re-focused: For example, is growth sustainable?For example, when the world is going backwards, what about a country?A “protected area”?Bringing together gold rushers from all over the country and around the world, Huaqiang North, which allows Indian restaurants and Pakistani restaurants to co-exist, is a small incision about the supply chain, about electronics manufacturing, and about the bigger world.*Thanks to Mr. Hu Bin, Vice President of Nubia for his support of this article..