Is Shenzhen becoming the next Hong Kong?

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Hong Kong relies on banking, real estate and other services. Innovation has largely failed to take off.

Bankers (especially the ones in Hong Kong), what are your thoughts on the city's prospects in comparison to Shenzhen? It seems like Shenzhen has really begun its rise as one of China's economic giants along with Hong Kong and Shanghai. With giants like Huawei and Tencent in Shenzhen, perhaps it may be better to call the city China's Silicon Valley?

In essence, this is what the city means for youth,

There's a frenetic energy here, too. In Shenzhen, says David Li, a founder of the Open Innovation Lab, a tech startup incubator, the "sound of money" is the crackle of duct tape sealing boxes of smartphones, MP3 players and drones for overseas shipment from the world's largest electronics markets.

The article mentions that Hong Kong's economic rise was made possible due to the laissez-faire approach Deng Xiaoping's "One Country, Two Systems" took in basically allowing Hong Kong to act within the framework of capitalism. Meanwhile, this does not apply to Shenzhen. Yet soon both cities will be neck-and-neck with each other for the attention of the talented young'uns. I think this highlights a really interesting -- if not mildly ominous -- data point that favors a socialist structure over a capitalist one; Shenzhen vs Hong Kong. Perhaps this city will become another example for people to favor socialism?

And so the questions I'd like to hear your thoughts on,
1. What are your thoughts on Shenzhen's growth as an economic powerhouse?
2. How is Hong Kong faring in comparison and can the city be able to keep up with the current state of things?
3. Have any of used products by Huawei or Tencent? If you have, do you think these companies could easily become contenders in joining the group of Asia's tech giants?

What are your general thoughts on the matter?

EDIT: Also, happy 4th of July for anyone who's still on here! ...or for everyone who comes back! I hope you all had a good one.

Comments (24)

Best Response
Jul 4, 2017

1. Shenzhen is more hardware manufacturing focused, which many consider to be lower on the value chain (vs. Silicon Valley which is more software/design focused). But it is certainly well positioned to be the next Silicon Valley, and the Chinese government is lending support. One competitive advantage that Shenzhen has is that the manufacturing time for a product is a fraction of that in the West, and so there is a real opportunity to move up in the chain. This is a really good documentary on YouTube by WIRED UK:

2. Never lived in HK but it seems to be more traditionally business/finance focused. I'm not sure if it's an issue of capitalism vs. socialism -- keep in mind that China's tech economy is more or less capitalist at this point, less the state-owned enterprises in more traditional industries like oil & gas, chemicals, banking, etc. But many do recognize there is an innovation problem in HK.

3. You should know about BAT: Baidu, Alibaba, and Tencent. These are the elite three tech companies in China. Tencent's WeChat is huge in Asia, and I would describe it as a way more advanced Facebook (3-5 years ahead in terms of features). But very few people in North America or Europe have heard of WeChat. Here is an interesting video by Andreesen Horowitz: https://a16z.com/2017/02/06/china-trends-2016-2017/

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Jul 4, 2017

Yeah I actually use WeChat and a few other programs from Tencent. They're really amazing, I adore them haha. They're definitely way more advanced than Facebook though, I agree with that point. They just work so well and they're so robust lol, I love them. There's a super smooth feel to them.

I definitely didn't know that Shenzhen can manufacture stuff at a fraction of the time as the West, I'll take a look at that documentary some time though!

Jul 11, 2017

I guess that in part it is a subjective matter. Saying that Shenzhen is the next Hong Kong sounds similar to Silicon Valley CA. There is plenty of potential for it to develop as a nest for tech industries and programming, but I wold still keep my options and views open since there is always dubious speculation in respect to new, developing cities/areas.

Jul 7, 2017

Largest tech company in Shenzhen is Tencent, which is definitely on the top of value chain and not a hardware company.

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Jul 5, 2017

While I do not know much financially about either of their economy's I have read a book called ''Shenzhen: A Travelogue from China'' By: Guy Delisle. Personally I would recommend this book because it shows the authors point of view on both Shenzhen and Hong Kong. You can also read it in about 1-2 hours.

I don't think this answers your question but it should definitely help you on understanding the extreme differences between a SEZ (special economic zone) like Shenzhen, and Hong Kong.

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Jul 6, 2017

I am also inspired by this book, it shows the reader on why these two places are important on a global scale.

...

Jul 5, 2017

It was well on its way until the incident...

Godzilla

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Jul 6, 2017

Them southern Chinese unlike similar latitudinal cousins in the States play capitalism especially hard.

Interesting to see what happens in the next decade.

Jul 6, 2017

I have been to China in the past on a school trip. We spent two weeks there. I can firmly say China has more capitalism than America in some aspects.

Like Deng Xiaoping said "It doesn't matter if a cat is black or white, so long as it catches mice."
(In response to weather China should stay a communist country or capitalist to push the country forward)
(One Country Two Systems) -Theory

That being said there are many mainland Chinese that support Capitalism.

Jul 6, 2017
Nickh:

I have been to China in the past on a school trip. We spent two weeks there. I can firmly say China has more capitalism than America in some aspects.

Like Deng Xiaoping said "It doesn't matter if a cat is black or white, so long as it catches mice."
(In response to weather China should stay a communist country or capitalist to push the country forward)
(One Country Two Systems) -Theory

That being said there are many mainland Chinese that support Capitalism.

Good observation on the complex Chinese political/economic system. So many westerners think that the Western democracy system needs to be implemented in China, assuming it will work. First off, China is still rapidly growing and the country is not mature yet. Opening up completely to foreigners would be a disaster. The economy and standard of living of most Chinese citizens is not good enough to support a western-style democracy (which is highly inefficient in policy execution), and governing 1.4 billion people would be a complete mess.

I think "One Country Two Systems" has worked well with managing capital flows/investment between China, Hong Kong, and the world, and it is only a matter of time before other hubs (Shanghai, Shenzhen) become international. With that said, China is progressing quickly, and should be ready to welcome more and more foreign business.

Jul 6, 2017

Indeed. That's a legendary quote .

First rate capitalists. First rate - world beating STEM students. Quite a few hot women - cursed with yellow fever, but fuck all regard for rule of law.

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Jul 7, 2017

interested read, thanks for sharing buddy

Jul 7, 2017

I also heard of Zhejiang (the province) being compared to Silicon Valley. It seems like China has lots of smaller sized tech hubs.

Jul 7, 2017

Hong Kong = San Francisco?
Shenzhen = Sillicon Valley?
Hainan Island = Tropic Lake Tahoe?
No Napa Valley equivalent though but I'm sure they can create one.

Pretty good recipe to attract young people and mix with seasoned professionals with an international financial center and tourist destination. I'm not Chinese, but want what's best for Hong Kong cause I like that city. Not a big fan of erosion of democratic systems of HK, but I hope HK can stay relevant.

Jul 7, 2017

I have never heard of Tropic Lake Tahoe before, lol.

Man I remember when I was younger, everyone was badgering about learning Cantonese just so you could do business in Hong Kong! I guess things have changed...

Nov 22, 2017

See: China Greater Bay Area

It's now an official term

Jul 10, 2017

Hong Kong was a British colony for 100+ years, and was only returned to China in 1997. Since 1997, HK is a Special Administrative Region (SAR) with a high degree of autonomy, and under the "one country, two systems" principle HK maintains a separate political/economic system from China, but not military defense and foreign affairs.

The "high degree of autonomy" was only negotiated for 50 years.

30 years ago, there were essentially no international Chinese study in the US and no Americans studying in China.

Sep 6, 2018
adots:

...HK maintains a separate political/economic system....

Ha! Sorry, no.
In theory yes.
In the same way that my wife's Chinese textbook said "China never achieved true democracy until it was ushered in by Mao Zedong. Now true democracy reigns in China and all people are free. Hail our great leader."
In the same way, HK has an independent political and economic system.
In theory.
In reality, the people of HK are permitted to select from a pool of officially selected politicians picked by the Communist Party in Beijing.
If any politician speaks out against the party, they are immediately sanctioned, and ejected from government, and in some cases fined and jailed.
Economically HK is tied to China, and increasingly subject to Chinese regulations.

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Jul 12, 2017

Number of Chinese students who return to China after getting their Masters/Phd degree in the US is about 300,000 EVERY YEAR. With that number of skilled labor Im sure they will come up with something. One thing to note is that Hong Kong locals have pretty hostile relationship/attitude toward mainland Chinese. While that is understandable given recent political conflicts, that could be a huge factor working favorably toward Shenzhen.

Sep 6, 2018
stilarie:

Number of Chinese students who return to China after getting their Masters/Phd degree in the US is about 300,000 EVERY YEAR. With that number of skilled labor Im sure they will come up with something....

China itself graduates more engineers on an annual basis than there are any US graduates in all disciplines combined. They are going to come eat US's lunch.

Jul 13, 2017

As a native Chinese student in the U.S., I think I can provide some inputs into this question.

  1. Shenzhen is indeed developing rapidly, both economically and culturally. In China, young people always say that, if you are looking for big opportunities, go to Beijing, Shanghai, Shenzhen, or Guangzhou. Actually Guangzhou is not in a very good shape right now (I have two very close friends from Guangzhou). Shenzhen gets a step forward because in 1978, when China, more specifically the then chairman, Deng Xiaoping (the guy who got Hong Kong back from Thatcher during negotiation), decided not to lock China from the world anymore (which was a mistake that the Qing Dynasty made in 1900s). Shenzhen was "the city" that Deng chose, put on the frontline of development. I have been to Shenzhen for a few times, no strong preference for the city. Cleaner environment definitely compared to most cities.
  2. Hong Kong is definitely still stronger than Shenzhen in finance, at least for a little bit, at least. Hong Kong also has a better diversity. Although I personally don't like Hong Kong very much. A lot of Chinese people (people from Mainland) does not like HK or just like it for shopping. That being said, the problem of HK is its politics. We have this "one country, two systems" thing that makes it difficult to do a lot of things in HK.

We hold the name of "communist party", but the country is not under communism. We claim to be "the special form of socialism in the basic stage", but actually there's more and more capitalism in the system/country now.

  1. Huawei is a top 5 mobile phone producer/developer in the world if I remember correctly. Their phones are good. My parents/people in their age like Huawei especially. Not familiar with their other products.

Tencent: WeChat. Every individual who has a mobile phone uses WeChat in China. Everyone. They are also a pretty big tech giant. The problem of Tencent is they do a lot of plagiarism but somehow they also won lawsuits/litigations.

Baidu: equivalent to Google in China.

BAT are tech giants in Asia, they are already.

  1. Zhejiang is nowhere near the SV. They are famous for small product manufacturing, and some particular cities, either because the view is good/pretty girls/history/people from that city are cunning in business. Generally speaking it is one of the fastest-developing provinces in China.

In a nutshell, is Shenzhen becoming HK? No, and it never will because of HK's "one country, two systems" thing.

I hope this helps.

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Nov 23, 2017
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Mar 29, 2018