Electronics hub an entrepreneur's natural home

Though it is known more for its electronics and digital products, Huaqiangbei is also gaining ground as an incubation center for Western consumer electronics entrepreneurs.

While the huge domestic market in China is the obvious attraction for most of the entrepreneurs, for many like Daniel Sparrow, it is the manufacturing capability that have won him over.

Sparrow, from Florida, has been in the consumer electronics industry for more than 30 years and has set up several companies and consumer electronics brands in the US. "Huaqiangbei is the most convenient location that I have been to so far," he says.

"Shenzhen is the electronics manufacturing capital of the world," says Sparrow, the chief executive of Paradigm Shift Sourcing and Manufacturing Co Ltd. "You can find anything in any sector here, ranging from the small mom and pop factories making goods by hand, to the major multinational companies such as Huawei, ZTE, Foxconn, and more. There are also many world-class design houses here."

Sparrow came to Huaqiangbei in November 2007. He says he decided to settle down after finding the ideal suppliers and contract manufacturers for his business.

"It is the best place in China for the latest technology and has everything from small startups to large-scale manufacturers. There is also an ever-changing product mix, and I can see more new products here than in any other global trade show.

"None of the others (consumer electronics markets) offers the kind of diversity and opportunity that Huaqiangbei does. It is easy to find the smallest and most obscure part as well as large finished goods here."

Sparrow set up Paradigm Shift Sourcing and Manufacturing in Shenzhen in 2008. The company has branch offices in Hong Kong and Boca Raton, Florida. It mainly focuses on sourcing and developing products for well-known consumer electronics brands such as Emerson and Haier. Many of its products are sold through big retailers like Kmart and Walmart.

Recently the company shifted to OEM (original equipment manufacture) and ODM (original design manufacture) mobile phone and Android smartphone/tablet design and manufacturing, to cash in on the growing demand for smartphones.

"The electronics hub gives me a centralized place and an opportunity to meet with many companies and traders," he says. "It is also a convenient place to start any new field in consumer electronics manufacture and distribution, since it encompasses so many companies specializing in all aspects of electronics goods, and you can find them all under one roof."

Sparrow says his sales have grown from $500,000 (370,000 euros) in 2008 to $3.4 million last year. This year the company expects sales of around $10 million, he says.

However, counterfeits and frauds are a blot on Huaqiangbei's horizon, he says.

"The proliferation of crooked and illegitimate companies is indeed a big concern. Many of them are fly-by-night operators, while others are those who make counterfeit products like consumer electronics accessories, fake brandname computers, mobile phones and even clothing."

But the Futian district government seems to be aware of this problem and has been cracking down on counterfeiters and last year more than 3,500 merchants were forced to move out of Huaqiangbei.

Guo Hui, vice-president of marketing with a local consumer electronics brand THL, says there used to be many small companies which made quick money by making copycat products of big brands.

"The government campaign has led to the exit of many of these companies and the reputation of the whole area has been enhanced."

Li Yongmin, director of the city redevelopment department at the Huaqiangbei Subdistrict Office, says local authorities will continue to keep a close vigil on the market.

"While we continue to foster independent innovation, we will also ensure that the credibility and reputation of this area is not compromised," he says.

Huaqiangbei is known as the busiest street in Shenzhen, and its frenetic pace is something that is exciting many people like Sparrow.

"I think Huaqiangbei is busier than ever, and slowly seeing a influx of high-end brands and stores. It adds to the vivid environment."

At the same time, the city also needs to spruce up its infrastructure, he says. "Plumbing, air conditioning and hygiene facilities need to be improved, and more attention needs to be paid to business registrations."

Buoyed by its success in Huaqiangbei, Paradigm Shift plans to add new sales offices in Hong Kong and Miami, and partner with more OEM factories in China and South Korea over the next three years.

"I have been doing business and living in Shenzhen for over five years now, and will continue to visit and do business in Huaqiangbei, as long as it is the center of the consumer electronics industry in China, if not the whole world."

(China Daily 03/08/2013 page16)