The mystery behind Shenzhen's rapid rise in the Internet

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While Shanghai's Internet industry as a whole is declining and established Internet companies such as Shanda, Anjuke and 99bill are transforming or selling themselves, Shenzhen's Internet industry appears to be thriving. Not only has Tencent's market value exceeded US$100 billion, but a large number of outstanding new technology companies have also grown up in Shenzhen.

Over the past two years, Shenzhen has quickly become a national leader in technology fields such as smart hardware, biological sciences, and drones. A large number of technology companies such as BGI, DJI, Fangdd, and Ubox have also quickly become popular in the country.

Hanergy Capital CEO Chen Hong told Tencent Technology that the proof of whether a place has a strong Internet atmosphere is to see how many companies there are with a valuation of over 10 billion US dollars. Tencent and Huawei meet the requirements, and BGI and DJI Technology also have this potential.

Among them, BGI has been working in the fields of medicine and agriculture, and can be listed in the mainland as long as policy approval is obtained. DJI Technology's drone products are exported to Europe and the United States. According to people familiar with the matter, the price of DJI Technology's private equity transaction for 1% of the shares has reached US$100 million.

Currently, Shenzhen is attracting more and more talents. Many people in the technology industry have left Beijing and Shanghai to work in Shenzhen. Even Zhou Hongyi, chairman of 360 Company, frequently travels to Shenzhen. At the beginning of this year, he publicly stated that he would move to Shenzhen to make smartphones.

Xu Jianwen, CEO of Renren Jucai, who used to work in Beijing and later went to Shenzhen to invest in Internet finance startups, told Tencent Technology that Shenzhen's Internet entrepreneurial atmosphere is no longer inferior to Beijing's. "Shenzhen's Internet strength is ten blocks ahead of Shanghai, and its momentum is approaching that of Beijing's Internet circle."

The mystery of Shenzhen's Internet rise

At the 2015 IT Leaders Summit, BGI President Wang Jun was highly sought after by the media because BGI is so popular.

Wang Jun also said in an exclusive interview with Tencent Technology that this is mainly because the bio-industry and genetic technology have reached a critical period. The development of genetic technology has enabled every citizen to understand their own genes within an acceptable price range and use genes to predict future life and health status.

For example, early detection and early diagnosis of tumors, as well as personalized treatment of tumors, all require large-scale intervention of genetic technology. Diabetes, complex diseases, etc. All visible things related to life and health are related to genes.

The bio-industry and genetic technology are closely related to people's lives, and BGI's big data contains huge industrial opportunities. What is less known is that BGI's original base was in Beijing, but it was only after it moved to Shenzhen that it accelerated its development.

As to why this strange phenomenon occurred, Softbank SAIF founding partner Yan Yan told Tencent Technology that one of the important reasons is that Beijing is too big a city with multiple government departments, making it difficult for BGI to gain much support.

In comparison, Shenzhen is close to Hong Kong, which makes BGI close to the international capital market. Shenzhen's environment is also relatively simple, with a high degree of marketization, little government intervention in enterprises, and easier international exchanges, which is more conducive to the development and growth of BGI.

In fact, the Shenzhen government is a very service-oriented local government. Chen Hong, CEO of Hanergy Capital, said that local government leaders are very courteous to entrepreneurs, and the 2015 IT Leadership Summit's eight major trend reports were the result of two consecutive late night discussions between the mayor and entrepreneurs.

"When local governments attach great importance to the technology industry, they are very willing to deal with entrepreneurs and have a strong sense of service, which makes entrepreneurs very willing to cooperate. The annual technology summit and the visits of IT giants to Shenzhen have also fostered a strong entrepreneurial atmosphere."

In recent years, Chen Hong has had more opportunities to go to Shenzhen than to Shanghai. When he recently visited the real estate e-commerce company Fangduoduo and the O2O company Tubatu, Chen Hong lamented that Shenzhen entrepreneurs are very motivated and these companies are growing very fast, with thousands of employees in a short period of time.

So, what do local Internet entrepreneurs in Shenzhen think about the rise of Shenzhen’s Internet?

Chen Xiangyu, CEO of Ledo Games, believes that, first, Shenzhen has a very good entrepreneurial atmosphere. Huawei, Tencent, and ZTE have accumulated a lot of talents and atmosphere for Shenzhen, which has a far-reaching impact on the development of Shenzhen's Internet; second, the government's policies are very supportive of the IT industry; third, the industrial chain is perfect, with manufacturing, content, and payment all very complete, and the integration cost for entrepreneurs is low; fourth, Shenzhen entrepreneurs have a pragmatic style.

Renren Jucai CEO Xu Jianwen added that Shenzhen is a very innovative city with open-minded entrepreneurs. In addition, Shenzhen is an immigrant city with a large number of foreign population, most of whom have a strong fighting spirit.

Xu Jianwen pointed out that Shenzhen is also the birthplace of China's private economy. A large number of companies such as Vanke, China Merchants Bank, Tencent, and Huawei have exported a large number of talents to Shenzhen. The only shortcoming of Shenzhen is that it does not have universities such as Tsinghua University and Peking University, otherwise it could develop faster.

Fenqi Le, a college student installment payment company, is a recently emerging Internet company in Shenzhen. It recently received investments from DST and JD.com.

Xiao Wenjie, CEO of Fenqi Le, believes that entrepreneurs in Shenzhen are more hardworking than those in Shanghai. If a Shanghai girl doesn't drink a cup of coffee every day, she would be embarrassed to be called a Shanghainese. Her life is petty bourgeoisie, while it is normal for Shenzhen technology companies to get off work at 8 or 9 every night.

The rapid development of the Internet in Shenzhen has led to a large number of companies such as Baidu, Alibaba, and 360 setting up operations in Shenzhen. It has also brought about a profound change: many VCs and funds have begun to set up offices in Shenzhen, a phenomenon that has never happened before.

Shenzhen has unique industrial chain advantages

Compared with other cities in China, Shenzhen has a unique advantage. The Chinese manufacturing industry chain has been formed in cities around Shenzhen such as Dongguan. IT companies can easily gather in Shenzhen. For example, although Xiaomi is in Beijing, most of its hardware production and processing are in Shenzhen.

Shenzhen's manufacturing industry chain advantage is unmatched even by countries such as Europe and the United States. Yan Yan, founding partner of Softbank SAIF, revealed to Tencent Technology that Softbank SAIF invested in a mobile phone battery company in the United States, but it is difficult to find the lithium battery production chain of this company in the United States. This company's negative electrode materials, positive electrode materials, and thin films are basically not available in the United States, and can only rely on production in China.

"It's not that the United States cannot build an industrial chain, it's just that the cost of starting from scratch is too high." Yan Yan said that Asia accounts for more than 90% of the global display material production market, and almost all color TVs are produced in China, South Korea, and Japan. The entire production chain is not in Europe and the United States.

Shenzhen Mayor Xu Qin recently revealed that Shenzhen is a city with extremely developed information technology facilities and an innovative city. It is currently formulating an "Internet +" action plan to comprehensively promote informatization and promote the deep integration of the Internet and various industries.

The "Internet +" action plan will bring huge opportunities to Shenzhen. In the past, hardware was purely hardware products. With the development of the Internet industry, Shenzhen hardware companies are more likely to combine with the Internet than Beijing and Shanghai, which do not have hardware advantages. An investor asserted that with the in-depth integration of smart hardware and the Internet, Shenzhen will become one of the best entrepreneurial bases in China.

This is also an important reason why DJI was born in Shenzhen. A senior investor believes that in the future, many directions of "Internet +", such as the combination of software and hardware, smart hardware, and smart homes, will enable local Internet companies in Shenzhen to rise rapidly.

Shanghai companies reflect on the decline of the Internet

The rapid rise of Shenzhen's Internet sector has also brought reflection to Shanghai. Shanda COO Chen Danian said that Shenzhen's Internet rise was due to two companies. Huawei created a culture centered on internal entrepreneurship, which even became Tencent's corporate culture.

To a certain extent, Chen Danian envied the birth of these two companies in Shenzhen. Chen Danian told Tencent Technology that Tencent also provides unparalleled resources, and many people rely on the Tencent platform to reduce the risk of entrepreneurship. These two core values ​​promote the development of the entire Shenzhen Internet.

Earlier this year, there was a lot of controversy over Chen Danian giving out a Tesla sports car as his year-end bonus. The more important reason behind this was that Chen Danian was very worried: Shanghai, which has no shortage of creativity and funds, cannot have the same large number of Internet practitioners as Beijing and Shenzhen.

Fu Cairui, CEO of Hujiang.com, who also started a business in Shanghai, told Tencent Technology that if this wave of the Internet, which combines software and hardware, takes off, Shenzhen will have a huge opportunity for Internet development. Fu Cairui said that Shanghai government leaders are also strengthening their inspection and support for local Internet companies in Shanghai, and the importance they attach to the local Internet is also increasing.

A senior investor told Tencent Technology that Shanghai residents are generally comfortable and few are willing to start businesses. The Shanghai government has also been reflecting in recent years that the government may have played a strong role in history and wanted to do good things for the market, but it may not be able to do good things in the end.

"Culture and the government's relationship to the market are both very important factors that make the difference." The above-mentioned person pointed out that Shanghai has also seen changes in the Internet recently, and some innovative companies have emerged in Shanghai, but overall, Shanghai still needs to make more efforts.