Moving to China: Where Should You Set up Shop?

Travelling the Silicon RoadSo you’ve decided you need to have a presence on the ground in China. Or you’ve decided it’s time to move some manufacturing to China, or expand the sales offices you have there.

Then the question becomes where do you go in China to set up shop?

It’s a big question, and not one with the clear-cut answers it had just a few short years ago. At first glance, it might seem obvious: if you’re talking about electronics manufacturing, then Shenzhen, China’s richest city, is the place to go. If you’re talking about something farther up the food chain, say semiconductor manufacturing, then Shanghai is the place to be, right?

Well, if you’ve been following along as Electronic News has ventured down the Silicon Road this autumn, you know it is not quite that simple. There is some truth to those statements, to be sure. But the industry landscape in China – and foreign companies options – are considerably more complex, to be sure.

But lets look at that conventional wisdom first. Shanghai and Shenzhen are obvious places for a reason. Shanghai is a huge port city with plenty of natural resources, namely water, and an established infrastructure – this is why there are fabs here in the first place, including many that belong to the fourth largest chip foundry, Semiconductor Manufacturing International Corp. (SMIC). You’ll find the Chinese offices of many a U.S. and European chipmaker here in the gleaming new skyscrapers that dot the skyline.

Look at Applied Materials Inc., the world’s largest process tool vendor, and an old hand when it comes to operating in Asia – it’s literally around the corner from its biggest Chinese customer, SMIC, and its headquarters in Shanghai.

At the other end of the supply chain spectrum is Shenzhen, which has blossomed over the past two decades into China’s electronics manufacturing center. It was made a special economic zone for a number of reasons, but those reasons are similar to why Shanghai has exploded — and why Shenzhen is exploding.

For one thing, Shenzhen is a port city. Located in southern China on the eastern edge of the Pearl River delta, just across the border from Hong Kong, it is home to much, if not most, of China’s electronics manufacturing, and has the infrastructure to support that. In fact, it is probably the only place in the world to have a wholesale electronic components shopping mall located in an office tower downtown. That’s right, the SEC Electronics Marketplace: seven floors of components and finished electronic goods available wholesale.

Both cities have abundant human resources, not to mention prevalent universities, particularly Shanghai. In fact, Shanghai is so popular right now — particularly with Chinese engineer-entrepreneurs returning from abroad to take advantage of the advantageous business climate – that there are some 120 fabless companies in various stages of development in Shanghai, according to one chip startup I visited.

Plus, both cities have much to recommend them in the eyes of Western expats. Both cities are relatively clean and pollution free, and are very cosmopolitan; one could easily get by in Shanghai without having to learn Mandarin, or ever having to eat Chinese food, for that matter (why anyone would actually want to do that, however, I wouldn’t know – but I met Westerners in Shanghai who happily pointed this out).

Shenzhen, meanwhile, while much smaller and definitely more “Chinese” than Shanghai, is rapidly approaching that same level of international sophistication, and is so new and clean, it has been labeled China’s garden city. Indeed, the whole city seems at first glance to be sparkling and new, and compared to China’s older cities, green space is much more abundant.

But these very things that make Shenzhen and Shanghai such obvious choices may also serve to make them not-so-obvious choices. Shanghai, for example, is very expensive by Chinese standards – many people I spoke with, both Chinese engineers who had worked in Silicon Valley, as well as Western expats, pointed out that housing costs are approaching San Francisco/San Jose levels – and all of the attendant issues are starting to crop up in Shanghai, too.

“It’s not a problem for us yet,” said Kevin Sun, a marketing manager for Applied Materials China, referring to the high cost of living in Shanghai. “But of course they feel this pressure,” he said of Applied’s local Chinese employees.

It’s Not Just Location, Location, Location: Beijing vs. Shanghai

Another thing to bear in mind is that to do anything in China, you have to have established quan xi with the government – you have to establish and maintain the right relationships. For all of its cultural opening up, for all of its warm embrace of the free market, China is still a party where the Communist Party holds near absolute power.

And while Shanghai and Shenzhen may have a wealth of technological human resources, when it comes to finding brainpower in China, there is no better place than Beijing – which happens to be the seat of political power in China as well.

Now, for people not familiar with China – and perhaps more so for those who are only familiar with Shanghai – it’s important to understand that Beijing is the cultural heart of China, not just the political center. Geographically, Beijing never had much to recommend it, but in China’s distant past, as its dynastic rulers began to consolidate power across this vast country, Beijing became a strategic location, the crossroads of a growing realm. That is essentially why it became the seat of power for China’s emperors, which in turn attracted China’s intellectual and cultural elite, historically.

By and large, this is still the case today. Not only is it the seat of government, it is home to most of China’s premier universities – the Peking University, Tsinghua University, and the China Academy of Science, to name just a few — not to mention most of its millionaires, old and new, and its popular entertainment stars. It is also home to many of its brightest painters, musicians and writers.

And if there is a hot-button issue for the Chinese today – well, there are many, actually, but the rivalry between Beijing and Shanghai is one of them. Of course, the people that live in China’s other burgeoning high-tech cities have their own views on the matter, but most Chinese people in the tech industry in either Beijing or Shanghai, have a strong opinion with regard to the rivalry.

And the people that argue on behalf of Beijing make strong arguments. Beijing may not be a bustling port city, and may not have the infrastructure for manufacturing that Shanghai has, which the city’s proponents readily acknowledge.

If you’re just after cheap manufacturing, then by all means, go to Shanghai, says Liang Sheng, the section chief of the Department of Information Industry of the Beijing Municipal Government. “But if you want to expand your profits, you have to come to Beijing.”

And if you are looking to develop intellectual property (IP) tailored for the booming Chinese market, Beijing is the place to be. “Here we have our own IP,” he said, observing – as many Chinese officials did — that there was a reason SMIC built its first 300mm wafer fab in Beijing.

Liang likens Beijing to Silicon Valley; it is where a big chunk of China’s domestic chip IP is created. China’s only EDA company, CEC Huada, calls Beijing home, and of the 400 design houses in China, 85 are in Beijing. If that ratio isn’t good enough for you, consider this: out of the 16 design houses that achieve more than $100 million in annual revenue, more than half have their headquarters in Beijing.

Of course, there is no official distinction between Shanghai and Beijing when it comes Chinese efforts to lure the semiconductor industry there. Rather, it’s the result of a natural evolution: “it’s just what it is,” remarked Xu Xiao Tian, secretary general of the China Semiconductor Industry Association. “These two cities have their advantages and disadvantages.”

There’s More to China than Beijing and Shanghai

Some of those disadvantages in Beijing, aside from a comparable lack of natural resources, are considerable pollution and horrendous traffic. That is not to say that they aren’t problems in Shanghai, but in Beijing, they are particularly acute. While Beijing has a venerable, effective public transit system, there are still so many people in the city that its traffic jams rival the worst of those anywhere on the globe; it will be interesting to see how Beijing addresses this problem when it hosts the 2008 Olympics.

And it isn’t the only place to find superior human resources in China; consequently, nor is Shanghai the only place to find infrastructure and physical resources for manufacturing. As Xu observed, quite rightly, many companies both domestic and foreign, are looking at other cities around China – Chengdu, Xian, Shenyang, just to name a few. There are resources to be had elsewhere, often without the costs associated with Beijing or Shanghai.

One thing is common to virtually every significantly large municipality in China today: the local governments are playing to their strengths, and doing what they can to lure foreign investment. Wherever you go, whomever you talk to in local governments – as well as the local companies looking for foreign business partners – the phrase “win/win” comes up time and again; incentives are falling out of the metaphorical trees.

And each these other municipalities offers unique cultural environments as well, as followers of the Silicon Road blog know well, be it the food of Sichuan Province, or the warm subtropical climate of southeastern coastal China.

“I want all these cities to be successful with their semiconductor industries,” Xu remarked. “We’re paying attention to all of them.”

Electronic News Travels to ChinaIndeed, if one were involved in optoelectronics, Xiamen would deserve consideration. If software is your company’s forte, then Shenyang may be the place to set up Chinese headquarters. There are many places, places that we couldn’t squeeze into my Silicon Road itinerary, that are burgeoning high-tech and/or industrial centers in their own rights, or soon will be – Xian, Wuhan, Tianjin, Beihai and Guanzhou, just to name a few.

Wherever you decide to set up shop in China, I can say one thing is abundantly clear after spending a month investigating China’s tech industry: now is definitely the time to be there.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

Thank You and Good Night

Travelling the Silicon Road

HONG KONG — Boy oh boy, what a place to end a month-long Chinese sojourn. I arrived here this afternoon; the sun is setting on my last night in China.

But then Hong Kong isn’t really China, in the same sense that San Francisco isn’t really the United States. It’s in the United States, but it isn’t an American city. Just like no country can really claim its bustling port cities as their own, it’s clear even after just a few hours that Hong Kong is a unique place. Hong Kong isn’t Chinese, it’s Hong Kong.

There is every flavor of human being here; a true international city if there ever was one. And it’s a shame I will only be spending about 24 hours here. Of course, one could get into a lot of trouble in a place like this in only 24 hours, and normally I would be more than willing.

But it is a rather bemused and bittersweet feeling I have at the moment. Like I said previously, I feel like the task of unraveling this fascinating, wonderful land has only just begun. It’s true that I’ve had enough business travel to last me awhile, and after wandering the streets of Hong Kong for a few hours, I can’t help but long for the solitude and wide open space that will greet me when I return home later next week.

And Lord so help me, I think I would consider murder in cold blood if I thought it would get me a decent burrito a few hours sooner.

Nevertheless, all things considered, if I had the opportunity and the world were a different place, I’d stay. For how long, I don’t know. As long as I want to, I suppose. If Reed Business were to offer me a correspondent position in China, and they said I could live where I want to, I’d take it in heart beat. If they said I had to live in Beijing or Shanghai, I’d have to think about it for awhile — not very long, likely — and the answer would probably be yes.

I’m not saying I want to spend the rest of my life here — there is that whole free speech thing, I have issues with — but then I can’t say that about anywhere, really. Not even Ireland, which is the only other foreign place to tug at my heart strings like China has. But for a time. …

Anyway, I was a day late arriving in Hong Kong, where I was scheduled to spend the weekend before returning back to the States, with only a day to spare on my visa. Why did I skip an extra day in Hong Kong to remain an extra day in Shenzhen?

Well, Dear Gentle Readers, you don’t get to hear that part of the story. Suffice it to say, my soul longs to return to Gulang Yu or Beijing, and I have no doubt left my stomach in Chengdu, probably for all-time (although I haven’t been to Italy or Thailand — yet). But just when I thought I was going to escape a month in China relatively unscathed, it turns out that I’ll be leaving a little piece of my heart in Shenzhen. A tiny piece, but a piece nonetheless.

And for those of you that know Shenzhen, get your minds out of the gutter, it’s not what you think; I’m not talking about any of Shenzhen’s legendary working girls. No, Ali … she is anything but that.

I even thought about staying tonight in Shenzhen and getting up early and going straight to the Hong Kong airport. But I figured that, even though I have no interviews or appointments in Hong Kong, it was still part of my job to come here and experience it. And it’s a good thing I did, because it took hours to travel the 30 some kilometers from downtown Shenzhen to downtown Hong Kong.

This brings us all the way back around full circle to the subject at hand, finding out the truth of China.

But that will have to wait until next week. After all, it is Saturday night, and I am in Hong Kong. I’m not that bemused.

Electronic News Travels to ChinaWhat, you thought this was it? Oh no, the voyage down the Silicon Road will continue long after I’ve returned to the States. There are more stories to write about China, and more blog topics, like the long list of people I want to thank.

Why for heaven’s sake, we haven’t even gotten yet to what I know many Westerners want to know about: public restrooms and pit toilets. How could you think we were done?

Stay tuned.

Jeff

Editor’s Note: As explained at length elsewhere on this site, this is a blog entry of mine that originally appeared on the now-defunct Electronic News’ website, which is long gone. While its former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge), as far as I know, this blog content isn’t hosted anywhere else on the Internet, hence my reproduction here.

Original Comments

at 11/7/2005 7:36:42 AM, PeteF said:

I’ve enjoyed this series very much. As a student of Chinese history I envy your opportunity to visit there. And I must compliment you; you were not an ugly american. You are a real traveler. I’m going to be looking forward to more of your work. The writing is quick, entertaining and insightful. You done good boy!

at 11/7/2005 12:37:29 PM, Wayne V said:

Jeff, just a short note to tell you how much I have enjoyed your reports from China. Definitely first hand and first rate! Have a safe trip home and I look forward to hearing more about your trip! Wayne V

at 11/7/2005 2:09:45 PM, Jim from Rhinebeck said:

I’ve read bits and pieces of your blog; have enjoyed, and agree with, your perspectives. I’ve been to Shanghai on and off, for 10 years, to attend Semicon China trade shows. It’s amzing to see Shanghai’s transformation in that time, when the Pearl tower was the only really tall structure in the city scape. Now, Shanghai boasts a skyscraper a day and a 430 km/hr ride on the mag-lev.

Jeff, if only you could have seen the bicycle traffic in 1995! So much of that traffic has moved to the subway. This past March was my first endeaver to see other cities in China; Beijing, Xian, Shanghai, and Hong Kong. Seemingly endless examples of cultural, social, and political juxtaposition. My Beijing business associate (friend/guide/translator) survived the Cultural Revolution, and is now quite proud to own his own home and car.

China, for all its complexities and contradictions, is modernizing at an unfathomable rate. It’s a 21st century version of the California gold-rush. Enough of the profound. Time and Newsweek covered the profundities in detail. Simply put, China is a great place to visit. An when you’re done, you’ll be wishing Chinese foot massage parlors in the US.

at 11/7/2005 2:13:04 PM, Phil Harris said:

Having recently returned from a 2 week stay in Beijing, I found the people friendly, warm, and very helpful. My coworkers were enthusiastic and recognized that I brought information on well established western procedures. It was also an opportunity for me to learn that business in China has some similarities and differences. I hope to make this trip again shortly and look forward to it except for the plane ride. That leaves a lot to be desired. Thanks for your perspective. Phil

at 11/7/2005 2:14:43 PM, C.C.Poon said:

All the tour articles make very interesting reading. Worth many times over the money spent (by whoever)on the trip. I look forward to reading the other articles yet to come. Many thanks for writing them, Jeff.

at 11/11/2005 8:49:12 AM, Pete Flynn said:

Jeff, I want to let you know that this series has been great. I’ve enjoyed every post and even most of the comments by other readers. Even the dopey ones.Since I work for a company that sells lots of “stuff” to the Chinese electronics industry, their success means I keep working. I see the global integration of China ultimately resulting in more freedom for the Chinese people and a reduction in tensions. I will look forward to more of your articles.

ARMing China

Travelling the Silicon RoadSHENZHEN, China — Software is a hard sell in China — in a country that understands the physical aspects of manufacturing inside and out, the concepts surrounding software are perhaps somewhat esoteric.

Furthermore, while system integration is something the Chinese technology industry is adept at, design is still relatively weak by comparison. This may make China an unlikely place to launch an embedded software and hardware company centered on microcontroller development kits, but on the other hand, that would make you the only local game in town, and being local is often a key element to doing business in China.

This is exactly what one company, Shenzhen Embest Info & Tech Co. Ltd., has done.

Embest, a privately held company started up six years ago, is the first and probably still the only domestic company to offer commercially available development tools for ARM processors. ARM is a very popular technology, and the Embest founders were already familiar with it, having worked in the industry, so it was a natural fit.

The company is focused on enterprise customers, the R&D market and education — it sells kits specifically designed for universities and engineering education.

“Things are getting a little better,” said Zhang Guo Rui, international manager for Embest, referring to the Chinese market for its products. Once domestic companies understand the concept of embedded software and what can be done with it, it’s an easy sell, he added.

And with China recognizing the need to develop its own intellectual property in order to keep the revenue generated here inside the country, the domestic market is growing. While software design was often outsourced to India in the past, this is beginning to change as more domestic companies and international companies involved in the domestic market are focusing on their design efforts in China, Zhang said.

The company is located in Shenzhen, where much of the Chinese market for its embedded software and hardware developed is located, given the huge manufacturing base in electronics here.

Still, it’s not a huge market to begin with, and a nascent one in China, so Embest has directed the marketing for its patented technology on international markets. It began selling overseas in 2003; today it is doing business in several countries, including the United States, France, Germany and South Korea.

The company has already built a reputation as a third-party supplier of ARM development products; the industry’s penchant for outsourcing to China to lower costs coupled with Embest’s position in the local Chinese market and its capability to design finished products based on ARM processors, has all helped to boost the company’s market presence both domestically and abroad, said Zhang.

Electronic News Travels to China

Eventually the company would like to expand beyond ARM and produce development kits and product designs around other technologies, such as DSPs. It’s been talking to a Western DSP chipmaker about doing just that, although the talks are only in the initial stages. Like it does for ARM, it wants to introduce tools into the Chinese market to develop designs based around the DSP.

Of course, this could provide the Chinese proverbial win-win situation: It would boost the foreign company’s presence in China via a local supplier, and help spread Embest’s presence in the international market.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

Chinese Electronics: Getting Ahead of the Game

Travelling the Silicon RoadSHENZHEN, China — It seems wherever you go in China’s cities, north south, east or west, business and government are looking for foreign partners and investments.

Start-ups, local and central government, well-established domestic companies alike, all discuss the possibilities of establishing a win-win relationship with companies from the West, particularly the United States. These efforts are still relatively nascent in China’s chip industry, with a few notable exceptions like foundry Semiconductor Manufacturing International Corp.

And on the other side, many are just as eager. In some cases, they’ve already been here for years, like Agilent or Applied Materials. Or they are just now looking to get involved in the booming Chinese market, and might not be sure who to partner with – venture capital firms, for example, look at the raft of Chinese chip and technology start-ups, and are bewildered about which ones to choose.

But China’s electronics manufacturing industry is considerably more developed than its chip industry. While developing intellectual property and bringing it to market might not be a Chinese strongpoint, manufacturing is, so it is only natural that China’s electronics manufacturing industry is humming along strongly and has been for years.

While the semiconductor content of Chinese electronic components may come from beyond China, the rest of the content that goes into making an electronic product can be found locally here in China, be it cables, boards, connectors or whatever. In many cases a product can be sourced entirely here in Shenzhen and that, along with cheap human resources, is why manufacturing is inexpensive here compared to the rest of the developed world.

Look at the cost of manufacturing a television. Thirty years ago, it cost about 3,000 yuan; today it costs about 500 yuan to produce a TV in China, noted Chao Getu, a general manager at Shenzhen Deren Electronic Co. Ltd. That’s about 62 bucks.

“The same thing will happen in the field of white goods and household electronic appliances, sooner or later,” Chao observed. “The advantage of China lies in the whole [electronics] supply chain.

And when it comes to doing business with the West, China’s electronics companies are also ahead of the game. Deren Electronic is a good example.

A privately held company created in 1992, Deren is focused on R&D and production of electronic connectors. It has a solid foot in the middle layer of the electronics supply chain in Asia and the world; its revenue this year should be around $87.5 million (700 million yuan). It has seven factories around China, and has an impressive list of domestic and foreign customers.

Among its Chinese customers are giants like home appliance manufacturer Haier and television maker Konka. Among its foreign customers most notably are big Japanese names in electronics: Toshiba, Sony and Sanyo – a notably tough market to crack, even now.

How the company got into Toshiba and the Japanese market initially, was its competitive price, said Chao. While the Western supply chain is open to foreign suppliers, the Japanese electronics supply chain is still relatively closed, at least until a few years ago.

To get more solid footing in that market, Deren went a step further, hiring Japanese engineers and setting up a new business division specifically to interface with Toshiba and Japanese customers, one that operated like a Japanese business; Deren recruited staff for that division from Japanese companies.

“This was a good start for Deren,” said Chao; it led to its business with Sony and Sanyo.

Deren has also been able to lure the business of U.S. giant Tyco Electronics. The two companies announced their partnership in January of this year, signing a strategic agreement for connectors to be used in home electronic appliances and communications equipment. Deren agreed to manufacture and distribute certain Tyco brands within China; in addition to this OEM agreement it also serves as a distributor for other Tyco products.

For Tyco, which was at one time naturally a competitor of Deren, it gained a local foothold in the blossoming Chinese market, a place it had struggled to penetrate previously. By partnering with Deren and offering its technology, it suddenly was inside China’s large home appliance market.

Meanwhile, Tyco is supplying Deren with patented electronic connector technology, advanced management techniques and brand marketing, and more importantly an entry into the top-level of its target customer base.

Essentially, the deal represented the localization of Tyco – an important step for foreign companies doing business here – and a step toward the globalization of Deren Electronic. Tyco brought in staff from Taiwan to train Deren employees, gaining access to people with business experience overseas.

As Chao observed, “We need more cultivation than utilization.”

Electronic News Travels to ChinaThe company has already learned a lot from Tyco in less than a year, he said. Its human resources management and factory production and product design have all seen great improvements. While the cooperation on a sales and marketing level remains somewhat lower by comparison, Deren hopes to raise that level going forward.

It’s not resting on its laurels either; it is currently courting a large European company as well, hoping to duplicate its relationship with Tyco and continue its foray into global markets.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

Shopping, Shenzhen and Farmer Ye: Pondering the New China

Travelling the Silicon RoadSHENZHEN, China — I’ve come to the conclusion that many, if not most Chinese people love to shop.

Now before the ignorant self-righteous weigh in, let me add that I’m not knocking China; far from it. After all, the movement to a market economy is still underway — less than a generation ago, really — and I imagine that many middle-aged people have disposable income for the first time in their lives, and want to spend it. As a middle class American I would feel hypocritical if I found fault with that.

Then of course, there is the bargaining. Travelers to China know all about the tourist or laowai price vs. the Chinese price, and one’s new-found Chinese friends are always on the lookout for you, making sure you get the Chinese price whenever possible. Like friends I’ve known of Middle Eastern descent, I think perhaps the bargaining is half the fun for them.

But for myself, I really don’t care to shop or bargain. While many Americans do, I think my disinterest stems also from being American — by Asian standards we tend to be rather abrupt and forthright; even by American standards most people would consider me very direct.

And I’m not one to mess around with shopping; if I need something I go buy it, as quickly as possible, end of story, no screwing around. I remember getting out of the mag lev station in Shanghai, along with my interpreter, Zhike; we were immediately besieged by taxicab drivers. When they realized that we wanted to go to the other side of the city, there was silence.

Finally one young man ventured timidly, “250 yuan.” I did the math in my head: expensive by Chinese cab fare standards, but still cheaper than many a cab ride from an airport or train station in the U.S. “Done!” I cried, happily. “Let’s go,” I said, proceeding to wheel my luggage toward the gentleman’s cab. At that point I was already sick of carting around luggage — business trips always seem to require 3x as much stuff as vacation — on planes, trains and automobiles, and the sooner this was done, the better.

But you could literally hear the sounds of jaws of everyone within earshot of this exchange bouncing off the pavement. Our cab driver looked a little bewildered; Zhike seemed almost shocked. At the time, I wasn’t sure what faux pas I had committed; now I know — crazy, hasty Americans.

But running around Shenzhen the past couple of days, conducting interviews or just wandering at random, phrase-book in hand, I’ve been thinking a lot about shopping. Shenzhen by all accounts was a sleepy, balmy fishing village 20 some years ago, when the central government decided to make it a special administrative zone. Viola — now it’s a busy, balmy port metropolis, the heart of the country’s electronics manufacturing, and consequently its richest city.

It shows. Everything seems new and sparkling, and the shops stay open very late; downtown there are shopping districts where the stores are open past midnight.

Shenzhen has also been recognized in China as a garden city, for its cleanliness and green space — and indeed it is, especially compared to China’s older cities, and even Shanghai. It provides quite a contrast to the rural areas that I glimpsed outside Chengdu this past weekend. Many of my newly met Chinese colleagues and associates have observed that the gap between rich and poor in China is greater than many in the West realize, especially those that never venture beyond the popular eastern cities — like Shanghai and Shenzhen. Judging from what I saw, I’m inclined to agree.

But I think it is also a generational issue as well; like Zhike and others pointed out to me, young people from rural villages are flocking to cities, hearing stories of the new wealth to be had; once they glimpse a “better” way of life, they head for the smoke.

I put the word “better” in quotes, because I suppose it’s a matter of perspective, in this case, a generational perspective. This past weekend, while hiking up the 1,200-meter Qingcheng Shan, a holy Taoist mountain some 65 kilometers west of Chengdu, I took us off the beaten path. I have a habit of doing that; chalk it up to a streak of Robert Frost.

The path took us to a small farm, a subsistence farm, really, of one Ye Wen Fu (you can see a few pictures of Ye and his farm in the photo section of the Silicon Road — I think it starts with photo no. 65). He told us that he and his wife had been living off the side of the mountain for nearly 50 years. At one point the government had tried to get him and his family to go down to the city, and he did for awhile, but he couldn’t meet his family’s needs, so he returned to the mountain.

While by the standards of any developed nation, East or West, Ye is literally dirt poor, all his basic needs are met, and he seems happy and content with his lifestyle as it is. It’s hard to argue with that, and I wouldn’t presume too. I wouldn’t choose his life, but I understand the attraction to its simple and uncomplicated nature. There doesn’t seem to be anything in the “New China” that interests him, even though he came down off the mountain to see it.

I have no idea how many people there are like Ye in China; I haven’t been here nearly long enough, and won’t presume to draw any broad conclusions. But I can’t help but think about him when I hear people who reside solidly in the New China talk about how China must bring the entire population up to speed in the modern world. People often talk about how 50 percent of the population doesn’t have any sort of reliable means of communication — no land telephone line, no mobile phone, no satellite phone — and how that is a market opportunity that needs to be developed, not only for their own sake, but for those who are rapidly becoming attached to disposable income.

Electronic News Travels to ChinaBut I’m guessing that Ye isn’t the only simple rural farmer out there who might not be interested in the Brave New World. Many of their children are, to be sure, but people like Ye are not. Just how much of a bump, if any, this will be on the road to the modernization of rural China remains to be seen.

Editor’s Note: As explained at length elsewhere on this site, this is a blog entry of mine that originally appeared on the now-defunct Electronic News’ website, which is long gone. While its former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge), as far as I know, this blog content isn’t hosted anywhere else on the Internet, hence my reproduction here.

Original Comments

at 11/2/2005 12:47:16 PM, W. Wong said:

Hi Jeff: I was born in HK and left there to live in thhe US when I was 10. Now I’m 50, I have yet return or have any desire to visit China. Your article and pictures have really touched my inner soul, so that I should plan a visit to my own country and see the changes that have developed since I left. Thanks

at 11/2/2005 1:28:26 PM, TerryP in VA said: Can you get Chinese food without MSG there?

at 11/3/2005 7:40:53 AM, AndyB said: I look forward to seeing pictures and hearing more about Shenzhen. I spent about a week there visiting companies and was awestruck by the growth and size according to some locals (that was 6 years ago). I was amazed by the unmarked dirt piles blocking freeway lanes and dodging bicycle rickshaws as well (4-way unmarked intersections on the freeway were interesting as well). Thanks for the very interesting personal experiences.

at 11/3/2005 10:00:15 PM, Jeff Chappell said: Yes, you can order food without MSG; you just have to ask (I recommend the Lonley Planet Mandarin phrasebook). And the food is so awesome here. … You can also find espresso; it’s not the espresso you’d find in say, Rome or Paris, but it’s often comparable to what you can get in the U.S., much to my delight. Starbucks is already here, of course. But then some of the tea over here will wire you right up 🙂 and it is about 1,000x better than any tea in Europe.

at 11/3/2005 10:03:59 PM, Jeff Chappell said:

Thank you Mr./Ms. Wong, for your kind words. And I think you would find that your childhood home has indeed dramatically changed …

at 11/3/2005 10:08:12 PM, Jeff Chappell said: AndyB, what you describe is typical of many a Chinese city. In that respect, Shenzhen is Chinese through and through.

at 11/4/2005 12:55:25 PM, BobboMax said:

Hey, I’ve enjoyed the blog- a pleasant mix of humility, openness, observation and that rarity of modern life, good writing.

at 11/7/2005 12:30:52 PM, D Autry said: Hello Jeff, I have thoroughly enjoyed your stories and pictures. We are a small electronics company and will be opening an office in Dan Dong.