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This post is part of our series Say Hello To China’s Expat-preneurs, where we will talk to a mix of foreign founders and tech veterans who have tackled China’s growing tech space and won. Stay tuned over the coming three weeks as we talk to foreign founders from Beijing to Shenzhen about what it takes to thrive in China. You can follow our updates at @technodechina, or check back here for new stories in the series. 

Shenzhen is becoming so attractive to manufacturers and innovators, that even a ‘Shenzhen map for makers‘ can be found on the web. One of the must-visit place for makers is HAX (previously HAXLR8R), an accelerator for hardware device makers, offering seed fund, office space and mentorship. 

They boast a 90% startup survival rate, 100% crowdfunding success and $300k average backing. Recently, HAX won the best institutional investor on ChinaBang, China’s annual award ceremony hosted by TechNode.

“Being near the world’s best ecosystem for electronics, and working closely with factories helps overcome many challenges,” HAX general partner Benjamin Joffe says. “Many entrepreneurs are coming in and communities and platforms are forming, which helps a lot.”

According to recent Cisco studies, IoE (Internet of Everything) value will reach $19 trillion over the next decade. “Everything is getting connected and I thought it’s a huge opportunity, ” Joffe says. Being an expat-preneur himself, he is not only general partner at HAX, but also an angel investor and founder of +8* (Plus Eight Star) and is optimistic about the potential of local innovation. “I am always surprised by the new electronic gadget me or my friends discover in the Huaqiangbei markets or on Taobao. Quality and creativity are definitely up!

The Flow of IoT, Beware of Copycats

Shenzhen presents a cheaper and faster solution for manufacturers to build prototypes, but building products remains challenging since there are a handful of copycats around. There are problems like increasing labor costs and living expenses in Shenzhen as the centre becomes a hub for innovation itself rather than a cheap manufacturing city.

One of the challenges in the market is a bandwagon effect on successful products. Joffe mentions that “me-too” products are still a common feature. “A bit cheaper, a bit faster. We think it’s a huge mistake for entrepreneurs, as this approach makes it hard to differentiate and lowers margins for everyone,” he states.

Still, other foreign founders are hesitant to move the innovation process closer to China at this point. “For many, China is a mysterious black box and they cut corners in making deals, trying to go too fast,” Joffe points out. “Understanding where your IP is important, since it helps mitigate risks, as well as doing proper due diligence on partners.”

What do Shenzhen based expat-preneurs need? 

HAX based both in Shenzhen and Silicon Valley, Joffe believes one of the biggest cultural differences between  Silicon Valley and Shenzen is that the former stands out for its “pay it forward” culture. “It comes partly from several generations of tech entrepreneurs reinvesting in the ecosystem and new generations,” Joffe explains. “It is starting to emerge in China with the newly minted millionaires from Alibaba, Tencent, Baidu and more.”

Another problem is that there is still little connection between foreign and local entrepreneurs. “It is improving and HAX is working on that too.” Joffe said. 

“There are many excellent engineers and scientists who could build global successes,” Joffe says.  “Make sure you have the time to dedicate to it, that there is a market for you and learn fast.”

<Quick Questions>

1. What’s the most striking cultural difference when you first came to China?

I am from France and lived in Japan and South Korea before moving to China. I was surprised by the entrepreneurial activity in China at all levels of society and across all industries. 

2. How did you get involved in the local startup scene? 

Meet connectors, ask, listen. There are many startup events these days, you can find some advertised in English via the Startup Digest newsletter. 

3. What do you love about China? 

The energy and scale, and the feeling that we are at a turning point in the world’s history.

4. What is your personal motto in your life?

Ha-ha, that’s a tough one! I want to live an interesting life, and I avoid sweating the small stuff. I like the English saying “worse things happen at sea!”

Image Credit: TEDx Taipei