On April 1, the lights went out in Gaokede Electronics Building for the last time. The eight-story, slate-gray building has been publicly marked for destruction and rebuilding for months now, as notices taped outside its doors advertise.
The structure is part of Huaqiangbei’s now-famous electronics market, a mecca for both parts and finished products that draws entrepreneurs from around the world. In its heyday, Gaokede—like surrounding buildings—offered multiple floors packed with around 2,000 vendors’ stalls, specializing in products ranging from switches to LED lights to USB cords.
Those days are now over for Gaokede. Most of its stalls have been emptied out. Some have also had their locks broken and glass walls smashed in—the handiwork of thieves and vandals, according to some of the remaining tenants. Other spaces, including the abandoned management office on the seventh floor, are simply littered with packaging detritus or trash.
According to an official notice posted in late January by Gaokede Electronics Company, the building’s main lessee, an agreement with Junjia Investment Company, the property landlord, had expired on Dec. 31, 2018. The company gave vendors until March 31 to vacate the premises, threatening to cut off access to water, electricity, and other services on April 1.
But as of the afternoon of April 2, some sellers had yet to vacate the premises, saying that they hadn’t been appropriately compensated.
A statement by a group of vendors in Gaokede, an electronic copy of which was reviewed by TechNode, accuses Junjia of requiring tenants to renovate their stalls at their own expense between January and October of 2018, despite deciding to tear the building down in June of that year.
In addition, the statement claims that Junjia’s offer of RMB 3,000 (around $440) in compensation falls short of the losses vendors have suffered as a result of not being notified earlier.
“Because they concealed the reconstruction, it led us thousands of vendors to look for stalls in a short period of time, causing surrounding rents to suddenly double and rise,” the statement said. “The transfer fee for a very small counter spot is hundreds of thousands of yuan.”
Some vendors also showed TechNode yearlong rental contracts that required an upfront payment for a period extending well beyond April 1. They claim that the remainder of the prepaid rent was never returned to them.
Neither representatives of Gaokede nor Junjia could be contacted for comment for this article.
One of the holdout vendors is Deng Xini, who together with her husband sells integrated circuits and dials. They’ve run their business for 20 years now. For the last 10, their shop has been in the Gaokede building, and the couple spent some RMB 10,000 last year to erect glass walls atop their plain counter.
Now, they want their money back. “We’ll need a little compensation” before leaving, Deng says. Until then, the Zhangjiang, Guangdong native is planning to stay, electricity or no–after all, their contract lasts until Oct.
On the afternoon of April 1, Deng and her husband were still receiving customers at their first-floor stall, located near a building exit. Zhang Feng, whose stall is on an upper floor building, isn’t so lucky.
On March 29, surrounded by haphazardly stacked bags and boxes filled with charger cables and more, Zhang told TechNode that he hadn’t had any customers all day. He’s waiting for negotiations among the vendors, Gaokede, and Junjia, currently overseen by Huaqiangbei’s police and neighborhood committee office, to produce results.
Since the January announcement of a construction date, one seller—who declined to give his real name—told TechNode that business has cooled down. As of late March, the Gaokede building was only a shell of its former self. Stalls were largely deserted, and one set of elevators was no longer active. Escalators throughout the building were similarly frozen.
An update posted by Junjia on March 29 warned vendors that the company reserves the right to fine holdouts in order to compensate for losses caused by delays in reconstruction.
On the afternoon of April 2, dozens of vendors gathered outside the doors of Gaokede, some of them holding paper banners reading “unscrupulous Gaokede, malicious relocation” (our translation). They spilled onto one of the roads that runs alongside the building, blocking off access for vehicles, before being broken up by police.
Symbol of Shenzhen
While it formerly housed around 2,000 shops, Gaokede is only one building among many. However, the evictions and reconstruction taking place there may be part of a larger shift in the area’s storied electronics markets.
According to David Li, executive director of Shenzhen Open Innovation Lab and longtime Huaqiangbei observer, the neighborhood has long fostered a special type of innovation.
“One of the big things about Huaqiangbei is the openness; everybody knows what everybody else is doing… the innovation is the wisdom of the crowd.”
For years, Li has written and argued that shanzhai–or copycat–culture in places such as this one actually aid innovation rather than hinder it.
By gathering thousands upon thousands of tech vendors in one area, Huaqiangbei enables “very rapid” iteration of products such as VR headsets among “copycat” sellers, eventually resulting in improvements.
From Li’s point of view, however, Huaqiangbei hit a high point between 2000 and 2012. “It’s [one of] those kind of huge gold rush, once-in-a-lifetime opportunities to make money, and it [didn’t] last.”
He thinks that Gaokede’s impending destruction and the resulting rise in rent of surrounding buildings will be a temporary change, not a lasting one. “It’s not a traditional story of gentrification” either, since vendors in the area must have a certain level of affluence to afford the relatively high rent there.
Jason Hilgefort, an urban design lecturer at Hong Kong University, sees another type of change taking place in Huaqiangbei, symbolized in part by the 2017 unveiling of a new, attractive pedestrian street in the neighborhood. “This is part of a conscious strategy to improve…the rental value and shift Huaqiangbei.”
While the desire to beautify the area is “understandable,” government and property owners should approach such efforts with caution, Hilgefort says. “When you do something like that, you’re going to cause a change to the buildings that surround it… It has consequences.”
For Deng Xini, those outcomes are all too real. Twenty years ago, she and her husband switched to selling electronics after they faced obstacles in their previous service industry jobs. Now, however, with the looming eviction from Gaokede along with rising rent, she thinks that electronics retailing too is getting “harder and harder.”