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Why China Kicks Ass

I had a meeting yesterday with the CEO of an entrepreneurial hardware venture that is looking for funding from us.  The guy recently moved to China to take advantage of the rapid prototyping capabilities to be found in Shenzhen.  

I asked him if there was really that much difference between doing the prototyping, say, in Singapore, or doing it in China.  What he told me gave me a new perspective on Chinese competitiveness.  Here's what he said:

"When I order a PCB (Printed Circuit Board) prototype here in Singapore, the order typically costs $100 and takes three weeks to fulfill.  In Shenzhen, the exact same order costs $10 and takes less than three days to turn around.  Sometimes it comes back in a day."

Huh?  

According to my calculator, this makes China approximately 70 times more competitive, if you take the cost and time savings at face value.  (3 / 21 = 14.2. 14.2 * 10/100 = 1.42857.  100 / 1.42857 = 70x - yeah, I know that's a rough calc, but hey... the numbers work well enough to be illustrative...)

What does a 70x competitive advantage provide you, as the entrepreneur?  Simple: the ability to continually iterate and experiment and try new versions of your product and shave years off your dev time... 

China isn't all good news - when it comes to raw talent, intellectual property protection, governance, and quality of life, give me Singapore any day.  

But rapid hardware prototyping?  I'll see you in Shenzhen.  


Sharp John Sharp

John is a Partner at Hatcher Plus, the leading data-driven venture capital investment firm. John has extensive commercial experience at the senior management level, having been the Chief Executive Officer of Authentium, Inc. the Managing Director, Asia, of WorldSpace, and CEO of Hatcher, the precursor company to Hatcher+. A tenacious and driven executive with longstanding board-level and C-suite level management experience within high-growth companies, John also brings a strong history of capital raising from an extensive network of investors globally. As Chairman and CEO of cybersecurity pioneer Authentium (acquired by CYREN in 2010), John co-authored three US patents and developed and sold cybersecurity solutions to some the largest organizations in the world, including the US Department of Commerce, NASA, AOL, British Telecom, Comcast, Cox Communications, Google, McAfee, Microsoft, Symantec, and Telstra. As CTO at Hatcher+, DocDoc, Heardable, and ThoughtRiver, John has designed and developed several highly-innovative technology platforms using cutting-edge approaches to data processing, user interface design, and workflow optimization. John is a frequent blogger and an in-demand speaker at venture events globally, and has extensive experience implementing ESG solutions as Chairman and/or board member of numerous start-ups, including director roles at trade finance provider ASYX and payment aggregator Mozido, and roles as Chairman of MENA-based financial services pioneer Telr, and the leading Cambridge-based legal services technology company, ThoughtRiver.