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.  

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John Sharp

John is a serial entrepreneur and investor, and the co-founding Partner of Hatcher+, a data-driven, globally-focused venture investment platform based in Singapore. In addition to leading capital raising and deal syndication, he is the visionary and architect behind the Hatcher Stack, the company's proprietary research and technology platform. Over the past five years, John has led numerous venture investments in early-stage companies, including ASYX, DocDoc, Dropsuite, Heardable, Invit, Inzen Studio, SocialCops, ThoughtRiver, and Telr - and syndicated over US$100Mn of additional debt and equity co-investment. IPOs and trade sales in which he was acted for the majority shareholder include Dropsuite (ASX:DSE) and Inzen Studio (ASX:ICI). His M&A work includes the merger of payment leader Telr with Dubai-based Innovate Payments, and the merger of Singapore-based companies DocDoc, and DoctorPage. Prior to co-founding Hatcher, John founded cybersecurity technology leader Authentium (acquired by CYREN in 2010), and acted as a director for global payments aggregator Mozido, and an advisor to Africa-based Gateway Communications, satellite technology developer MDS America, Kuwait-based Internet marketplace Sheeel.com, and Orion Partners, a $2B private equity fund manager based in Hong Kong.

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