p Something Ventured in Shenzhen

7/28/2019 p Something Ventured in Shenzhen

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Something ventured in

ShenzhenChina's capitalist revolution is about more than cheap goods and

labor. A tantalizing

promise of wealth

has created a

freewheeling spirit

and eager

entrepreneurs.

By KRIS HUNDLEY

Published September

18, 2005

[Times photos: Bob

Croslin]

China opened its

doors to Western

business in

Shenzhen. The

former fishing

village is now a

showpiece.

SHENZHEN, China - This may be the biggest place you've never

heard of.

More people live here than New York city.

It has more factories than the Midwest; a skyscraper taller than the

Empire State Building; the busiest port in China.

And a premier golf course that has been played by Tiger Woods.

Shenzhen was nothing but a fishing village 25 years ago when it

was picked by government officials to become the showplace of

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China's economic resurgence. Now this city of 10-million rivals Hong

Kong as a mecca of capitalism.

Said Rick Cui, a computer engineer who bolted Atlanta for a job in

Shenzhen two years ago: "Here all anybody talks about is how tomake money."

John Lackey and George Asselin of Pinellas County certainly had

never heard of Shenzhen when they first came up with the idea for a

tool that rips shingles from rooftops.

The two men, then unemployed machinists, invented the gadget

after Lackey nearly suffered heat stroke during a brief foray into

roofing. Using parts from Home Depot, they built a prototype in

Lackey's Kenneth City garage and applied for a patent. They calledtheir invention the Roof Shark.

Short of cash but not confidence, the two men wrote to 40

companies around the United States looking for someone to produce

their invention. But nobody would bite.

"They just didn't want to take a chance on two guys in a garage, I

guess," Lackey said.

Some wouldn't consider ideas from outsiders, others said they were

too busy. A couple of companies wanted thousands of dollars

upfront just to make the production molds. The men figured if they

could get the Roof Shark made in the States, costs would drive the

retail price to more than $200.

Then they read a newspaper article about CSD Worldwide, which has

offices in Oldsmar and Shenzhen, China. Its forte: taking

brainstorms and turning them into products.

Lackey and Asselin got halfway through their homemade video

showing Lackey ripping off shingles with the Roof Shark when CSD's

Jim Wetzel said his company would bring their idea to market.

In a matter of months, CSD's engineers in China refined the design

and lined up factories in Shenzhen to do the manufacturing and

assembly. The Oldsmar office will do sales and marketing. Lackey

and Asselin will get a percentage of gross sales.

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Less than a year after signing the deal with CSD, the men had a

finished Roof Shark in their hands and a shipment of 200 on the way.

Anticipated retail price: $59.95.

"We wanted to make it in the States really bad," said Asselin, a 52-year-old former union member who works at Circle K on Redington

Beach. "But the choice was made for us."

* * *

The world's biggest Communist country has become a powerhouse

of capitalism. And the momentum comes from much more than

cheap labor. The tantalizing promise of economic advancement has

generated a freewheeling entrepreneurial spirit among one-fifth of

the world's population. Having so little to lose, the Chinese havebecome risk-takers extraordinaire.

Party-appointed officials still control everything from Web sites (nix

on anything related to Falun Gong) to the number of kids in a family

(one unless the first one is a girl), but they have given citizens free

rein to make money.

As a result, China's per capita income has quadrupled in the past 20

years. More than 250-million people have moved out of poverty, a

phenomenon the World Bank calls unprecedented in human history.

In Shenzhen, factory wages averaging $85 a month are up 50

percent from a decade ago and well above pay in surrounding areas.

But demand so outstrips supply - even with millions of migrant

jobseekers - that 200,000 positions are unfilled.

That dynamic generates an attitude of risk-taking among people

who were constrained for decades under Mao's policies. Teenagers

forsake ancestral villages for distant cities, then job-jump for higherpay. Government workers abandon secure bureaucratic posts to

develop real estate. Peasants pave their fields and build factories.

With the government's blessing, the doors of opportunity have

opened and 1.3-billion people are charging through.

The West has witnessed China's emergence with the red-hot IPO of

Baidu, China's Internet search engine; CNOOC's recent unsuccessful

bid for Unocal; and the sale of IBM's personal computer business to

China's Lenovo.

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But the focus on such main stage megadeals misses the frenzy of

business activity taking place every day in places like Shenzhen.

Engineers in Tampa are working out software bugs with coders in

Shenzhen by e-mail daily. An entrepreneur in Palm Harbor importsmillions of dollars worth of pizza delivery bags, spatulas and

ingredient scales from China. And the Roof Shark's inventors are

seeing their product assembled in a city whose name they couldn't

even spell a year ago.

Lackey sleeps with a Roof Shark on the floor next to his bed.

"We had an idea," he said. "Now it's going to be on a store shelf.

That's so rare."

* * *

When Deng Xiaoping told his countrymen in the early 1980s that "To

get rich is glorious," he probably didn't have the Roof Shark in mind.

But the process Deng set in motion with his pronouncements, as

well as his moves to normalize relations with the West, made gizmos

like the shingle remover possible.

Shenzhen was the perfect place for Deng's bold experiment withcapitalism because it was close enough to Hong Kong to attract

foreign business people and their money. It also was far enough

from the politics of Beijing that if the experiment failed it could be

officially ignored. And Shenzhen, situated on China's southern

border, could be sealed off from the rest of the country if Western

influences proved too inflammatory.

But once Shenzhen made friendly overtures to outsiders, there was

no turning back. It wasn't that China was handing out generous

incentives. It was that after 30 years, China was finally opening the

door to Western businesses. Shenzhen's municipal leaders held

welcoming banquets, helped foreigners navigate the maze of official

regulations, then sat back and collected taxes and fees.

In the past two decades, more than $30-billion has been invested by

outsiders in Shenzhen: building factories, forming joint ventures,

hiring workers. Among the newcomers were multinational

corporations like St. Petersburg's Jabil Circuit Inc., which has a

factory here. Also staking a claim in Shenzhen was Davy Wong, a

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Hong Kong entrepreneur and partner in CSD, the maker of the Roof

Shark.

John Parke Wright IV, a Tampa native and member of the Lykes

family, witnessed China's early economic transformation. Wright hadbeen working with the British trading company Jardine Matheson in

Hong Kong when he got the job of reopening the firm's Beijing office

in January 1979.

"In 1978-79 all the big American companies - Coca-Cola, Kodak,

Pfizer, Goodyear - were lined up to come back into China," said

Wright, who now lives in Naples. "The Chinese were saying quietly

they wanted China to be more like Hong Kong, and not Hong Kong

more like China."

Deng, who returned to power in 1978 after losing his leadership

position during the Cultural Revolution, quickly dismantled Maoist

communes and allowed peasants to produce food for private sale.

He negotiated full diplomatic relations with Washington and became

the first leader of Communist China to visit the United States. He

encouraged state-owned enterprises to become more

entrepreneurial and signed off on joint ventures with Westerners,

the first with a Swiss elevator company.

Wright said he was at a Beijing train station in late 1978,

accompanying officials with Bechtel, the giant U.S. engineering and

construction firm, on a visit to Chinese oil fields, when they learned

that President Jimmy Carter had appointed Leonard Woodcock to be

the first U.S. ambassador to Communist China.

"All of a sudden we were surrounded by a crowd and one man

asked, "Are you American?"' Wright remembered. "When we

answered yes, there was a cheer. They were terribly excited that the

U.S. had normalized relations with China."

By spring 1979, Wright and Ambassador Woodcock were watching

the first American ship in 30 years pull into a Chinese port: the

Letitia Lykes of the Lykes Line picked up a cargo of nails from

Shanghai while a Chinese ship was being loaded with grain in

Seattle.

Economic progress stalled after the Tiananmen Square massacre in

1989, but was revived in January 1992 when Deng made his famous

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southern tour, urging Shenzhen officials to "move faster and be

bolder."

Soon after, Beijing opened a dozen more cities to foreign

investment. Shanghai and Shenzhen opened the nation's first stockexchanges. Shenzhen's population ballooned with migrant workers,

70 percent of them young women. At Shenzhen's border crossing

with Hong Kong, the cycle of trade soon reversed: instead of TVs

and washing machines flowing into China, they were suddenly

rolling out.

Deng's 1992 visit - and his not-so-subtle order to outdo Hong Kong -

is memorialized in a mural on top of Shun Hing Square, Shenzhen's

tallest building. Looking out from the twin-spired skyscraper, a

visitor sees a spiky blanket of condos, office buildings and hotelsand, to the south in the haze beyond, Hong Kong.

* * *

On the streets of Shenzhen, cars, trucks and minibuses jam

highways that have no median strips, playing a game of high-stakes

chicken with bicycles. The sky is the color of a smoker's lungs.

KFC, McDonald's, Starbucks and Sam's Club are sprinkled among

giant Chinese department stores and mom-and-pop shops operating

out of garage-like spaces. There's such a rush for new retail that a

six-story bookstore opens for customers while the top floors are still

being plastered.

Shenzhen makes a feeble bid at tourist attractions. There are parks

with a scaled-down replica of the Eiffel Tower, a miniature Great Wall

and an ocean liner turned shopping mall, inexplicably moored in

concrete.

But the city's main attraction, to migrants as well as foreign

business people, is its tens of thousands of factories. Proof of the

city's key role in the world supply chain: Wal-Mart's global

purchasing headquarters is in Shenzhen.

The factory where the Roof Shark is assembled is on the rapidly

developing northern edge of Shenzhen. In the neighborhood outside

the factory gates, poorly graded roads are filled with mud and

clogged by fume-spewing buses. Old farmhouses have been

reduced to rubble, soon to be replaced by high-rises. New white-

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tiled workers' dorms are already coated with gray film, their

balconies strung with laundry.

At ground level, tiny family-run restaurants cater to workers with

woks and pool tables out front. In a bare-bones Internet cafe - nocoffee, just Net - every seat is taken as uniformed workers play

World of Warcraft or surf the Web.

CSD is putting together the Roof Shark on one floor of a new five-

story building. The floor above is leased to a clothing manufacturer;

downstairs another entrepreneur makes cell phone covers. The

landlord is a peasant who, until a year ago, farmed the land beneath

the building. Today he collects rent.

Wong, a lanky Hong Kong native in his early 30s, runs CSD's Chinabusiness on a shoestring, a cell phone and a Rolodex. He

subcontracts simple manufacturing jobs to more than 50 factories

around the country. More complicated products are handled at the

Shenzhen location, which is less a factory and more a wide-open

flex space that can be configured for the job of the day.

Engineers tweak clients' designs on computers in one office while a

couple of project managers who earned their MBAs in England are

on the phone down the hall.

In a room shut off by dangling plastic strips, a crew of about 30

young women in white caps hunch over benches, soldering tattoo

needles while a Rube-Goldberg-like venting system rattles overhead.

In an adjacent area, women in black polo shirts and hairnets check

finished needles for imperfections before they are cleaned, sealed

and blister-packed.

Off a hallway, nine men wind tiny wire motors by hand for yetanother CSD client. Every work area looks like it could be broken

down and retooled to make something different in a matter of hours.

Wong said laborers earn about $100 a month plus a bonus for

meeting production goals. Most of his workers are migrants in their

early 20s; half are young women who leave when they marry,

meaning Wong's managers are constantly hiring and training.

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CSD's workforce will soon expand from 50 to 80, thanks to the Roof

Shark and a new deal making a tooth-whitening product for a

European customer.

"My biggest challenge is to expand in good step," Wong said,"instead of moving in high speed."

After nearly a decade of doing business in China, Wong said roads

and hotels have been upgraded and government fees have become

standardized. One vestige of old China still bugs him: a state-owned

banking system that has little incentive to provide speedy customer

service. He said it can take two hours to make a deposit.

"But over the next few years, with the help of the Olympics and the

World Trade Organization, China will become more and morecompetitive," Wong said. "It is not very Communist."

* * *

Halfway around the world in the Tampa Bay area, China's impact is

felt daily.

Gas prices are rising in part because there are now 10-million cars in

China. More than 1,500 new vehicles are registered each day in

Beijing alone. In a few short years China has become second only to

the U.S. in oil consumption.

Meanwhile, apparel prices in the United States have declined

because of factories like the 5,000-employee operation in south

China that makes one of seven men's shirts sold in America. While

that factory is far from China's biggest - a competitor with 8,000

workers is nearby - it is 10 times bigger than any apparel plant in

the U.S.

Fewer computer programmers are needed at CommerceQuest in

Tampa because of software outsourcing companies such as

Freeborders in Shenzhen, where Rick Cui is employed.

And China has been key to the growth of giant electronic

components maker Jabil, which will soon open its fourth factory in

China. Low wages are not the only draw.

Bill Muir, president of Jabil Asia, said the company's suppliers,

competitors and customers, both existing and potential, are allactive in China, making Jabil's presence mandatory.

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"For us to be competitive, we must offer a viable global footprint,"

said Muir, whose division accounts for about a third of Jabil's total

production. "The customer relationships we have in China carry over

to Florida and the rest of the world as well. It's seamless."

The same kind of global reach, though on a much smaller scale, has

transformed the Roof Shark's inventors from dreamers into guys

with a product to peddle.

"Now we're employing people, only the jobs are in another country,"

Lackey said. "I'm patriotic, but it's like a global economy."

Kris Hundley can be reached at [email protected] or 727 892-

2996.

[Last modified September 19, 2005, 09:44:11]

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