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Doing Business in Shenzhen; the Pros and Cons

Shenzhen is known for its magical transformation from fishing village into a kingdom of electronics manufacturing. It is now considered as the financial capital of Southern China being home for innumerable tech firms, accelerators and start-ups alike. And because of its display of prowess being an hub for global manufacturing, it landed on top of the list for global cities of the future. If you are just a start-up in making products, you sure cannot find another city that offers manufacturing your products at the most efficient and cheapest fashion. If you dream of creating your own footprint in the most populace countries in the world, this city should be your next home.

Shenzhen is the ideal place to be when you are trying to find a supplier or manufacturer of electronics parts. This city hosts various malls such as SEG market which can be found in Futian District and offers just anything and everything that you are looking for. Huaqiangbei Commercial Street for electronics is a place you should never miss. This is the largest electronic market covering an area of about 70M square feet with around twenty different malls. If what you are looking for are manufacturers, there are wide variety of factories which can make any electronics product in just few days. And considering that this is the place creating almost 90 of the world’s electronics, shippers and expert packagers are just lurking around the area.

This place has become the dream world for the founder’s because of accessibility of cheap manufacturer’s, cheap labor as well as crowd-sourcing, cheap parts, and cheap shipping. Here, it will be easy to create your own prototype and then craft your own kick-starter campaign, and once you are successful on it, you will be off to the race. This is indeed the Silicon Valley of China.

Another best point of doing business in Shenzhen is the fact that this place is very business friendly when we talk about tax impositions. If you are going to make a comparison of it, this place offers very low corporate tax at 25% while US imposes 39%. You will not also be taxed for the interest that is earned on bank accounts, no tax is imposed on capital gains, and the rate of dividend tax is only between 5-10%. Taxes which are not so taxing is the best business environment.

However, there are still setbacks in engaging in electronics business in Shenzhen. Foremost, there is a very pervasive internet censorship in this country. The Communist Part imposes massive control on web contents, they monitor individual access, and even block user’s access to certain services and sites. There is even a proposed law wherein the tech companies that is based here shall give the government an access to all their communication, unprotected or encrypted. Further, the major negative aspect is the massive intellectual property theft. Many entrepreneurs in this place have learned that ripped-off or stolen products will always be part of the business.




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