How will Apple 's announcement to open a research and development center in Shenzhen affect the startup and makers movements there?

The announcement is an important validation for the local maker scene, as it sanctifies that Shenzhen’s shift from factory hub to design center is now consumed.

For Apple, opening a R&D center in Shenzhen is both mandatory and opportunistic, regarding the importance of the city in tech world today. Then, I am sort of skeptical about the company will to really relocate research on key product lines there, besides the announcement effect. Here are a few reasons :

  • Apple have to stay relevant in China to survive. Chinese people don’t really buy Apple phones anymore because Chinese companies are totally better and cheaper today. Then, it is quite unlikely that Apple wants their product lines to adopt some China trends in UX, mobile, IoT, etc. Apple branding is all about Designed in California so integrating China-specific ideas will be shooting themselves in the foot.
  • Apple is coming to Shenzhen to show its total and unconditional commitment to the CCP. The company just made major investments in many domains (Didi, Apple Pay, etc.) so now it has to follow orders from the top or lose everything - like the others did. If Beijing say tomorrow that the new innovation hub is in Tibet, Apple may as well go there to save its ass.
  • It will be super hard for them to have anything really strategic in Shenzhen. Shenzhen is a small place and Chinese companies struggle to have basic loyalty from their own employees already. With a foreign company like Apple, business secrets will leak all over the place on day one — good news for many local makers that will now be able to make fake iPhones based on real blueprints !

So, my wild guess about this Apple R&D center :

  • Apple play it safe and build a “learning center” which will be beneficial for local makers and Apple to exchange knowledge about design trends and markets. More big names in design and tech may resettle to Shenzhen to finally get a grasp of what the future of tech looks like. That movement may lead to the creation of new schools and campuses for training - which the city totally lacks currently.
  • The other option is that Apple wants to use it to explore new markets, like medical devices for instance. China aging population is the best market ever to sell connected medical devices. It also has the “legal flexibility” to experiment in that field without the hassle of Western legislation.
  • Shenzhen is a manufacturing powerhouse. The biggest ally of Apple locally is Foxconn which is Taiwanese and has been trying to relocate recently, which may cause Apple troubles. If Apple wants next-gen product it has to invest in next-gen supply chain. Guangdong and esp Shenzhen is the definite place where robots and automation will be brought to an entire new scale.
  • There is another possibility : this R&D center will turn out to be one of those Chinese “innovation hub” that looks really cool on the prospectus but are always empty. Mostly, putting Apple name on some insignifiant real-estate investment with 10 guys inside will buy peace with the mayor and make its friends in Beijing happy. It will also allow Apple to keep investing steadily in the Chinese market while keeping all its core assets in California.

Anyway, all of these scenarios are beneficial for local makers in Shenzhen and China, mainly because they strengthen the presence of China stakeholders in Apple businesses. Also there will be other side effects (the in-famous “spillovers”) but they look marginal in comparison of what Shenzhen has already achieved without Apple.

This text was originally published in quora.

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