Why Silicon Valley and Shenzhen Have Exactly The Opposite Problem | Economics Explained

"Move fast and break things" doesn't exactly translate into Mandarin.

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Silicon Valley: History’s Greatest ‘Ponzi Scheme’ (Mini-Documentary) by Jake Tran

How to Invest In Chinese Stock Markets (And Why You Absolutely Should Not!)

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[EconomicsExplained]

Huge thanks to our mates at Acorns for making this video possible! ❤️

[amiralimo]

I'm a 17-year-old from Iran your videos are such huge inspirations fantastic job.

[adaffro]

I appreciate this being done by an Australian, which means world maps include NZ haha

[VViatro]

"It does almost seem like the companies being run like the government and the nation is being run like a company" and that my dear EE is probably the best short describtion of China I've ever heard.

[luisfernandoalmeida]

I think one of the things that was overlooked in the video is that Shenzhen (like other cities in the Pearl River Delta) is also an industrial production center, 80% of all electronic devices are produced there, so the economic proposal is still very different from the sillicon valley (that focuses on innovation while its products are not made there).

[switzerlandch]

When you're so early China still haven't opened its market to foreign companies yet

[alexanderphilip]

Last time i was this early Shenzhen was still a fishing hamlet.

[Zei]

So basically too many investors in Silicon Valley stifling creativity for money. Too few investors in China stifling creativity because no money.

[matthewstevenson]

Awesome video. I’ve lived in SF my whole life and this holds true. The only thing I would add is that through my travels to Shenzhen I would argue that their version of Silicon Valley is much more focused on hardware innovation given the prevalence of manufacturing the region as a whole and less on software. Software is where most of the “gold” is right now. So I’d argue that’s another point why more money stays in CA rather than Shenzhen.

[smorcrux]

How are those "weekly uploads" going😉

In all seriousness, I can notice a huge uptick in production quality and things like animations in the latest videos, keep them up!

[ac.]

I’ve learned so much about economics just from this channel. I could never sit in a beginner economics class in college but now after watching EE I feel confident in enrolling into a beginning economics class. You have added fuel to my small spark of interest that I had for economics. Thank you!

[nhmooytis]

I’m old enough to remember when the Santa Clara Valley aka Silicon Valley was orchards! ‘Silicon Valley’ was traditionally the area from San Jose to Sunnyvale, not including Palo Alto to SF; the original PA and Menlo Park companies like HP were affiliated with Stanford. But now there’s high tech companies all the way from San Jose to SF! MP was the epicenter of Venture Capital.

[adrianarnold]

*me pretending like I know what you’re saying *
Ah yes, valuation🤔

[mordekaisworld]

Hey Mr. Economics Explained. I thought the YouTube algorithm nuked you out of existence. Nice to have you back

[wildeash]

It's not that there aren't big tech companies that come out of shenzhen, but that most of them aren't really used outside china. Examples include alibaba, tencent, bytedance(creator of tiktok), didi, et cetera.

[bysshe]

China takes an entirely different perspective. Traditional economics is heavily skewed towards the western capitalism view. Shenzhen doesn’t exist to be ‘China’s Silicon Valley’. Beijing doesn’t care about that. They’re looking at creating strategic economic centers around the country focused on the various kinds of industry needed to make Communist China a 1000+ year system. They take the view. Something western economics doesn’t calculate due to inflation / npv.

Shenzhen isn’t ‘sinocon valley’. It’s just the heart of the technology manufacturing industry sector of China and enjoys policies and government focus to make sure it plays its part in the overal grand plan. They also try hard not to concentrate too much economic power in a single city or province. It’s very unlikely that you’ll get the defense/hardware/software combination in China like Silicon Valley has for fear of a challenge to Beijing’s power.

And for software industry, look at Hangzhou. Petrochemicals and automotive, Guangzhou. Etc etc. Think of these cities as semi-planned capitalist centers of economic activity.

Lesson is: don’t analyze China with a western filter. The numbers may be correct (or not, that’s often murky too. E.g. if you add up all the reported GDP growth of individual provinces it’s higher than national GDP numbers), but the motivations are likely only part of the picture at best.

[CarthagoMike]

Youtube actually notified me for once, great!

[tobiogunsina]

Could you take a look at the economy of Nigeria. Its a really weird case and I think it would be interesting to study

[HugoGarciaCotte]

I'm the CEO of a tech company in Shenzhen. I respectfully disagree that Chinese business culture is risk averse. It's not. Chinese entrepreneurs make and crash companies at an insane rate, they are bullish like you can't believe, if your company doesn't IPO within few years of it's creation they consider it a failure, Shenzhen speed is something unheard of for me, you really have to be here to understand it. Everything from the consutrction of subway lines (one line per year !) to the recruitment of engineers (they never stay in the market for more than 10 days !) to the IPO of companies. I've worked in the Valley and in France before and I can say there's nothing like it.
One problem with the Chinese market is that a Chinese company will always try to copy other people's products as soon as they can, "make or buy" they will always start by "buy" and move to "make" as soon as they humanly can. Of course this is a general feeling and not a rule, you have an ocean of patents being filed in the Greater Bay Area of Shenzhen and companies like Huawei have dominated the 5G market not by copying but by inventing from scratch. So I don't mean to look down on Chinese companies or whatever, but it's still a dominant rule of the Chinese market because the big players are doing it.
If you're Google and you see a promising product, you acquire it. If you're Tencent and you see a promising product, you just copy it and kill the company. Those bad business examples will make more friction to innovation as you fear big players instead of trying to befriend them. And fear is a lose lose proposition.
Again, there are beautiful examples of the opposite, like Huawai, who made a deal with Leica instead of just killing them and copying them.

[PeterXian]

Most Chinese tech growth firms are listed in us or hk which is not included in the csi 300 I believe