Embed Size (px)
Citation preview
Learnings from China: Making and Manufacturi
ng
2
Beijing Maker SpaceInnoConn…
Seeed StudiosPCH InternationalFoxconnHAXLR8RLi & FungHuaqiangbeiShenzhen factories…
Terry ChengDavid LiBunnie HuangEric PanLiam CaseyGE FirstBuild…
XinchejianFab LabDFRobotInnovation House…
Many conversations and visits over the course of 10 days…
3
Top Learnings from China:
#1 “Hardware is not defensible”
#2 Scale manufacturing is very different from ‘Making’ and ‘Prototyping’
#3 Makers need help for DFX
#4 Small run manufacturing and “order of 1”
#5 Building a product vs building a brand
#6 American big brands are holding strong in China
#7 Size matters
#8 “Big retail is killing innovation”
#9 Speed to market is king
#10 China’s maker movement is deeply embedded in strong manufacturing expertise
#11 Build to order vs build to stock
#12 A new approach to supplier relationship
#13 Catalysts play an important role in connecting desperate worlds
#14 Hardware innovation space is heating up
…..
4
Learning #1
“Hardware is not defensible”- Cyril Ebersweiler, HAX
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 5Slide credit: Eric Pan, Seeed Studios
Hardware can be easily reverse engineered
6
What used to be a tablet factory is now producing many variations of electric uni-bikes
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 7Slide credit: Eric Pan, Seeed Studios
What is defensible?
• Software• Community
“Direct relationship with the consumer is crucial ”
“Our core value is in software. Hardware is just a vehicle. ”
8Slide credit: Eric Pan, Seeed Studios
Xiaomi
• Weekly builds, direct sale• Fan community• “Design as you build”
9
“Protection of IP takes the form of complex manufacturing or product, community and cloud based services that are hard to reproduce outside of the hardware itself” - Idan Beck, HAX Fund
10
Learning #2
Scale manufacturing is very different from ‘Making’ and ‘Prototyping’
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 11
Even in Shenzhen, hard tooling still take up to
20 days due to the level of precision and raw material required
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 12
Many product lines are still shockingly
labor intensive
1
160
worker required on a line manufacturing a charge cord
13
Wage has been increasingEmployee benefits has significantly improved
Application of robotics in manufacturing ranges significantly with production line from extremely labor intensive to highly automated
2010 2011 2012 2013 20140
500
1000
1500
2000
11001320
1500 16001808
Minimum wage in Shenzhen (RMB/Month)
Manual labor vs automation
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 14
150 engineers to design the ‘perfect clasp’
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 15
Large contract manufacturers have deep expertise in
testing and inspection
• Durability testing• Functionality testing• Environmental examination• Physico-chemical
examination…
16
Learning #3
Makers need help for
Design For X
ManufacturabilityPowerVariabilityCostYieldReliability…
17
“Quirky had a great industrial design, but the engineering would not have passed the regulatory specifications”
18
seeed studiosOpen Parts Library
Collection of most commonly-used componentsIncrease development efficiencyShorten lead timeDFM ready
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 19
King Credie & KosagiFlexible PCB
Mutual respect is needed to take advantage of both sides
20
Learning #4
Small run manufacturing and
“order of 1”
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 21
Doing small run manufacturing
economicallyUsing excess capacityLeveraging existing resources
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 22
Other incentives for factories to work with makers:Building up capabilityGetting involved earlyInvestment mindset
23
Learning #5
Building a
product vs Building a brand
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 24
Leverage the best of both sides
Different strengths for West and China
25
Short term demand Sustainable demand
Unbra
nded
Bra
nded
Shanzhai phones Tinno Mobile
Wiko
Successful kickstarter campaign
Chinese companies generally are good at building commodity at a competitive price
Western companies can create brand through customer experience
26
Driving sustainable demand is the key to cross “bridge of death”
Slide credit: HAXLR8R
27
Learning #6
American big brands are holding strong in China
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 28
29
Learning #7
Size Matters
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 30
Size
matte
rs for
Pro
toty
pin
g
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 31
Size
matte
rs for
Manufa
cturin
g
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 32
Size
matte
rs for
Fulfi
llment/S
hip
pi
ng
33
Learning #8
“Big retail is killing innovation” - Liam Casey, PCH international
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 34
Big retailers control direct access to consumer and pushes additional cost to manufacturers A significant portion is spent on multiple intermediary costs E.g. inventory management, forecasting, distribution Final sales price is usually 5x COG for most manufacturing segments
COGInventory/Distributio
n
Branding/
Marketing
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 35
Ocean freight cargo
3 months
Air freight
5.5 days
84 additional days to sell
• 15 day payment terms • WACC for three months vs. air freight
PCH partnership with RadioShack
36
Learning #9
Speed to Market is King
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 37
“Speed 速度 Shenzhen speed 深圳速度” – PCH
“If you need a part, you can order it and have it delivered the same day”
– HAX
Shanzhai phones: rapid responsiveness to the market
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 39
“In our business, time is the number one currency.” – Liam Casey, PCH
40
Learning #10
China’s maker movement is deeply
embedded in strong manufacturing expertise
41
Millions with deep manufacturing knowledge
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 42
Mobile recycling market
Mobile recycling market
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 43
Tacit knowledge on components and manufacturing
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 44
Not many hardware hackers (yet)
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 45
Huaqiangbei – Responsiveness to market trendEconomic value driven
46
Learning #11
Build to order vs
Build to Stock
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 47
Build to order examples:Local MotorsKickstarter campaignXiaomi
48
Learning #12
A new approach to supplier relationship
49
Long-term vision Beyond complianceMutual economic benefit Social impact
Supplier Facility Upgrade Program
Technical and financial assistance
Staff engagement
Supply chain transparency by creating a comprehensive factory evaluation, qualification and development tool set
50
Learning #13
Catalysts play a valuable role in
connecting disparate worlds
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 51
Imperfect market
Many shanzhai items remain as hidden gems in Huaqiangbei even to the localsMost consumers in the US are not aware of ecommerce channels such as AliExpress
52
People are take advantage of the gap of disparate worlds – in both ways
Aliware – repackage a product sourced on Alibaba
Kickstarter to demohour
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 53
Bunnie Huang
Terry & Friends
David LiEric
Pan
Cyril and Ben (HAX)
Liam Casey (PCH)
54
Learning #14
The hardware innovation space is heating up
Member Firms and DTTL: Insert appropriate copyright (Go Header & Footer to edit this text) 55
Previously friendly partners are increasingly seeing each other as competitorsBig and small players are all jumping in to participateRoles are constantly evolving
The question is – who does what in the space? Name Start date
HAX 2011
Lime Lab 2012
Highway 1 Mid 2013
Innoconn Early 2014
Kick2Real Early 2014
…
56
Chinese government (national and local) is throwing money into the space
57
Anything else?
Let us know!
Duleesha Kulasooriya
Mengmeng Chen
