The secrets of Shenzen: smartwatches for €9
Touring the Huaqiangbei market in China is an eye-opening experience. Can they really make a cellular smart watch for less than €10?
Have you heard of Shenzen? It’s the region of China where the majority of our computer-based tech is manufactured. And within Shenzen, there’s the Huaqiangbei electronics market. It’s not a market in the western sense, of where you go to buy some stuff for yourself. It’s more akin to a perpetual trade show, where you go to buy parts pin volume for new products you’re going to make.
The team behind keyboardio – a company that makes customisable keyboards for “serious typists” headed over there to get the parts for their latest products – and were astonished by what they found. Not least of the surprises was a smartwatch – that made calls – for the equivalent of $9.74, or €8.84.
The economics of how to make a watch phone for $9.74 were completely bewildering to us. If we could get the price down to 65 CNY just by buying 30, how much could they possibly cost to make?
Luckily they had a friend in sales for one of the factories in Shenzhen, and she was able to answer the question:
If the factory sold the watches for $7.49, how much could they possibly cost to make? That’s a question that can be awfully hard to get answered. Not really expecting an answer, we asked our friend to ask his friend. She was happy to tell us: $6.
Six dollars for: a GSM chipset, a CPU, an LCD screen, a battery, a PCB, a metal housing, a molded silicone watch band, a MicroUSB cable, and a box. And the labor to assemble and test all of that.
It’s an astonishing insight into the power of volume manufacturing – and income disparity – in shaping the products we use every day.