Huaqiangbei is located in Futian District, Shenzhen, Guangdong Province. It is a showcase of China's achievements in reform and opening up, and has been awarded the title of "China's No.1 Electronics Street" by the China Electronic Chamber of Commerce. It is a world-class hub for electronic and hardware products. Mr. Song Shiqiang, the General Manager of Kinghelm and Slkor (www.slkoric.com), stated that the core commercial area of Huaqiangbei covers an area of approximately 1.45 square kilometers, accommodating over 60,000 companies, 40,000 individual businesses, and nearly 500,000 employees. The annual transaction volume is about 200 billion yuan, comparable to the GDP of Yuehai Street, surpassing commercial hotspots like Causeway Bay in Hong Kong and Fifth Avenue in the United States. The "One-Meter Counter" in Huaqiangbei has produced over 60 billionaires, and the daily turnover of a 3,000-square-meter store in Wan Jia Department Store reaches up to 3 million yuan, making it the most efficient in the world. During its peak, Huaqiangbei in Shenzhen attracts over 800,000 visitors daily, and prime shops in SEG Plaza are sold for 300,000 yuan per square meter! Tencent, the former company of China's richest man Ma Huateng, had its office located in SEG Science and Technology Park in early stages.

Song Shiqiang's Article "Huaqiangbei in Shenzhen: Yesterday, Today, and Tomorrow"

The reason why Huaqiangbei in Shenzhen is highly impressive and widely discussed is because it is home to a large number of billionaires. Are there any underlying patterns behind this phenomenon? In the agricultural era, Tao Zhugong Fan Li summarized commercial principles such as distinguishing value, assessing proximity, and balancing surpluses and deficiencies. Later, figures like Qiao Zhiyong and Hu Xueyan followed similar models. In the industrial era, Adam Smith's "The Wealth of Nations" highlighted key social and economic principles, including the invisible hand of the market, the significant efficiency gains from industrialized division of labor, and the concept that benefiting others leads to self-interest. These principles guided nations and individuals in achieving rapid wealth growth. Kinghelm and Slkor (www.slkoric.com), our companies, have also experienced rapid development in recent years, and our business management strategies draw inspiration from these principles. As a renowned street vendor economist in Huaqiangbei, I, Song Shiqiang, have been tirelessly exploring the wealth patterns of Huaqiangbei, hoping to provide guidance for the local residents to achieve prosperity and contribute to the transformation of Huaqiangbei.

To illustrate this point, let's compare Huaqiangbei in Futian District with the Science and Technology Park in Yuehai Street Office, Nanshan District. In 2020, the GDP of Yuehai Street Office reached 320 billion yuan. The companies in this area primarily focus on research and development, boasting high technological content, and are known for their ability to compete with the American tech industry in trade wars. Tencent, DJI, ZTE, Mindray Medical, JPT Opto-electronics, and Kingdee Software all have their headquarters here, while Huawei, Lenovo, Huizhou Desay, and Huizhou TCL have their research and development centers. The majority of these companies are publicly traded, and their wealth is concentrated in the hands of the founders and major shareholders. For instance, Ma Huateng, the founder of Tencent, has a net worth of 320 billion yuan, and DJI's Wang Tao is valued at 50 billion yuan. Executives in these companies typically earn salaries in the millions, with a significant portion consisting of stock options and paper wealth. On the other hand, according to Song Shiqiang, the famous street vendor economist, trading companies in Huaqiangbei operate with low operating costs and high efficiency. Many of them are run by couples and their relatives, profiting from the price difference in electronic components and amassing substantial tangible wealth. Huaqiangbei is home to approximately 100,000 small companies and stalls, as well as 200,000 backpackers, all operating as independent economic entities. With a large foundation and numerous opportunities, Huaqiangbei has become a place where many individuals have become multimillionaires.

Huaqiangbei Pedestrian Street, SLKORMICRO Electronic Screen Advertisement

Economist Hayek has a saying that the most important aspect of economic issues is the discovery and utilization of dispersed information. Similar to the arguments made by Tao Zhu Gong in agricultural society and Adam Smith in industrial society, it should be one of the foundational theories of information economics. Huaqiangbei serves as the best validation for this. The primary business model in Huaqiangbei is the matching of components. It involves cleaning and organizing various information, integrating it with Huaqiangbei's integrated circuits, adding profit to the goods, packaging and desensitizing the information, and then selling it. Song Shiqiang, an expert in Huaqiangbei from Shenzhen, explains that Huaqiangbei has over 10 million different models of integrated circuits, each with its own channels, parameters, and original or refurbished status, making the information complex. With over 500,000 professionals and hundreds of thousands of transient population daily, Huaqiangbei gathers information from all over the world through channels such as emails, WeChat, QQ, TikTok, telephone, and e-commerce platforms. In the explosive realm of information, people find convergence with electronic components in Huaqiangbei, creating opportunities for transactions and wealth accumulation!

Kinghelm, a company in Huaqiangbei, sells antenna sockets and RF connector cables

People in Huaqiangbei search for opportunities amidst complex information, with low probability and efficiency. The advantage lies in the abundance of asymmetric information. Opportunities arise from events such as fires, floods, earthquakes, discontinued old models, geopolitical factors, great power competition, the emergence of new consumer goods, economic crises, and structural shortages that cause imbalances in supply and demand, leading to price increases. Huaqiangbei's bosses and business owners cherish these opportunities and engage in speculative trading and hoarding. They even leverage their positions for greater gains. In 2012, when I first entered the electronics circle in Huaqiangbei, there was a major flood in Thailand that destroyed many factories. As a result, prices for many electronic components doubled overnight, and Sanyo Semiconductor's affiliates reaped huge profits. For instance, the price of Sanyo's high-frequency transistor 2SC2078E used in Motorola's GP88 walkie-talkie, which was typically ordered at $0.46, skyrocketed to 8 RMB in Huaqiangbei. Since it involves gambling, there are winners and losers. Those who bet correctly can see their prices increase several or even dozens of times. In 2021, a component from Texas Instruments (TI) surged from 9 RMB to 1500 RMB, equivalent to the value of a two-bedroom apartment in Shenzhen. Successful traders can live in luxury homes, drive fancy cars, and boast about their achievements in Huaqiangbei. However, those who lose have to liquidate their positions and return to their humble beginnings, searching for opportunities to turn the tables. In the attached image, the person lost so much that they had to sell goods previously valued at 300 million RMB for the price of a Maybach. I hope they can make a comeback and double their profits in the next wave in Huaqiangbei!

In the downward market situation of Huaqiangbei, prices drop by one percent, prompting a clearance sale for an exit strategy

Huaqiangbei is both a reservoir for adjusting production capacity by original manufacturers and a valve for adjusting financial statements by listed companies. Negotiating product prices for capacity filling and financial provision adjustment is favorable for the bosses who deal in spot goods, as they can buy them at lower prices for stocking. However, there is always a silver lining. During the 2008 economic crisis, there was a production reduction, and in 2018, there was an insufficient supply of capacitors and resistors. The bosses with inventory in Huaqiangbei made a small fortune. In 2019, the emergence of under-display fingerprint chips and Huawei's large-scale stocking squeezed the production capacity of 8-inch wafers, leading to a shortage of power devices like MOS transistors. Due to our well-established supply chain and sufficient inventory, our company, Slkor (www.slkoric.com), gained fame by meeting the high demand for products. Slkor became synonymous with "domestic substitution" and subsequently opened two direct stores in Huaqiangbei. Starting from 2020, the alternating shortages of STMicroelectronics' MCUs and Texas Instruments' (TI) products created a new group of millionaires in Huaqiangbei. The newly wealthy individuals in Huaqiangbei gather in private rooms at Damao Chaozhou Beef Restaurant, enjoying "Martell XO" and "Hetingxia" cigars while discussing whether to buy a property in Xiangmihu Phase 1 or a Rolls-Royce. Of course, they invite me, a cultural connoisseur of Huaqiangbei, to join them in wining and dining. I put on a show, boasting about Huaqiangbei with vague references to "Kondratieff cycles" and "Fibonacci curves," without batting an eye or skipping a beat. One boss's wife, who is very successful in her own right, quickly earned a lot of money and graciously gifted me a Bentley car model. Now that I have a successful case to boast about, my grand image is almost on par with Chen Anzhi, a guru of success studies! Sometimes, happiness comes to Huaqiangbei in such a straightforward and crude manner!

In the global macroeconomic context, "Made in China" produces the highest number of electronic products, including smartphones, computers, and household appliances, with the world's largest production output. China imports over $400 billion worth of integrated circuits annually, accounting for 34% of the global market, surpassing the United States (27%) and Europe, Japan, and South Korea. The strong manufacturing capacity and the vast consumer market of 1.4 billion people have generated robust demand for integrated circuits. Huaqiangbei's electronic components encompass civilian consumer goods, industrial-grade products, military-grade equipment, and aerospace-grade electronic products. The cluster effect of Huaqiangbei has contributed to its overall competitiveness. 

Huaqiangbei's trade in small-scale electronic components complements and regulates large-scale economic transactions, facilitating efficient resource allocation and reducing transaction costs to enhance social efficiency.

The influx of a large number of migrants to Huaqiangbei in Shenzhen brings abundant resources, information, and boundless creativity. The entrepreneurial spirit of Huaqiangbei's local and Shantou businessmen, who are willing to take risks and seize business opportunities, combined with the industriousness and tenacity of Hunan people and the optimistic and confident personality of Sichuan and Chongqing residents, as well as individuals from Jiangxi, Fujian, Henan, Shaanxi, and other regions who have come to Shenzhen, contribute to their characteristics of innovation and risk-taking. The resilience and perseverance demonstrated by Huaqiangbei's business owners, as depicted in Xie Jiapeng's book "My Father's 30,000 Yuan," are truly admirable.

People from Huaqiangbei come together based on hometown connections, school ties, blood relations, and industry affiliations. Through information exchange and benefit allocation, they collaborate, cooperate, and develop synergistically. When they sense the opportunity for profit, they quickly organize themselves. Order placement, inventory accumulation, and information dissemination are all carried out in an orderly manner, much like the internal coordination within large corporations. With a well-coordinated strategy, they wait for the moment to cash in. 

We ventured into Shenzhen, fueled by excitement and carrying the burning desire to make money. Many people criticize Huaqiangbei as a den of unscrupulous merchants, but deep down, they honestly want to come to Huaqiangbei to make money. If their skills and luck are lacking, and they fail to make money, they become even louder in their condemnation of Huaqiangbei's unscrupulous merchants. 

Allowing ambitious and hardworking individuals to prosper and become wealthy in a place with a developed market economy is a normal and positive incentive in society. As long as it doesn't violate public order, social ethics, or the law, and as long as it is reasonable and legal, making money represents a contribution to society. Many individuals in Huaqiangbei, after achieving financial success, give back to society. Dr. Zhu Junshan from Zhongyi Law Firm, for example, has helped over 600 people from his hometown in Guiyang County, Hunan, to become prosperous. The Andehui Charity Association in Shenzhen, organized by Lin Zhenchuan of Sai Ge Building's AOS Wanguo Store, Wang Lei of Qingshang Weiye Company specializing in Maxim products, and Chen Guiou of Bo Guang Electronics specializing in STMicroelectronics, has silently carried out numerous charitable activities.

Kinghelm's ceramic Bluetooth antenna series

Huaqiangbei's spot trading focuses on "fast"! In the one-meter counters of Huaqiangbei, the upper glass display showcases the samples, while the cabinets below and behind are filled with goods. With tens of thousands of small companies in Huaqiangbei, most of them have small warehouses in their offices. Capacitors, resistors, diodes, transistors, connectors, plugs, switches, and other low-value, large-volume items have turnover warehouses in the surrounding areas of Huaxin Village, Huahuanan, Gangxia, and Futian Village to ensure the fastest delivery and payment. Huaqiang Electronics Network has also launched a "Huaqiang Cloud Warehouse," which speeds up the service for Huaqiangbei. The storage volume in Huaqiangbei reaches 200 billion yuan, supporting a daily transaction volume of nearly 1 billion yuan! Manufacturers' large warehouses are located in Bantian, Longhua, and Guanlan, and the farthest reaches Tangxia and Fenggang in Dongguan, all revolving around the rapid trading of Huaqiangbei!

Huaqiangbei (Shenzhen Hauqiang North) is a gathering point for international resources. Shenzhen, where Huaqiangbei is located, is the southern gateway of China, close to Southeast Asian countries such as Singapore, Malaysia, Indonesia, the Philippines, and adjacent to Hong Kong. Semiconductor companies and international agents choose Shenzhen as their first entry point into China. The mainstream Chaozhou and Zhejiang people in Huaqiangbei have many overseas connections, which serve as opportunities to make money. The characteristic of the electronic components industry chain is its global layout, so overseas wafer fabs, testing factories, OEM/ODM processing factories are all channels for procurement. Huaqiangbei integrates with old electronic component markets such as Guidian, Chendian, etc., and has direct special line buses connecting them. These buses often stop at the eastern gate of New Asia Electronics Market, with people pushing carts to pick up goods. Huaqiangbei's electronic information products are very suitable for sales on internet platforms. Foreign trade companies generally have one or more accounts on platforms such as eBay, NetComponents, Alibaba International, HKinventory, FindChips, Efind, etc. Huaqiangbei has the ability to purchase and sell products worldwide at the fastest speed, and its business network penetrates every corner of the world!

Presentation materials for Kinghelm, SLKOR, and Song Shiqiang

Shenzhen Huaqiang North remains an ever-lasting exhibition for electronics. The "front store, back factory" model allows products such as terminal connectors and switches from Wenzhou and Yueqing in Zhejiang, hardware components from Yuhuan in Taizhou, and antenna connectors, wires, and cables from Humen and Chang'an in Dongguan to be sold in Huaqiang North. For instance, Kinghelm Electronics (www.kinghelm.net) and its subsidiary SLKOR (www.slkoric.com) have established flagship stores in Huaqiang North. Kinghelm's North Star GPS antenna debugging R&D laboratory is located in Tangxia, Dongguan, while its RF connector production base is in Liuzhou, Guangxi. SLKOR's semiconductor R&D teams are located in South Korea, Beijing, and Wuxi, with assembly and testing facilities in Taizhou and Dongguan. The headquarters is situated in Shenzhou Computer Building in Bantian. Additionally, both companies have two direct-operated stores in Huaqiang North.

Electronic components have the characteristic of long-term storage durability. Components typically lose value due to moisture and electrostatic damage. When stored in temperature and humidity-controlled warehouses in intact anti-static packaging, the electrical parameters of the components will not change for up to 10 years, with some products having an even longer shelf life. After testing and refurbishment, certain reclaimed components can be used normally and offer good value for money. In the past few years, there was a high demand for hoverboards. Due to severe shortages of MOSFETs with the part number SL7N50, some reputable manufacturers discreetly used refurbished components, earning substantial profits at a fraction of the price of original parts. In order to survive in a highly competitive market, many manufacturers take necessary safety measures and utilize reclaimed components.

Another characteristic of electronic components is their small size and high value, which makes transportation convenient. Integrated circuits the size of a fingernail may be worth several tens of dollars, and in 2021, due to a shortage of automotive ICs, a pack of Freescale components was sold for over 30 million yuan. After simple packaging, they can be shipped worldwide without deformation or deterioration, and without any loss. SLKORIC/SLKORMicro, under the brand of Sarko Microelectronics, has two specialty stores in Huaqiang North, occupying less than 3 square meters but holding inventory worth 600,000 yuan. In the context of globalization, Huaqiang North's integrated circuits can generate profits from customers located several decades ago and thousands of kilometers away, breaking free from the constraints of time and space. It truly is a lucrative business. Husband-and-wife teams operating small counters in Huaqiang North can achieve monthly sales in the millions and profits surpassing those of hundreds of employees in a factory.

In the realm of electronic components, passive components have high standardization and interchangeability, such as capacitors and resistors from Samsung, Murata, and Yageo. Active components, on the other hand, have unique corresponding models, and if a single digit or letter does not match, it cannot be substituted. With a multitude of models listed on customer BOM (Bill of Materials), even a slight discrepancy in a component would require the customer to purchase at an increased price. Owners of Huaqiang North who possess the scarce components can then profit significantly by selling at a premium. Just yesterday, a friend of mine secured an export order worth 8 million yuan because the terminal customer couldn't find the scarce components elsewhere. With this advantage, my friend had negotiating power and achieved good profits.

Slkor along with Song Shiqiang (second from the right), participated in the electronic industry forum.

Consumable goods are characterized by large quantities, explosive growth, and short cycles. Once a new product is discovered, the bosses of Huaqiangbei become fully focused, stockpiling goods, leveraging and financing off-market to speculate on the development and imitation of products, thus initiating a mode of rapid wealth accumulation. Every breath of the era brings a sense of prosperity to Huaqiangbei. The explosion of blockbuster items such as selfie sticks, TWS Bluetooth earphones, counterfeit mobile phones, fidget spinners, and fingertip gyroscopes triggers the assembly line of Huaqiangbei's multimillionaire entrepreneurs.

In early 2018, following a breakthrough in Bluetooth earphone technology, SLKORMicro (www.slkormicro.com) and its R&D and marketing teams, in collaboration with Kinghelm (www.bds666.com), swiftly positioned themselves to embrace the market explosion. SLKOR's MOSFET transistors, such as SL2301, SL2302, SL2N7002, Hall sensor switches like SL1613-SL, SL1625-SH, SL1603, along with Kinghelm's chip ceramic Bluetooth antennas KH2012, KH3216, KH5220, and FPC connectors, all found simultaneous applications in TWS Bluetooth earphones. Kinghelm and SLKORMicro achieved a dual-drive model with both brand and product development. Supporting industries in the supply chain, including mold-making, PCBA manufacturing, power management ICs, and small coin batteries, have also thrived. Companies such as Qualcomm (CSR), Hangxuan (BES), MediaTek (Airoha), Realtek, JL, Blue Solutions, and Huizhou EVE Energy have reaped substantial profits, and a few have even gone public as a result.

However, the simplicity of the business model, lack of entry barriers, absence of pricing power, absence of competitive barriers, and poor risk resilience limit the long-term accumulation and scalability of companies in Huaqiangbei. These companies also lack management upgrades and knowledge iteration compounding. Trade companies typically employ fewer than 5 people, with 50 being the upper limit for management. Aspects of corporate governance such as business models, brand building, corporate marketing, organizational development, supply chain management, customer management, legal risk control, knowledge engineering, process management, standardization, talent training, competitive barriers, corporate culture, and ethics are all lacking, not to mention the current emphasis on digitalization. 

In this year's economic downturn, those brothers who flaunted their cars, houses, and watches on social media in the past two years are now sunbathing on the beaches of Thailand. The bosses' wives who used to make money during the day and attend classes in the evenings are now going to temples to pray. Using the money earned through luck to enhance company strength is a serious challenge faced by Huaqiangbei's bosses.

In summary, Shenzhen Huaqiangbei is a hardware distribution center for the world-class electronic information industry that has gradually emerged on the basis of spontaneous market forces. It is a place with abundant money, people, goods, information, resources, opportunities, and high efficiency. With minimal government intervention and the courage and ability of Huaqiangbei people to seize opportunities, the effective combination and rapid transformation of vast hardware product resources and massive market demand have created numerous billionaires. It is a product of its time, and this can be seen as the wealth code of Huaqiangbei.

Huaqiangbei's charitable organization is called the "Ande Hui Love Group."

Huaqiangbei is indeed a remarkable place! Comrades, come and strive in Huaqiangbei for your own wealth dreams and our national rejuvenation, the "Chinese Dream." Future entrepreneurs of Huaqiangbei, if you love him, let him come to Huaqiangbei, where endless dreams and luxury cars and watches can take him to the pinnacle of life. If you hate him, let him come to Huaqiangbei, where there are endless hand-pulled carts and unlimited braised pork rice. If you love and hate him, let him reach the peak of life first and then descend to push the small cart, so you won't feel heartbroken when he leaves you. If you hate and love him, let him exercise and build a strong physique by pushing the small cart before reaching the pinnacle of life, and he will stay with you till old age. And if you haven't understood love and hate, let him become a dominant CEO who not only reaches the pinnacle of life but also personally pushes the small cart. The success or failure of Huaqiangbei's entrepreneurs lies in the minds of their partners. Kinghelm and Slkor's Song Shiqiang, hopes to engage with everyone, encourage critical thinking, promote communication, and facilitate learning to contribute to the prosperity of Huaqiangbei.

Slkor, Kinghelm, and Mr. Song Shiqiang from Huaqiangbei have a significant impact overseas

Mr. Song Shiqiang, the General Manager of Kinghelm (www.kinghelm.net) and Slkormicro (www.slkoric.com), is a researcher at the Economic Development Center of the State Council of China, a member of the Electronic Information Expert Pool of the China Association for Science and Technology, a columnist and science popularization writer, and a business research expert on Huaqiangbei. Mr. Song Shiqiang invests in and manages Shenzhen Slkoric Semiconductor Co., Ltd. and Shenzhen Kinghelm Electronics Co., Ltd., building the "SLKOR" brand for Slkor/Slkormicro and the "Kinghelm" brand. Both Slkor/Slkormicro and Kinghelm are national high-tech enterprises and play an active role in the "domestic substitution" of electronic components.

The Dow Jones Index Reprints Song Shiqiang's "Yesterday, Today, and Tomorrow of Huaqiangbei, Shenzhen" (Part II)

Mr. Song Shiqiang's series of articles on business research in Huaqiangbei have gained significant attention. The English version of his article titled "The Past, Present, Future of Shenzhen Huang Qiang Bei (Volume 2) - Slkor, Song Shiqiang" was reprinted by the Market Observation section of the Dow Jones Index. This article provides a comprehensive overview of the development of Huaqiangbei in Shenzhen, focusing on its beginnings, growth, and maturity since the reform and opening up era. It is well-argued and thoroughly discussed, offering valuable insights. The article can be found on the Market Observation section of the Dow Jones website at the following link: [Market Observation Link: https://www.marketwatch.com/press-release/the-past-present-future-of-shenzhen-huang-qiang-bei-volume-2----slkor-song-shiqiang-2023-05-02]. Moreover, "The Past, Present, Future of Shenzhen Huang Qiang Bei" by Slkor, Song Shiqiang has also been republished by Yahoo, Worksmatrt Asia, TechNode Global, and "Quality News" People's Daily. The republishing by internationally recognized media outlets such as People's Daily and Xinhua News Agency serves as recognition for Mr. Song Shiqiang's constructive and pioneering research contributions to Huaqiangbei.