A Shenzhen Rapoo Technology Co. in Shenzhen, China, is using its manufacturing automation know-how to build high tech products like quadcopters as the market for its computer peripherals shrinks. Photo: Gillian Wong/The Wall Street Journal
Updated Feb. 13, 2016 5:35 a.m. ET
SHENZHEN, China—As global investors fret over the health of China’s stuttering economy, some battered manufacturers in the industrial south are pinning their hopes on moving up the technology ladder.
Inside the factory of struggling electronics maker Shenzhen Rapoo Technology Co., robotic arms that for years swiveled and bent to churn out computer mice and keyboards are now reaching further up the gadget spectrum: making consumer drones. Such products, it expects, will deliver bigger margins and find new customers as its original business shrinks.
Like many companies in Shenzhen—the city bordering Hong Kong that helped power China’s industrialization over the past 35 years by mass producing cheap toys, clothes and household goods for the world—Rapoo is racing against the clock to find new markets that will let it thrive again.
“If you know only one move well, can you really be unbeatable and not have to change for 10 years?” said Xie Haibo, Rapoo’s board secretary, a wiry 37-year-old who was skipping lunch one day last month to prepare to meet potential customers. “That’s the kind of problem we face, so we need to transform, transform, transform.”
Across Shenzhen, small manufacturers increasingly are turning out 3-D printers, hoverboards and robots that are expected to continue to grow, a view encouraged by visits and financial incentives from China’s leaders. Beijing wants the upgrade to help pull the country through a painful economic transition from infrastructure investment to a consumer model.
The city that Deng Xiaoping anointed in the late 1970s to lead China’s market reforms is once more showing the way forward. Its economy grew 8.9% last year, faster than the national expansion of 6.9%. High-tech and advanced manufacturing grew at almost double the national average, in terms of share of GDP.
China’s economic woes are largely imperceptible here, in contrast to the depressed towns built on state-run mining and steel companies that are suffering from collapsing demand. The city is home to the world’s biggest drone maker by revenue, SZ DJI Technology Co., boasts a thriving Internet startup scene and hosts technology giants such as Huawei Technologies Co., the world’s biggest telecoms networking gear provider, and Internet giant Tencent Holdings Ltd.
The country’s economic slowdown has even brought an unexpected benefit for once-bustling hardware makers and startups: excess factory capacity.