The underlying logic of the business model of the "Huaqiangbei Electronic Bazaar", Futian District, Shenzhen, China, is the screening and matching of massive information by numerous small merchants and vendors, followed by the handling and trading of small-batch goods on a large scale. The functions of Huaqiangbei include electronic component brand promotion, product display, information dissemination, model matching, parameter selection, warehousing, physical experience, authenticity identification, product maintenance, financial transactions, goods delivery, and a range of supporting services. The primary business model development for Huaqiangbei typically involves end customers engaging factory engineers to send samples first, then placing orders with the factory's procurement officers once the samples have been tested and approved. This process determines the product's brand, model, parameters, supplier information, as well as emotional communication and profit distribution mechanisms. The key to the success of this model lies in the collaboration between the factory engineers and procurement officers.

Location, Functions, and Characteristics of Shenzhen Huaqiangbei

With the rise of "Internet Plus" (the integration of the internet with traditional industries), the entire sales end of the electronic industry chain in Huaqiangbei is also moving towards online platforms. I’m Song Shiqiang, CEO of SLKOR and Kinghelm, I refer to this as the three versions of "Internet Plus" in Huaqiangbei.

The 1.0 version of "Internet Plus" in Huaqiangbei (including Beijing Zhongguancun) emerged with platforms such as Huaqiang Electronic Network, Zhongfa Electronic Network, IC Trading Network, and Weiku Electronic Network, which are B2B information trading platforms that operate on a paid basis. Merchants pay to become registered members and can then publish their company's inventory and product information on these platforms. As a result, the data and transaction information of goods in the Shenzhen Huaqiangbei Electronic Bazaar, Beijing Zhongguancun Electronic Bazaar, and other channels were moved online by merchants and vendors, quickly spreading worldwide. Interested customers can conduct transactions online without visiting the physical bazaar, greatly improving the efficiency of information exchange and product transactions.

However, these platforms also have drawbacks, such as the presence of redundant information (according to Hayek's theory, redundant information is a feature of market prosperity and a guarantee of operating profit) and even traps. Customers need to constantly sift through and match information amidst the mix of genuine and fake data before engaging in transactions. This represents the "Internet Plus" 1.0 model in Huaqiangbei, which has accelerated and promoted the development of economies of scale and trade in the electronic components industry in Huaqiangbei.

Song Shiqiang participated in BomAl Summit

In the 2.0 phase of "Internet Plus" in Huaqiangbei, there is a reutilization of integrated B2B platform information. After dzsc.com established itself in Huaqiangbei and the electronic trade industry, in order to further expand and delve deeper into the downstream of the industry chain, it launched the PCB factory "Jiepei." dzsc.com, with initial supply chain thinking, streamlined the vast and complex information and data in Huaqiangbei, integrating and realizing commercial value on PCBs. The end customers served by Huaqiangbei merchants and vendors are mainly small-scale hardware production and processing enterprises scattered across the country in a detached state. The dzsc.com model can be seen as peeling back a corner of the outer layer of Huaqiangbei. Fortunately, "Jiepei" developed slowly and was not large in scale, so at that time, the bosses of Huaqiangbei had not yet felt the danger!

SLKOR Song Shiqiang discusses the current glory of Huaqiangbei

The 3.0 model of "Internet Plus" in Huaqiangbei is quickly following suit. Platforms such as LCSC, ELECFANS (Huaqiu Mall), and Yunhan Mall have emerged as new players. Their models not only encompass the functions of B2B platforms but also provide services such as warehousing, delivery, and freight transportation, filling the gaps in the Huaqiangbei Electronic Bazaar. These platforms have already formed industry benchmarks and reference points. Customers now compare prices on these platforms before making purchases to ensure peace of mind. Even our sales representatives at SLKOR Micro Semicon (www.slkoric.com) and Kinghelm Electronics (www.kinghelm.net) refer to the tiered prices on the LCSC platform when providing quotes to end customers. This is now similar to the practices of internet giants like JD, Alibaba, and other electronic component industry leaders like Digi-Key and Mouser!

SLKOR Best-selling products on LCSC

It is worth mentioning that platforms such as LCSC and Huaqiu Mall also attract a large number of purchasing agents from downstream factories, as well as a group of electronic engineers who are skilled in drawing, selection, and design. The LCSC platform also provides supporting EDA design software, allowing engineers to select components and apply for samples directly on the platform, while purchasing agents can make small-volume purchases. With a large inventory of stock in their own warehouses, they can achieve fast delivery, and with the endorsement of the platform, there is no need to worry about counterfeit products. This is the huge dividend brought by "Internet Plus", but it has also brought a great crisis to the future of Huaqiangbei. Specifically, after accumulating upstream resources and building a powerful database, these platforms have used online platforms to construct an online electronic circle ecosystem and have begun to develop in a benign manner. They can easily obtain original factory agency qualifications, develop upstream scale, and build PCB factories downstream to serve end customers, thereby connecting the entire industry chain. In particular, the LCSC platform's full industry chain layout for intelligent hardware is similar to the IDH model of Samsung Electronics and Intel in South Korea and the United States, respectively, using efficient and full-stack services to potentially dominate the hardware customer service market in Huaqiangbei. It has stripped Huaqiangbei's bottom line directly.

Kinghelm Best-selling products on LCSC

Embracing the internet model is a double-edged sword for Huaqiangbei: on the one hand, it is a sign of progress and beneficial for promoting social efficiency, as well as providing better services and experiences for more customers; on the other hand, the decentralization of the internet has posed unprecedented challenges for the merchants in Huaqiangbei, as it is an international hub for electronic components. We have seen many of Huaqiangbei's peers undergoing transformation and embracing the internet by creating their own independent websites or building internet platforms. However, the "Internet Plus" of Huaqiangbei's merchants requires a significant amount of investment and constant funding, making it incomparable to running a small company in Huaqiangbei.

Introduction of Mr. Song Shiqiang

Mr. Song Shiqiang, General Manager of SLKOR and Kinghelm Electronics, is a member of the Expert Database of the China Electronics Society, a research expert on Shenzhen Huaqiangbei commerce, and a columnist and popular science writer. Starting his career as a grassroots technical staff member, Mr. Song has served as the CEO of an internationally listed real estate company, bringing with him rich experience in technical management and corporate operations. By combining macroeconomics theories with practical business management, he has led the company to rapid development!

Huaqiangbei Song Shiqiang

SLKOR Micro semiconductor and Kinghelm Electronics, both invested by Mr. Song Shiqiang, are headquartered in Shenzhen, China. They are both national high-tech enterprises and have gained international recognition and reputation for their brands: "SLKOR" (www.slkoric.com) and "Kinghelm" (www.kinghelm.net). Their market share has been gradually expanding. SLKOR Limited, based in Shenzhen, China, focuses on the research and development of new materials, new processes, and new products. The technical team consists of experts from Yonsei University in South Korea and Tsinghua University, and they are at the forefront of silicon carbide MOSFET technology. SLKOR has evolved from a fabless design company to a comprehensive company that integrates design research and development, manufacturing, solutions, and sales services.