In June, I spent a few weeks in Shenzhen, moving through China’s robotics supply chain on the ground: a precision gear factory in Songgang, Seeed Studio, large lawn mowing manufacturer targeting the US market, Engine AI and spoke with the team behind FAIR Plus, the largest AI & Robotics trade show in Shenzhen. The energy in Shenzhen is palpable. Former Huawei, DJI engineers founding their own companies, many with 出海 (go international) ambitions. And the ecosystem is pulling in foreign builders to relocate.
Here are 13 key takeaways from the ground:
Who comes to Shenzhen, and what for
FAIR Plus drew 60,000 visitors this year, in only its second year of the show. Americans were the largest foreign cohort. The most interesting observation from organizer Jasmine Bai: Europeans and Southeast Asians arrived with sourcing lists and partnership targets; they know that they need to buy parts from China. American visitors went to look and learn. They were less sure of what to do in Shenzhen. SCHUNK, the German gripper and clamping incumbent, went further than sourcing and set up manufacturing facilities in Shenzhen directly earlier this year.
Many international visitors to FAIR Plus were “researcher-founders”. They went not to find hardware, but also to look for partners on the “brain” side. That’s a contrast to the common assumption that people go to Shenzhen for the body and develop the brain at home.
What to build in Shenzhen, and what not to
Seeed Studio, founded in 2008, today manufactures Reachy Mini for Pollen / HuggingFace at scale. Each year it house dozens of founders from abroad to work at its Bao’an office, build idea to prototype on top of Seeed’s deep supply chain relationships. Despite that success, founder Eric Pan advised Western founders to not build hardware. Instead, use what’s available on the extensive web of suppliers on the ground, and innovate on the application and software layer.
Why? Managing the logistics and establishing trust with dozens, if not hundreds of suppliers is a “nightmare” for a startup. Most early-stage founders are unequipped to handle the vendor vendor required to bring a single piece of hardware to life.
Shenzhen appears to have cost as its competitive advantage. Its true capability and advantage run much deeper than just price. The full conversation goes deeper on how US hardware builders can navigate the Shenzhen hardware ecosystem. The episode is coming next week.
Trust is the supply chain
We visited a precision gear factory in Songgang, an industrial area in northwest Shenzhen. They are not listed on Alibaba. Bespoke-part shops don’t list there; they work through referrals only. Our visit began with a tea ceremony in the owner’s office. As he brewed Pu’er and poured our cups, the owner, likely in his 50’s, told us about his founding story: hailing from Jiangxi, an inland province and evolving the business from home-appliance to robotics parts. His close team, including the account manager we’d been liaising with, is also from Jiangxi. A tight circle of family and hometown ties, common in Chinese businesses.
Robotics is now 22% revenue and the fastest growing segment. 30% of customers are international. Pudu Robotics has been a customer for nearly a decade. The factory saw Pudu through the difficult years; Pudu is now reportedly headed toward an IPO.
The owner’s observation: successful robotics companies tend to innovate with the supplier, instead of treating suppliers as vendors. One client sent designs for an intricate part,that physically could not be made. Working closely with the supplier caught it early; the client adjusted and moved faster for it.
The floor runs 26 wire-cutting machines, 24/7. Workers run 12-hour shifts, 26 days a month, some opting into overtime. Many live in a factory-provided dormitory next door, meals included, banking holidays for month-end trips home. Inspection rooms are filled with dozens of staff, usually the more experienced, checking tolerances (parts on the floor go to ±0.005mm) for 12+ hours a day. The labor market is short. Sometimes workers don’t return after holidays, especially week-long ones like May Golden Week.
Factories are deeply specialized. This one partners with a neighbor a few minutes’ drive away, which we also visited, for heat treatment or plating. It’s because each process needs its own machines and because of the proximity of the cluster, vertical integration was unnecessary. The account manager claimed that 90% of the world’s parts are covered within this region in Songgang. Dongguan, a city north of Shenzhen is for volume and standardized parts, and Songgang for bespoke precision.
The visit ended in a private room at a Chinese restaurant near the factory, a table full of dishes treating just the two of us as visitors. The meal and tea ceremony are how trust gets built. The owner noted that business here used to start with baijiu (Chinese white wine), but they’ve since adapted to the Cantonese sequence of starting with tea and celebrating with wine after the deal. Over steamed fish and stir fried beans, the account manager shared one piece of advice for US customers: show up in person at least once, ideally at the start to establish trust.
What the cluster produces
EngineAI, a humanoid company founded in 2023 by XPeng alumni, demoed the smoothest humanoid locomotion I’ve seen in person; the T800 moved fluidly and threw powerful punches. Beyond the demo, the staff showed the vertical integration down to its own actuator, the same playbook as Unitree, with up to 20 linear and rotary actuators on display.
For all the technical strength, EngineAI is cautious on generalized Physical AI foundation models. Its near-term deployments are narrower: traffic coordination and store greeting. Staff showed us a video of their robot working as a sales helper at a Decathlon store.
EngineAI filed for IPO in Hong Kong last month (I wrote about it earlier), and it is not the only one. Robotics companies of 2023-or-later vintage are already preparing for public markets, and visibly need help with narrative and listing strategy. The IPO pipeline behind Unitree is deep; some of it routing to Hong Kong where capital flows more freely.
