Electronics market in Shenzhen struggles to cope with e-onslaught

The Huaqiang North Electronic Market in Shenzhen used to be bustling but now counters are gathering dust and stores are shuttered with rolling doors.

Even the opening of Shenzhen's new Metro Line 7, in October, failed to bring the area back to life, though it offers greater access to Huaqiang North from all parts of the city.

Tenants have been forced to close their businesses due to slumping profits.

According to research by Shenzhen University, 40 percent of 238 sellers interviewed said they earned zero profits in 2015 and 39 percent had a profit of 100,000 to 200,000 yuan ($14,500-$29,000).

An overwhelming majority, 88 percent said their profits declined compared to a year earlier and they could barely make rent payments, which in fact are decreasing this year.

Shenzhen Evening News reports the rent at SEG Electronics Market, one of the most popular markets in the district, has decreased four times in the first seven months of this year.

Yuan Yiming, deputy director of the China Center for Special Economic Zone Research, Shenzhen University, says one of the main reasons for the decline in Huaqiang North markets is the current upgrading.

"During the transformation, pain is inevitable," he said.

Shanzhai (imitation and trademark infringement brands and goods) used to be common in Huaqiang North, but since last year the local government has been cracking them down and carrying out constant inspections, leading to the closure of many stores.

"Any product with a logo has to be examined," said a vendor surnamed Chen at an electronics store in the district, adding that the latest inspections just two months ago were the strictest yet.

Electronics components are a major aspect of the market, but the rapid development of internet and e-commerce has eaten into profits of small distributors.

Zeng Long, investment manager of the Huaqiang North International Maker Center, said the rapid development of internet-based phone, television and other electronic brands has substantially squeezed profits of upstream component suppliers.

Many small and micro-sized distributors in Huaqiang North market depend on these suppliers, he added.

Some sellers and distributors choose to adapt to market trends and upgrade through innovation. Taking Zeng's Maker Center as an example, smartphone and electronics component sellers come here to create their own products and brands.

Yuan from Shenzhen University said Huaqiang North district is also the epitome of industrial upgrading in the Pearl River Delta area.

He suggested the area integrate with the Pearl River Delta's industrial upgrading to high-tech, high added-value and high-end manufacturing.