Shenzhen startups still target foreign buyers despite trade tensions
As Shenzhen hosts the APEC forum, many of its startups continue to focus on overseas markets despite rising trade barriers. An incubator in the city reports 80 per cent of its 120-plus startups target foreign customers, reflecting a strategic push to export high-quality goods.
As Shenzhen prepares to host the Asia-Pacific Economic Cooperation forum on 18-19 November, the city is showcasing its transformation from a manufacturing hub to China's Silicon Valley. However, interviews with executives at seven startups and a review of municipal data show that many businesses are doubling down on selling to wealthier customers overseas, even as foreign trade barriers rise.
At the hardware incubator InnoX in Liuxiandong, co-founder Carol Yu said about 80 per cent of the 120-plus startups there target foreign customers. 'In terms of the ability to pay and willingness to pay, it's still much stronger in overseas markets,' she said. The incubator, set up in 2021 under a Shenzhen city plan, sits in the shadow of drone giant DJI's towers and represents a state-directed wave of economic growth.
Chen Congyi, founder of sports-recovery device maker XPolar, said foreign trade barriers are a burden but virtually all competitors selling to markets like the US face similar challenges. Beijing has argued its products are not only cheaper but of increasingly high quality. The EU, which struck a deal in October to cap Chinese hybrid car imports, says it will propose curbs on other sectors.
The drive to export has been accelerated by cutthroat domestic price competition and a property crisis that has crimped consumer spending. Shenzhen retail sales grew just 2.3 per cent between January and September, far outpaced by an 18.5 per cent increase in city exports. 'Domestic consumption has been downgraded,' said Yu, using a phrase common in China for shoppers trading down to cheaper goods.
Founders are drawn to Shenzhen by its concentrated supply chain. Electric jet-ski maker Anavi sources parts from the city and four others, but founder Li An said Shenzhen is best for startups 'going from zero to one' because suppliers are more willing to support them. The incubator provides prototyping labs, a pilot production line, and introductions to suppliers and overseas trade shows.
Denise Wu of scalp-care company Rootique said Shenzhen is 'the best place to be and probably the only place to be because everything's so accessible.' Her firm has sold about 10,000 of its $148 devices, more than half to US customers. However, selling to the US has meant riding a 'tariff roller coaster', with duties peaking at 145 per cent in April 2025 before a truce, and a separate 12.5 per cent levy added this July.