As many businesses shift supply chains out of China in response to the uncertainties of geopolitical tensions and Beijing’s “zero COVID” policy, Fictiv is solidifying its outpost in the country.
San Francisco-based Fictiv runs a platform that aims to simplify the hardware sourcing process and connects hardware firms to suppliers around the world. When it comes to procuring high-end parts for products like medical equipment, surgical devices, and even rockets, there probably isn’t a better place than China. That’s why Fictiv set up an office there to be closer to its network of suppliers. Within five years, it has grown the team to 60 people in the southern industrial hub of Guangzhou.
Despite challenges around COVID restrictions and geopolitics, “the China manufacturing base is not going away,” said Fictiv’s founder and CEO Dave Evans in an interview with TechCrunch. “Thirty years ago, Shenzhen was a fishing village, and now it’s the center of the world for manufacturing. It’s going to take a while for other third ecosystems to really catch up,” he said, adding that Apple and its contract manufacturer Foxconn have offered a strong playbook for a generation of factory owners in the country.
Digital sourcing proves especially useful in COVID times. The conventional way, according to Evans, is a manual process that relies on face-to-face encounters: In China, you will need to find a shifu — a skilled craftsman in Chinese — who will sit back, sip some tea, and then slowly tell you from his 30 years of experience in molding to change this and that on your 3D drawing. Fictiv is using AI to replace that arbitrary human interaction by letting product developers run simulations on 3D designs and get a quote and estimated time on manufacturing.
Despite its focus on digitization, Fictiv stresses the importance of on-the-ground teams in its sourcing destinations. Evans used to travel to China every quarter or so but hasn’t been since the COVID outbreak, which has ushered in strict inbound travel restrictions. Huaqiangbei, the world’s largest electronic trading market located in the heart of Shenzhen, used to attract floods of foreign hardware makers. Now foreigners are a rare sight.
“Because it’s so hard to access China in the last years, the value we have in combining software, technology and all the AI that we built with boots on the ground right next to our manufacturing partners has built a really compelling offering for all customers because they can’t fly to China,” said the CEO.
While China remains an integral part to Fictiv, the company is also diversifying. “When the next big major thing happens, how is your business going to shift? And that’s what I would tell all the founders who are thinking about this — are you building a truly resilient supply chain?” Evans asked.
That’s in part why Fictiv recently opened an office in India, which “is very strong and getting stronger by the month” thanks to “a large population, relatively low costs, and the increasing talent there.”
The firm has built a global network of 250 vetted manufacturing partners, a third of which are in China, where production capacity is often larger. The rest of its suppliers are from India and the U.S. To date, Fictiv has produced some 20 million parts for thousands of customers. It runs a team of just over 300 employees around the world.
An OS for product developers
Nine years after its launch, Fictiv is carving out a new business line. The company’s selling point has been to enable early-stage product development, that is, the long-tail volume that Foxconn would find too small. Rather than contracting factories to make tens of thousands of units, it works with companies trying to get from 10 to 1,000.
The company’s new service is a work collaboration platform for everyone involved in the lifecycle of product development. Unlike its sourcing platform, which has its profit margin built into the manufacturing model, the service charges an annual membership fee. Using the software, the engineer can upload a product design with specifications on the material used and etc. Then the supply chain specialist may come in to estimate the lead time and target price, followed by the quality control person who makes further comments. Finally, the manager will approve the pricing before the buyer goes ahead to purchase it.
The idea is to capture the conversation and quality control process of product development in an integrated platform rather than having them scattered across emails and spreadsheets, which is how communication used to happen.
“For engineers who have a team, it’s almost like a 3x improvement [on productivity] because of all the tasks that you’re eliminating. For design firms or people that are managing many clients, [the software] helps them organize a lot of their workflows, and that gives them an easier way of filling and tracking all the different projects that are going on,” Evans noted.