Silicon Valley may be in California, but the silicon itself is in southeast China. Today, the Chinese city of Shenzhen produces 90% of the world's electronics.

Yet, forty years ago, Shenzhen was nothing more than a sleepy fishing village across the border from Hong Kong. The decades between then and now have transformed it into a factory-focused megacity with a population of 10 million.

To keep up with ever-increasing global demand, an endless procession of circuit boards, processor chips, and memory sticks are churned out by toxic factories with suicide nets. Yet there is a silver lining to the clouds of smog that cover the city.

After 14-hour shifts, factory workers are putting their unrivalled knowledge of computer hardware to creative use. A maker movement is galvanising electrical engineers and inspiring game makers who, a few years ago, might have spent their free time on intellectual property theft.

Today, the tinkerers of Shenzhen create new products instead of off-brand PlayStations. Though they still do that sometimes as well.

"People have always seen the city as 'factory of the world' with cheap production and copycats," says Luisa Mengoni, former curator at London's Victoria and Albert Museum and now head of the gallery's sister location in Shenzhen. "This may have been accurate in the 1990s or early 2000s, but it's a limited view of today's Shenzhen."

Like hacker culture, the maker movement is a subculture of dreamers and inventors. The community revels in disassembling electronics, studying their inner-workings and then repurposing devices, mostly just for fun. While there are makers all over the world, nowhere are they as adept and fanatical about reverse-engineering gadgets than in Shenzhen.

"Shenzhen gets to act fast because of its open and collaborative ecosystem," says David Li, co-founder of XinCheJian, the first maker-space in China. In addition to establishing maker-spaces, Li is a key figure in the Shenzhen tech scene, having launched a research hub and accelerator program, which is backed by Intel and Shenzhen Open Innovation Lab.

This copycat culture, known as Shanzhai, has been celebrated by locals as being the driving force behind Shenzhen's culture of innovation. The term, which literally translates as "mountain stronghold," refers to the radical thinking of bandits operating far away from central authorities. In this case, the central authorities are copyright and patent enforcers who would clamp down on the blatant infringements were they happening anywhere else in the world.

"Shanzhai will likely play an even more important role as the maker movement emerges globally, it's an open and collaborative culture that runs counter to the proprietary nature of current global practices," Li adds.

"Many people have been discussing the idea of Shenzhen as an innovation capital," says Lman Chu, a consultant working on IoT tech and smart hardware at Shenzhen Open Innovation Lab. "You can see the Chinese government is helping, but it's the Shanzhai culture that's the basis of all the magic."

Research has shown that patents often stifle innovation by establishing monopolies. In China, being able to rapidly copy, rip-off and improve other people's designs without state interference has created opportunities to mod existing devices for more culturally specific needs. Tech evolves in Shenzhen in a way that it doesn't in any American city.

"It's time to review the usefulness of copyright laws. Instead of encouraging innovation, the laws are protecting artificial monopolies," says Li. "Unlocking the potential could create opportunities for new kinds of innovation globally."

He adds: "Open source has reshaped software over the past two decades, and it's fuelled the growth of the Internet. The maker movement represents an open-source alternative to existing hardware systems."

China has mostly turned a blind eye to cases of infringement. After all, the owners of the intellectual property had almost always been rivals (specifically Japan, South Korea and the US). Ripping off intellectual property from those countries was a win-win.

Now, however, the Chinese government has decided the country should no longer be the world's sweatshop. There are more middle-class consumers in China than America these days, and the economy is shifting from manufacturing to consumption rapidly.

To fund this transformation, the Chinese Communist Party realises that they have to produce their own, world-leading products to sell. So they're piling vast amounts of money into research and development in the hope that the next Apple or Google will be a Chinese company. If China becomes dominated by intellectual property-rich companies, then they're going to have to clamp down on infringement.

If the Chinese government comes down too hard or too soon, it runs the risk of stifling the Shanzhai culture responsible for the city's success. If it turns a blind eye, rampant piracy could cannibalise the ideas of Chinese startups, preventing any of them ever becoming global players.

Shenzhen's makers may be operating on shaky ground, but their culture likely isn't going anywhere. As Mengoni puts it: "Innovation comes from iteration, testing and experimenting. Hybridisation and remixing are just part of the process."

This story was originally published by Inverse.