China is taking the Internet of Things very seriously: Digitalization is starting to impact all aspects of life in the Asian superpower since the government began to promote and fund public IoT projects. The new strategy "Made in China 2025" aims to make the country's IT sector a global player.
Reducing pollution, preventing bicycle theft, monitoring agricultural crops in remote regions: There are countless examples showing just how far China has developed its digital ecosystem for the Internet of Things.
DRIVING GROWTH WITH "MADE IN CHINA 2025"
The Chinese government started this initiative back in 2010, as part of a five-year economic plan targeting an ambitious $163 billion market volume by 2020 for the IoT sector. Then in 2015, the government announced its "Made in China 2025" strategy and supplemented it with an "Internet Plus Action Plan." These efforts are meant to digitalize the Chinese economy’s traditional industries with mobile networks, cloud computing, Big Data and IoT applications to enable innovative manufacturing and production. Beside tax breaks for IoT providers, the strategy also calls on public institutions to pursue IoT projects.
BOOMTIMES FOR IOT START-UPS
In the meantime, start-ups developing all sorts of IoT applications have sprung up across the country. For example, in the capital Beijing there are smart fleets of bikes, buses and trains on the go with IoT technology embedded. Some apps like bike-sharing services have eased access to urban transportation while combining Chinese traditions with the modern world.
According to the study "China IoT Market," the Chinese IoT sector will reach a volume of more than $120 billion by 2022, growing on average by at least 40 percent each year. The study identifies the most important factors driving this development as the growing demand for smartphones and connective devices like gateways and routers, increasing Internet penetration and more widespread industrial automation. For example, agricultural apps for remotely monitoring crops, seeds and irrigation systems are seeing huge annual jumps in growth. Due to the increasing demand for solutions that control IoT applications and devices, such management platforms are also set to boom. Producers of integrated circuits for connectivity are also likely to see a big slice of the Chinese IoT cake, since these ensure that devices link to each other and the Internet.
FROM IMITATOR TO INNOVATOR AND MARKET LEADER – LEARNING FROM CHINA?
According to the data portal GSMA Intelligence, the Industrial Internet of Things (IIoT) will link some 14 billion objects by 2025. With around four billion connections, China and Taiwan will account for nearly a third of the total global IIoT market. The Chinese government's plan appears to be working: China is on the verge of transforming from an imitator to an innovator and establishing itself as an IoT leader. A survey by the management consultancy McKinsey revealed that nine out of ten business executives in China consider digitalization the most important topic when it comes to their manufacturing operations. In 2016, Chinese companies invested 12 percent more in IT than the previous year; globally companies boosted their IT budgets by just two percent.
China's top-down industrial policy approach isn't applicable, of course, to Western democracies. Still, governments around the world have the ability to stimulate technology markets through regulation, agenda setting and naturally as early adopters of new technologies.
Expert Digital Marketing
Digitization and the Internet of Things are among the favourite topics of Daniel Kunz. He has been with Deutsche Telekom since 2017 and regularly writes about technology trends and many exciting topics, especially for the retail trade and the logistics industry.