The Size of the Industrial IoT Market in ChinaPosted in Blog
China is positioned to be a world leader in deploying Internet of Thing (“IoT”) solutions on an industrial level. There are a number of various factors pushing the Chinese Industrial IoT market to exponential growth in the industrial market.
One major reason for China’s large-scale and rapid adoption of the Industrial internet of Things (“IIoT”) is their capacity to generate enormous economies of scale with its current industrial infrastructure. There are more things connected to one another in China than in any other country.
China is also the leading producer of the world’s electronics, which includes, many sensors, microchips, and other electronics that form the back bone for the IoT technology market. By 2020, there will be 200 billion IoT connected devices globally, out of which 95 percent will be manufactured in China
China’s manufacturing sector is made up of millions of factories. These factories would not only be the foundational supplier of the global Industrial IoT network. Industrial IoT will allow factories to greatly increase their efficiency, lower cost and better manage their infrastructure.
According to Ernst and Young, there are 5 major benefits of implementing Industrial IoT networks in manufacturing. These include, reducing correction cycle time, the ability to anticipate failures in advance, the improvement of design through big data analysis, saving money through proactive monitoring and prevention as opposed to reactive repairing, and ultimately reducing faulty products and product recall which can cause severe reputational damage to a brand.
The benefits of extraordinary interconnectivity between machines which allows for real-time transmission of information and big data insights are not limited to manufacturing – these advantages will be a boon to the efficiency and productivity of many important economic sectors in China, including resources, energy, telecommunications and automotive.
Over the next 15 years, the economic value of Industrial IoT to China’s GDP from the manufacturing industry alone is projected to increase from US$196 billion to US$736 billion; an increase of 276 percent. For the resource sector, the increase would be from US$48 billion to US$189 billion; an increase of 294 percent. Cumulatively, the growth of China’s GDP from IoT technologies will reach US$1.8 trillion by 2030 – That is no small number!
The Chinese government pushing IoT innovation
China’s rapid adoption of the Internet of Things has been fueled by the Chinese government’s proactive strategies and financial investments in the industry, driven by its desire to turn the IoT industry into a major pillar of the economy.
In 2010, then Premier Wen Jiabao, announced that the IoT is critical to China’s information and communication technology plans. This resulted in a national IoT Centre being established in Shanghai.
Various initiatives are being introduced by the Chinese government that will support the growth of IoT adoption, including the “Made in China 2025” initiative. According to The Economist, the government is looking to upgrade the nation’s manufacturing capacity and the “Made in China 2025” will allow it to do so. Another initiative is the, “Internet Plus” strategy, which was proposed by China’s prime minister, Li Kequiang in 2015. The strategy aims to integrate the mobile internet, cloud computing, big data and IoT innovation into other industries to create new industries and business opportunities in China.
The manufacturing industries would make up the highest proportion of the total IoT’s economic benefits to the country. Also, the Chinese government has been promoting IoT development in major economic areas such as industrial control, financial services, and healthcare.
Government officials are strategically providing funding to local governments and economic development zones as part of official “smart city” pilot projects, who are looking to use IoT applications to address major urban issues such as congestion and pollution.
A Market of Opportunity
The extraordinary benefits that China stands to gain in becoming a world-leader in Industrial IoT technologies is clear, and the market has ample of opportunities to enter. The country is keen on encouraging industrial partnerships and cross-sector collaborations that will fuel the growth for the industry. Additionally, international companies are poised to make positive impacts on the industry, considering the issues that could plague China’s domestic market.
This is an opportunity for Western firms to start building inroads into the Chinese market. One example of Western market penetration into the Chinese IoT economy is General Electric’s (the world’s largest industrial company) opening of a “digital foundry” in Shanghai. The foundry is set to help Chinese companies to develop and commercialize products for the Industrial Internet of Things, and could set a precedent for further international investments and partnerships within the industrial IoT market.
The future looks connected for the IoT in China and it can generate enormous economies of scale. Furthermore, strong government support and the potential for international partnerships are launching China to the forefront of the industrial IoT revolution. Internet of Things Inc. (TSV:ITT) partnership with New Hope Data Technology Co. Ltd, will position IoT Inc. to sell solutions and services to the largest Industrial IOT market in the world.