The rapidly growing IoT market could turn out to be the greatest opportunity yet for the Chinese tech industry. China wants to dispute Silicon Valley’s place as the global innovation hub. Hundreds of tech start-ups are working on developing new IoT devices, which will soon support people worldwide in everyday life.
The answer to the question of what is going on in Shenzhen is that there is a new high-rise building every day and a new boulevard every three days. The Chinese city, home to 15 million people, has become one of the most important business centers in the People’s Republic within the last few years. Shenzhen’s economic power is now greater than that of Portugal, Ireland or Vietnam – the trend continues to strongly increase. Like no other metropolitan region in China, Shenzhen stands for modern China – a China that does not follow technological developments, but rather plays a key role in shaping them.
China Claims Leadership Role in Consumer IoT Market Worth Trillions
Today, Shenzhen is home to some of the most important technology companies nationwide. In addition to established market leaders such as Huawei and ZTE, young innovative brands have been attracting attention for some time now. In one of our last blog posts, we reported about how emerging smartphone providers such as Nubia and OnePlus are capturing market share worldwide and becoming increasingly popular with a young target group.
Chinese tech companies are now discovering the market for consumer IoT devices. The market potential is too attractive: 14 billion connected devices will be in use in 3 years. Users will spend more than 1.5 trillion dollars in 2020 on drones, fitness trackers, smart home devices, smart watches, virtual reality glasses and other IoT devices. Not being part of this market is simply not an option, especially since the market for consumer IoT devices is still relatively undefined. Chinese providers can smell their opportunity to play a decisive role in shaping the global market through rapid experimentation in the form of a rapid trial and error approach.
Silicon Valley Is No Longer the Exclusive Hub of the Tech World
The widespread perception that 99 percent of disruptive tech innovations come from the Silicon Valley is a false one. In addition to the big Californian tech giants Apple, Google and Facebook, numerous start-ups are working on IoT innovations. However, Chinese start-ups don’t seem to be phased by their competition from the Silicon Valley. They carry out research themselves and develop the most diverse types of devices that can be connected to the Internet. The Asia Lab of the AXA insurance company has examined the Chinese IoT market more closely and expects that up to 95 percent of all IoT devices could soon come from China.
In particular the widespread use of online services in China for most parts of everyday life has led to a sheer explosion of the IoT market. While PayPal has 190 million customers worldwide, Alipay has 900 million. The Chinese e-commerce conglomerate Alibaba records more transactions than the entire US online market. WeChat makes everything mobile, meaning that networking takes place in almost every area of everyday life. This is the calculation of the Chinese IoT industry: not all services will be used effectively via smartphones. New types of devices will emerge of which we have no idea today. China’s IoT elite wants to set the pace in this market instead of continuing to move in the shadow of the Silicon Valley.
No Longer Just a Production Center, But Also a Development Hub
In addition to countless start-ups, the now well-known Chinese tech providers are preparing for the IoT run. While Apple has to regularly take a scolding for its reluctance to introduce new IoT product categories, Xiaomi is launching a frontal attack. The company didn’t rest on its laurels for very long after its rise to the top 10 global smartphone brands, and now offers a drone, a virtual reality headset, various wearables and connected home appliances. The IoT boom is in full swing and standing still is simply not an option.
Not much in China is left to chance and the new Chinese government initiatives “Made in China 2025” and “Internet Plus” are seamlessly integrated into the overall picture. China wants to get rid of the stereotype of being no more than a manufacturing nation and begin to decisively shape technology innovations with global impact.
Summary: We can look forward to the coming years, in which China will most likely play an even more decisive role than it is already playing in the smartphone market today. The IoT hype could turn out to be the perfect platform for which the Chinese tech industry has been waiting, in order to get an equal footing with the Silicon Valley. How do you see the development in the global IoT market? Contact us today and don’t forget to follow B2X on LinkedIn!
Chun Zhang is Working Student at B2X’s Marketing Team.