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China building IOT sector

2013-02-18 08:28 Global Times     Web Editor: qindexing comment

China is encouraging foreign investment to enter the Internet of Things (IOT) industry, a move to speed up the development of the fledgling sector, the State Council said in an industry guideline Sunday.

The IOT, which refers to the virtual representation of physical objects on digital networks, is one of the country's key emerging industries of strategic importance. The guideline, which also includes fiscal measures such as subsidies and tax reduction, encourages venture capital funds and private investment in the IOT industry, as well as supporting IOT enterprises in financing directly from international capital markets.

The country's final goal is building up an internationally competitive IOT industry. In the short term, it targets significant achievements in core-technology research, industrial chain building, and application of the IOT by 2015, the guideline said.

"Introducing foreign investment could not only help cash-strapped IOT enterprises, but also bring the domestic industry in line with the international industry, as China still lags behind developed countries in term of core technologies and applications of the IOT," Chen Chen, an expert at IOT industry information website m2mun.com, told the Global Times Sunday.

He expects applications of IOT technologies in security, intelligent transportation and smart grids to be hot destinations for private and foreign investment.

"Foreign companies could participate in the IOT sector through joint ventures with domestic companies, but they will face barriers to some sectors over national information security," Wang Huan, a senior analyst at Beijing-based CCID Consulting, told the Global Times Sunday.

The State Council also highlighted problems in the fledging domestic IOT industry, such as excess investment, information security risks and lagging behind in core technology.

There are more than 600 IOT-related enterprises in Wuxi, a pilot city for the IOT industry in East China's Jiangsu Province.

Nearly 70 percent of these enterprises have lost money and relied on government subsidies to survive, Chen said, citing a report published last year by the city's IOT industrial park.

"In countries like the UK and the US, the commercialization of IOT technologies is pushed by big enterprises," Wang said. He gave the example of a clothing retailer in the UK, which purchases 300 million RFID (radio-frequency identification) tags a year and links them to products so they can be tracked by an information system.

"In China, the IOT industry is driven by the government rather than the market, so the development of the industry is slower," he said.

The market value of China's IOT industry amounted to 200 billion yuan ($32 billion) in 2010, and is expected to surge to more than 500 billion yuan by 2015, according to estimates from the Ministry of Industry and Information Technology.

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