Viewpoint: Why China Will Lead The Next Wave Of Innovation

The US has always been the front runner in IoT innovation. Currently there is little to no sign of that title being stripped. In fact, Samsung announced a $1.2 billion dollar investment in the US last year with half the investment going into US IoT startups and the other half into its US facilities for technology development-related projects.

But on the other side of the Pacific Ocean, another country is catching up quickly. There’s no need to guess. China is becoming a powerhouse in IoT, and will soon outpace the US in innovation in just a few years. The Chinese IoT market alone is expected to reach revenue of $248 billion by 2020. The country is making huge investments into the IoT market. Foundational strengths in manufacturing, mobile and micro-innovation are driving China into an IoT innovation leader.

Market Opportunities
The Chinese government is putting a lot of money into growing its IoT industry. Hundreds of its cities have embarked in smart city programs and according to a 2016 GSMA report , China’s machine-to-machine (M2M) market will reach one billion connections by 2020. China is predicted to be ahead of the US in the number of global IoT connections.

Manufacturing & Supply Chain
Companies from all over the world go to China to access its manufacturing, engineering and supply chain capabilities. The country is starting to produce high-end products and not only low and middle level products. This strong foundation in manufacturing and supply chain is a huge advantage in the IoT game helping Chinese entrepreneurs to quickly iterate on their product to adapt to customers need and market trends.

Mobile Innovation
The foundation of IoT is in internet-connected devices. A big advantage for China is its massive Internet and smartphone user base. China is already the world’s largest smartphone market and according to data from App Annie, the country has the biggest mobile application market in the world based on revenue. The country is a mobile innovation leader with an app-centric user base. This has propelled Chinese companies to excel in areas such as hardware and software development, services and design.

Micro-Innovation
Then there is micro-innovation, an approach leading the way in moving IoT forward. The strategy behind micro-innovation is not about coming up with new ideas, but taking the disruptive ideas and technologies and iterating them. Chinese companies are seeing and seizing the opportunities to take those ideas and technologies, and then fine-tune them or fill in the gaps in existing products and services.

You’ll often find dozens of companies forming to deliver on the same idea, but compete with one another based on differentiated features and services. Think of the dozens of companies providing food delivery, payment, or messaging apps – like WeChat, Mobile QQ, Momo, and Youni to name a few –  and making virtual reality (VR) headsets and pet robots. By some estimates, there are more than 100 types of VR headsets in China. This approach is already propelling more products and services into the market, driving competition and driving down prices.

As Competition Heats Up, Opportunities Flourish
The four Ms – market, manufacturing, mobile and micro-innovation – this is how China will win in the IoT innovation game. But competition aside, there is really room for everyone in the IoT market. First of all, the global IoT market is huge. Projects are happening everywhere and it shows no signs of stopping. A report from Analyst group Machina Research foresees the global IoT revenue opportunity to reach $3 trillion dollars from $750 billion in 2015.

There is an opportunity for companies from both sides of the world to collaborate and work with each other leveraging each other’s strengths. For example, US companies can leverage China’s manufacturing supply chain or Chinese companies can tap into the enterprise software capabilities in the US. We’ve recognized this opening at IngDan. Entrepreneurs from around the globe are capitalizing on world-class hardware manufacturers at an affordable cost by leveraging our network of more than 8,000 suppliers in China. To date, our global successes include more than 16,000 projects in IoT and robotics, including the award-winning Sleepace intelligent sleeping monitor, the Cookee smart bike, and an innovative smart precision cooker.

by Dr. Shipeng Li, CTO, IngDan & Cogobuy Group
Dr. Li is an IEEE Fellow, Microsoft Partner, and world renowned researcher and multimedia expert. Prior to joining IngDan & Cogobuy Group in 2015, Dr. Li co-founded and headed up Microsoft Research Asia for nearly two decades. Dr. Li has 186 U.S. patents.