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  • Chuck Cai

Why is everyone scrambling to develop the Internet of Thing in China?

Updated: Jul 14, 2021

The Internet of Things (IoT) is the new force driving the global economy, with endless possibilities in terms of increased productivity, innovation and automation across all sectors. According to International Data Corporation (IDC), China’s IoT market spending is expected to reach US$300 billion by 2024, with an annual compound growth rate of 13% in the next 5 years. This growth can be attributed to strong drivers on both the demand and supply side.

Demand Side

Favourable policies for IoT

Increasing societal challenges such as health, environment security and transportation

Competitive advantage for firms who adopt IoT

Supply Side

Presence of 5G

Innovation in the sensor technology sector

Rapid price decline for communication chips

Additionally, there are many upstream manufacturers producing mid-to-low-end sensors, and competition is fierce, but the manufacturing of high-precision and high-sensitivity sensors is relatively weak, providing opportunities for high-precision sensor manufacturing; the downstream market is still a blue ocean with low market concentration and only a few segments There are several large buyers in the application industry, and their bargaining power with downstream customers is relatively weak.

From a macro perspective, China has made the Internet of Things its investment focus. According to the "Internet of Things Volume of the Development Plan for the Information and Communication Industry", "In the 13th Five-Year Plan period, promoting the widespread application of new technologies and new business formats such as the Internet of Things and big data, and cultivating and growing new momentum has become a national strategy." The central government has arranged special funds for the development of the Internet of Things in the past four consecutive years, and the Internet of Things industry seems to be the focus of the "13th Five-Year Plan". China has singled out IoT as its investment priorities and with the China Standard Plan 2035, China intends to become a leader in tech innovation and set global standards for emerging technologies including IoT, 5G, and artificial intelligence. By setting technical standards, it enables interoperability between devices and their usability worldwide.

Therefore, China presents a huge opportunity for IoT firms looking to penetrate into the Chinese market, especially in the core technology aspect which consists of the components which make up the IoT technology stack, such as the chipsets and IoT operating system. Due to the low domestic self-sufficiency rate, self-developed radio frequency chips, power management chips, and high-tech cellular communication modules will bring greater benefits to enterprises. The cloud also presents a huge market for foreign cloud providers who have the advantage of targeting a global market.

Summer Atlantic Capital is composed of a growing core team that can assist your company in penetrating the Chinese IoT's market, be it through a joint venture, distribution deals, or any other structues. Our services include planning, execution, monitoring, and finally exit. If you or your company have a new technology in this industry and want to enter the Chinese market, please don't hesitate to contact us at for a free evaluation to assess if your company is a good fit or visit our website for more information. We would be very grateful if we could talk to you!

Thanks for reading, we look forward to working with you!

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