By Xiang Anbo, Research Team on "Study of Government-Corporate Relations of Strategic Emerging Industries", the Enterprise Research Institute of DRC

Research Report No 6, 2011

The overall performance of China's Internet of Things is good, but it also faces some problems. For example, enterprises do not have mature commercial models, proprietary core technologies or well-defined development strategies. Government does not have systematic planning, top-level design or regulatory system. For these reasons, government and enterprises should work together to cultivate mass market demand, develop key technologies, establish technology and application standards, build supporting infrastructures, protect information security and privacy, and promote cooperation between industry-related regulatory departments and coordination between enterprises, industries and regions. Therefore, improving government-corporate relations and forming a development pattern that features government promotion, corporate initiative and government-corporate effort is vital to the healthy development of the Internet of Things.

I. Government-Corporate Cooperation Is Required for Developing China's Internet of Things

1. Importance of developing the Internet of Things

At present, countries around the world pay much attention to the development of the Internet of Things mainly for the following reasons. One, as the Internet of Things offers comprehensive perception, reliable transmission and intelligent handling, it can ensure human beings to have a technological basis for the real-time control, accurate management and scientific decision making of the physical world. It will revolutionize human production and life. Two, the Internet of Things can be regarded as a penetration of the Internet into real economy, whose industrial chain incorporates more upstream and downstream participants and widens the intelligent and elaborate application areas of information technology. With a vast development space, the industry can become a trillion-yuan sector. Three, the Internet of Things is a highland for the future competition between various countries in the field of information industry and an important basis for industrial upgrading. Its healthy development can help increase economic stock and expand economic increment.

To China, the Internet of Things is also a bond to deepen integration between industrialization and informatization. Its further development will promote China's new industrialization process and help the society transit from the information age to the intelligence age. China is roughly at the same level with developed countries in Europe and American in the field of Internet of Things application researches, and enjoys superiority in some fields. The State has defined the Internet of Things as a strategic emerging industry, and cities like Beijing, Shanghai, Wuxi and Hangzhou are all vigorously developing this industry. As a result, several Internet of Things industrial alliances are being formed in China, and the country is highly likely to make breakthroughs and form competitiveness. Under such circumstances, the relevant authorities should pay much attention, observe the laws of industrial and technological development, and turn potentials into real competitiveness.

2. Government-corporate cooperation is required for solving some problems associated with China's Internet of Things development

In the course of rapid development of Internet of Things, the enterprises in China also face some challenges, which cannot be solved by themselves but require government-corporate cooperation.

Both the supply and demand ends have some problems in the initial age of marketizing Internet of Things technologies. China's Internet of Things industry is still in the initial stage of application launch and has problems at both supply and demand ends. The availability technologies that can create real values for users are undersupplied and the commercial models are unsound. In the meantime, inadequate understanding and high application cost have dampened the effective demand for Internet of Things application. In developing the Internet of Things industry, China should change its old mindset and practices that were inclined to promote industrial development from the supply end. Now the government should join hands with enterprises, give equal emphasis to both demand and supply ends, tap the potential of the Chinese market, and cultivate market demand through several influential demonstration applications. It should also encourage enterprises to develop technologies and products that have practical functions and can create values, and to innovate commercial models so that the Internet of Things enterprises in China can boost their international competitiveness and sustainable development capacity.

China should strengthen planning and coordination for the development of the Internet of Things. From the government perspective, the Internet of Things as a strategic emerging industry has the mission to adjust industrial structure and change the mode of development. But systematic planning and national design are essential to avoid disorderly development. From the corporate perspective, when there is no effective interest-sharing mechanism, Internet operators and other corporate oligarchs may abuse their monopolistic powers to prevent fair competition and technological advance and to impede overall development. Therefore, the government should strengthen planning, regulation and coordination for Internet of Things development so as to effectively balance and harmonize the interests of different parties, encourage their cooperation, and prevent monopoly and unfair competition.

China should unify and standardize the Internet of Things standards. The Internet of Things is mainly designed for inter-industrial and inter-sectoral applications. But different industries have different application features and user demands. Standards play important roles in reducing cost, stabilizing quality and enhancing efficiency for the development of the Internet of Things industry. Currently, China still has no unified standards and specifications for Internet of Things technologies and applications. This state of affairs has increased the costs of development, integration, deployment and maintenance and restrained the mass application and development of the Internet of Things.

China should improve infrastructure construction for Internet of Things development. The Internet of Things is both an important area for various places in China to develop emerging industries and also an intelligence-based infrastructure for China to promote the integration between industrialization and informatization. This infrastructure has a high externality and requires huge inputs, and cannot be built by enterprises alone. In the sphere of sensor network, the government should make proper investment at a proper time or encourage the three major telecom operators, cable operators and related enterprises to improve their relevant public infrastructure facilities. In the field of services, the government should use investment and other measures to build public operating and service platforms and at the same time guide enterprises to make investment in building application platforms that will serve relevant industries.

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