By Jia Wei

On December 8, the Ministry of Industry and Information Technology published the 12th Five-year Development Plan of the Internet of Things. The Plan analyzes the status quo and development trend of IOT in China, sorts out the IOT industrial chain, brings forwards development goals and roadmaps, and proposes numerous measures to support and promote the development of the industry.

 

Some research institutions believe that the Plan makes it clear in terms of finance and taxation that the volume of IOT development special funds will be expanded, the investment proportion of industrialization special funds in IOT will be increased, and non-government capital and foreign capital will be encouraged to invest in the field of IOT. As the government’s taxation policies roll out, IOT-related public companies may be expected to gain further preference in terms of taxation and financial subsidies. 

Every major financial crisis would generate a scientific technology revolution, and the new technologies would become a great force that pushes the economy, particularly industries, out of the crisis. The international financial crisis has kicked off a global emerging industries revolution. The information network industry, represented by the IOT, becomes an “engine” that promotes industrial upgrade and drives the society towards informatization.  

From the prospective of informatization, IOT is in fact the deepening and widening of the application of informatization that aim to achieve a higher level of intelligence.   

IOT has vast market potentials

In the view of Shenyin Wanguo, IOT applies informatization to all aspects of production and people’s lives, and its extensive application will effectively promote the integration of industrialization and informatization, serving as an important momentum for industrial upgrade, technologic progress, and economic development.

IOT has a potential market value of up to the US$ 1 trillion. Different from the internet, IOT links up the physical world, and its volume will be bigger than that of the internet. In May this year, the White Book of the Internet of Things, published by China Academy of Telecommunication Research of MIIT, estimates that by the end of the 12 Five-year period, the volume of IOT-related industries in China will exceed RMB 500 billion Yuan, and by the end of the 13th Five-year period, it is expect to go as high as to RMB 1,000 billion Yuan. Also, according to prediction of relevant organizations, by the year 2020, the ratio of thing-thing network business to the current human-human network business will be 30:1, and IOT will be widely adopted and develop into a US$ trillion-level industry.

In the opinion of Fang Xiahong, analyst of Central China Securities, IOT is an important part of the next-generation information technology. The government and relevant enterprises are making vigorous efforts in promoting industrial standardization and business models are maturing. The industry is embracing opportunities of rapid development, and its output value is expected to reach RMB 750 billion Yuan in 2015. 

Meanwhile, the government and enterprises are increasing investment in the IOT industry. On November 17, Newland Computer, a leading IOT enterprise, announced that the Fujian Internet of Things Industry Venture Investment Fund, which was initiated by Newland, has been approved by the National Development and Reform Commission. The volume of the initial stage of the fund is RMB 250 million Yuan, with RMB 50 million Yuan coming from the Ministry of Finance, RMB 50 million Yuan from the provincial government of Fujian, and the rest mainly from Newland and other social capital. This is China’s first IOT fund that is funded by the government and initialized by a leading IOT enterprise. 

According to Wang Jing, president of Newland Group, this fund is an IOT industry equity investment fund, which will choose leading technology companies in the field of IOT as it investment targets and carry out a series of industrial integration and merging. 

Investment logics and strategy

The IOT industry, currently at the early stage of its development, centers on closed-loop application. Unifying industrial standards can link together relevant applicant fields, and enable companies to establish standard interfaces to share resources. On this basis, the industry will gradually shift from the public and commercial markets to the more spacious civil market.

According to the Research Department of China International Capital Corporation, IOT helps advance intelligentization, as it is an important part and representation of intelligentization. From the perspective of industrial chain, IOT is divided into three major classes, namely sensors, system integration, and communication network. From the perspective of downstream application, IOT is extensively adopted in such fields as railway, electric power, transportation, security, energy, and finance. Therefore, in terms of industrial attributes, IOT companies possess desirable investment value.     

In Guotai Junan’s opinion, in terms of key technologies innovation engineering, IOT includes information sensing technology (RFID, sensors, and location sensing), information transmission technology (wireless sensors network and integration of heterogeneous nets), information processing technology (mass data storage, data digging, and intelligent analysis of image and video), and information security technology. Public companies that possess technology accumulation and RD prowess can seize this opportunity to achieve technology breakthroughs and secure a better position in the industrial chain. Many public companies, including Nationz Technologies, which is engaged in RFID recognition, and Navinfo, Gotecom, and Hua Create Corporation, which are engaged in location sensing technologies, and TRS and Meiya Pico, are expected to benefit from it.

In Shenyin Wanguo’s opinion, informatization suppliers who possess rich industrial experience, leading technologies, and large user bases will benefit from the rapid advancement of the emerging IOT industry and gain expansive market space. Based on the informatization development statuses of industries in China, Shenyin Wanguo believes that attention may be paid to public information companies operating in such fields as intelligent city (including transportation, city management, and construction), intelligent industry (electricity and manufacturing), intelligent agriculture, and intelligent medical care, such as Enjoyor, Splendor Science Technology, Sunwin Intelligent, DHC, and Neusoft.

In the view of Wei Xingyun, chief computer industry analyst of Guotai Junan, attention may be paid to leading public companies that are within the application scope defined by the IOT development plan and that will benefit from the plan, such as MESNAC and HANS Laser in the field intelligent industries, Enjoyor and e-Hualu in the field intelligent transportation, Eastsoft Communication and Fuxing Xiaocheng in the field of intelligent power grid, Hik Vision , Dahua Technology, OB Telecom in the field of intelligent security, and Winning Software, Wonders Information, and Neusoft in the field of intelligent medical care.