'Intelligent' Internet Hub Planned In China

The southeastern Chinese city of Guangzhou plans to spend close to $14.6 million annually to promote an “Internet of Things” infrastructure, with the goal of becoming a key hub in China for the networking concept by 2013.

The idea is being pushed by Guangzhou Deputy Mayor Xu Zhibiao, signaling strong government support which will be key to ensuring funding. Xu envisions hundreds of companies being involved in the system and derivative sales exceeding $7.3 billion.

At a recent conference hosted by China’s powerful Ministry of Industry and Information Technology (MIIT), the deputy mayor said the city wants to develop an “Intelligent Guangdong" province that would become a model for other cities to follow in China.

It would budget the money from a fund the city has to develop high tech industries and apply it to research and development for infrastructure and applications that would support city management, traditional industries, and everyday life for residents of Guangzhou. The city is one of China’s largest and a key hub in the Pearl River Delta, the center of much of China’s manufacturing activity.

Though the concept first emerged from MIIT in the late 1990s, the Internet of Things only recently became a hot topic in China -- in part because of Premier Wen Jiabao, who earlier this year focused on the networking concept as a key area where China should “accelerate research and development as well as practical applications.”

By 2013, Xu hopes that Guangzhou will have cultivated its own competitive Internet of Things brand, attracting more than 500 companies.

The basic idea behind the Internet of Things is to connect virtually everything to the Internet. In its simplest application, lost things, such as keys, would be easy to find because they would be embedded with a chip. In its more complex form, it could revolutionize the supply chain by offering unprecedented visibility into upstream manufacturing cycles, downstream product inventory and consumer-side demand fluctuations.

This more complex application is keenly interesting to the Chinese in their capacity as the world’s manufacturer.

A key unknown in the development of the concept in China is whether the country will try to forge ahead with its own standard. Some regulators within MIIT have expressed concern about foreign companies implementing technology that would be able to collect such a deep level of intelligence about manufacturing and consumption patterns in China.

This is prompting debate about whether China must view the concept as a national security issue, which would make the market much tougher for foreign companies to navigate.