China's manufacturing IoT spending to hit 128 bln USD by 2020: IDC

Chinese manufacturing enterprises' spending on the Internet of Things (IoT) is expected to grow by an annual average rate of 14.7 percent and hit 127.5 billion U.S. dollars by 2020, a report showed Thursday.

"During the process, software and services will lead the way for fast growth with a combined market share of over 60 percent," according to the report by research firm International Data Corp. (IDC).

IoT is a strategic emerging industry in China, and was included in the 13th Five-year Development Plan. "Made in China 2025" is a 10-year action plan that aims to build China into a manufacturing powerhouse.

Promoting smart manufacturing -- raising the level of networked, collaborative manufacturing and expediting the manufacturing industry's transformation into services -- is the way forward for the industry, said the IDC report.

"Many Chinese manufacturers have started to implement an IoT strategy to improve production, efficiency and evolve their business models," said Wang Yue, senior research manager at IDC China.

With the promotion of smart manufacturing, the fast integration of information technology and operational technology (OT), and the prevalence of the "digital twin" concept, there is plenty of room for development in the manufacturing industry, according to Wang.

In the next two years, three major trends will lead IoT development in China's manufacturing industry -- IoT platform competition will intensify, manufacturing IoT applications will accelerate innovation, while edge computing will become the next area to be expanded, IDC forecast.

IoT will see tangible objects connected to the Internet, allowing them to interact with other devices.

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Chip sector to get US$100b infusion : Report

CHINA aims to invest US$100 billion in its semiconductor industry over the next few years to meet surging domestic demand and also as part of its technology upgrading efforts, research firm Bain said yesterday.

By 2020, about 55 percent of the world’s memory, logic and analog chips are destined to flow to (or through) China. The country now only produces about 15 percent of these chips, up from about 10 percent a few years ago. But the higher production still marks a long way from closing the widening gap between supply and demand, according to Bain.

Bain also predicts that electric cars and new energy projects like smart grid are likely to fuel a rising amount of highly-advanced and next-generation chips.

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Five made-in-China hi-tech breakthroughs

Chinese leaders are resolved that the best way forward for the country is "innovation" -- modernizing industries and creating technological marvels that China can call its own. With this belief, China has achieved momentous progress in science and technology in recent years. Thanks to high-speed rail, long distances can not keep friends, family or business partners apart, as 1,000 miles can be covered in a day. The sky is no longer the limit, as China has sent manned flights into space.

The following are the most revolutionary hi-tech achievements that Chinese has made lately.

High-speed rail: China's business card abroad

A CRH train that runs on the Beijing-Shanghai High-Speed Railway leaves Tianjin South Railway Station in North China's Tianjin, June 30, 2012. [PhotoXinhua]

No sector better symbolizes China's shift from a nation of labor-intensive manufacturing to one that excels in sophisticated technology than high-speed rail.

Just a few years ago, high-speed rail was a new concept to the Chinese. Now, China boasts the world's biggest high-speed railway network. By the end of 2015, its total operating length had reached 19,000 km, accounting for more than half of that across the world.

After years of technological upgrades and innovation, China has lifted its high-speed railway technology to the most advanced level, which has the advantages of low cost, quick delivery and acknowledged reliability.

A lot of Chinese high-speed rail expertise and equipment has also been exported, generating huge economic efficiency in many parts of the world. For example, in Africa, China-built train lines are increasingly becoming the backbone of the local public transport system and a key component of growth in a number of countries, including Nigeria and Ethiopia.

Chinese Overseas Spending Ranks First in the World

Tourists on Phuket Island, Thailand, enjoy unspoiled scenery. 

 

The latest data released by the World Tourism Organization (WTO) shows that China's revenue from international tourism in 2015 amounted to $11.4 billion, taking Spain's former ranking as second in the world. The US remains first with $17.8 billion.

 

As for spending and visits to overseas countries, China ranks first in the world, according to Xinhua News Agency.

The spending of Chinese tourists abroad witnessed a year-on-year increase of 25 percent, reaching $292 billion, followed by the US ($120 billion), Germany ($76 billion) and the UK ($63billion). The number of Chinese people traveling abroad grew 10 percent overall and totaled 128 million, the data showed.

 

Global revenue from tourism in 2015 rose 3.6 percent, amounting to $1.4 trillion with an average daily spending of $4 billion per day. The number of international tourists increased 4.4 percent to reach 1.2 trillion.

 

The growth rate of tourism worldwide has exceeded that of merchandise trade for four consecutive years. The tourism industry accounted for 7 percent of world exports and 30 percentof exported services in 2015.

German firms upbeat on Chinese market growth: report

BEIJING - German firms in China are still optimistic about their local sales growth despite theeconomic slowdown, a report showed Tuesday.

About 90 percent of the surveyed 189 German firms, based in China, planned to continuebusiness in China despite the economy seeing the weakest quarter-on-quarter expansion inthe first quarter since 2011, according to the report released by the German Chamber ofCommerce in China.

Over one third of the surveyed German firms have taken steps such as rolling out newproducts and services to adapt to market changes, the report showed.

Meanwhile, most German firms look forward to the opportunities brought about by China'sdevelopment plan for the next five years. Over half of the surveyed firms regard China'sgrowing sales market to be their biggest opportunity as more Chinese firms upgrade theirsystems and equipment.

"One important area of business we see from the 13th Five-Year Plan is the focus oninnovation -- this carries the potential for ample Sino-German business cooperation," saidAlexandra Voss, North China executive director with the German Chamber of Commerce inChina.

China is Germany's largest trade partner outside Europe. There are more than 5,000 Germancompanies in China. Sentiment is high among the firms as they have been encouraged byChina's efforts in the areas of environmental protection and innovation, according to thereport.

They also expected more agreeable market environment thanks to continuous opening upand easier market access, the report said.

Why China's bid to promote domestic brands will fail

China's drive to combat pollution is helping homegrown carmakers, which are boosting sales at the expense of Western brands.

But General Motors and Volkswagen -- the top-selling brands in China -- shouldn't worry: Changan and Great Wall won't topple them.

In October, China cut taxes on cars with engines of less than 1.6 liters to 5 percent of the purchase price, down from 10 percent. The tax cut reversed a decline in overall car sales and buoyed demand for domestic brands. Eighty to 85 percent of vehicles produced by local carmakers qualify for the tax break, according to Bloomberg Intelligence analyst Steve Man.

By January, Chinese domestic brands had a 41 percent share of car sales in China, up from about 38 percent a year earlier, according to data from Bloomberg Intelligence and the China Automotive Information Network.

China's auto sales had been falling until last summer as the economy slowed and the government's anti-corruption campaign ate into demand for ostentatious vehicles.

The tax cut raise passenger vehicle sales to 21.1 million units last year, up 7.3 percent from 2014. Car sales continued their rebound this year. In January and February, China sales totaled 3.61 million units, up 5.1 percent from a year earlier, according to the China Association of Automobile Manufacturers.

In addition to the October tax cut, local and national government subsidies for electric car producers can reduce a vehicle's purchase price by 50 percent or more.

The incentives have helped local brands to find a market for their electric cars. Last year, EVs accounted for 2.5 percent of cars sold in China last year, more than doubling EV sales in 2014.

But China's carmakers shouldn't get too comfortable. There are two reasons why Chinese carmakers may find their days in the spotlight cut short.

Conventional hybrids, the more pragmatic option for EV fans, are coming. The cities of Guangzhou and Tianjin are allowing foreign ventures to make them and Hyundai Motor Co. plans to launch sales this year, according to BI's Man. 
While growing fast, demand for electric vehicles has been restricted by a lack of charging stations, a problem that doesn't affect hybrids.

Secondly, the tax cut will be temporary. China last lowered the levy in 2009, briefly boosting the share of local brands before restoring the tax to 10 percent.

This time, the 50 percent reduction expires in December, barring a government extension. China's carmakers may be feeling a sense of deja vu.

Private equity behind booming health checkup business in China

The market for health checkups in mainland China is nearly 200 billion yuan (US$30.7 billion) a year.

Private equity (PE) firms around the world have rushed into the sector in recent years.

The latest case is the 2.7 billion yuan acquisition of CiMing Health Checkup Management Group by major industry player Meinian Onehealth Healthcare (Group) Co. Ltd.

Since 2010, a large amount of capital has been injected into the mainland health checkup industry.

Three companies gradually became the top players: CiMing, Meinian and iKang Healthcare Group Inc.

All of them are backed by PE firms, but the success of the investors varies.

CDH Investment and Shenzhen Ping’an Innovation Capital Investment invested in CiMing in 2008, with an initial public offering planned for 2010.

But, for various reasons, the process of going public dragged on for five years.

During the period when CiMing was waiting to list its shares on a mainland stock exchange, iKang raised nearly US$100 million from Goldman Sachs and GIC in 2013 and listed its shares on Nasdaq in 2014, raising a total of US$153 million.

Meinian received an investment of a combined 600 million yuan from the Carlyle Group and Pingan Insurance in 2012 and 2013.

As its competitors grew stronger with the support of the PE firms, CiMing and its investors must have been very worried.

The investors may now breathe a sigh of relief.

The market had expected Meinian to acquire CiMing after it bought a stake in the firm several years ago.

In the past decade, iKang Healthcare Group acquired iKang.com and Meinian bought Onehealth.

The health checkup market in the country has been basically “carved up” by the big players.

Privately owned healthcare checkup entities hold only a 5 percent share of the market.

I believe the PE firms are hunting for the next Meinian Onehealth, to seize the growth opportunities in the booming market.

This article appeared in the Hong Kong Economic Journal on March 24.

The state of the smartphone industry in 2015: top 10 phone makers, the losers and winners.

What did the smartphone world look like in 2015?

You probably already know about the best phones of 2015: the Galaxy Note 5, the new iPhone 6s series, as well as LG's G4 and V10, but what about the market on a global scale? Which company made the most phones? Which companies grew and which companies fell in 2015?

These are the questions that we can finally answer as the sales figures for the whole year have come in, courtesy of various analysts and rounded up by seasoned ex-Nokia veteran turned mobile analyst Tomi Ahonen. 

With no further ado, here are the biggest winners and losers of 2015.

Top 10 phone makers in 2015

One thing is clear: Samsung remains the clear leader when it comes to smartphones sales in pure volume: with 322 million phones sold throughout the year, it captured a 22.4% share of the global market, way above Apple who finished the year with 231.4 million phones sold and a market share of 16.1%.

In fact, Samsung and Apple combined made the overwhelming majority of smartphone sales and it's clear that these two companies are now the biggest name in tech by a huge margin. Together, Samsung and Apple combine for a 38.5% share of the global market.

Number three, Chinese Huawei, has made great strides in 2015, growing its sales and average sales price, but it remains a brand that has its strength in China and is much less prominent in the Western world.

Lenovo, on the other hand, is well recognized with its Motorola brand, but its sales actually tumbled, dropping to just 76.3 million units, down dwom 95 million in 2014.

SONY AND LUMIA ARE FAR BEHIND, DROPPING OUT OF THE TOP 10

Xiaomi, a company that is big in China, did not quite live up to the sky high expectations and finished fifth for the year, growing its sales modestly from 61.1 million in 2014 to 71 million in 2015.

LG finished a somewhat distant sixth with 59.7 million units sold, roughly flat on the year. The rest of the companies in the global top 10 are Chinese companies with limited or no presence in the United States and Europe.

It's particularly shocking that former grand forces in the phone market like Sony and Microsoft Lumia (taken over from Nokia) have dropped off from the global top 10, giving way to Chinese brands.

Rank	Brand	2015 (units)	2015 (share)	2014 (units)	2014 (share)	2013 (units)	2013 (share)
1	Samsung	322	22.4%	314.2	24.2%	311.4	31.5%
2	Apple	231.4	16.1%	192.7	14.8%	153.4	15.5%
3	Huawei	108	7.5%	75	5.8%	52	5.3%
4	Lenovo	76.3	5.3%	95	7.3%	46.2	4.7%
5	Xiaomi	71	4.9%	61.1	4.7%	-	-
6	LG	59.7	4.2%	59.1	4.5%	47.6	4.8%
7	ZTE	57.2	4.0%	46.1	3.5%	40	4.0%
8	Oppo	50	3.5%	-	-	-	-
9	Coolpad	45.5	3.2%	50.4	3.9%	35.3	3.6%
10	TCL-Alcatel	43.5	3.2%	41.4	3.2%	-	-

*all units in million

The state of platforms: Android vs iOS

When we look at the overall state of the smartphone market from the point of view of platforms, there is one platform that rules them all: Android. That's the objective reality on a global scale, with the notable exceptions of most developed countries and the United States in particular, where Apple is holding a strong position and is able to compete on equal terms with Android.

Still, it's stunning how Android is able to increase its already dominant positions: Google's platform now has an 81% market share, up from the already dominant 78% in 2014, and much higher than its 65% market holdings in 2013.

SOMEHOW, ANDROID IS STILL GROWING AND TAKING OVER THE WORLD

Apple's iOS, on the other hand, remains mostly flat: as the smartphone market continuous to grow in 2015, the company holds a 16.1% market share, while in 2014 that number stood at 16%, while in 2013 it reached a high of 20%. With bleak expectations for 2016, the forecast is for Apple's position in terms of market share to further derode.

What about Windows Phone, the much touted third platform? Well, it's quickly sinking into oblivion. In 2015, Windows Phone sales amounted to a miserly 28.6 million, or just 2% of the whole market, down from 35 million and a 3% share in 2014. With no support from the big phone makers and only Microsoft making Windows Phone devices (and even those are often uninspired), we expect Windows Phone to continue losing its already weak positions.

BlackBerry has also quickly dissolved as a platform and has a marginal, 0.3% market share. In 2016, it makes no sense at all to speak about BlackBerry as a platform. 

Samsung's Tizen, on the other hand, holds a very minimal position, but it is found on some of the hottest gadgets at the moment: the Gear S2 series of smartwatches for instance. Given that the world's largest phone maker supports it, Tizen might not be a mainstream platform, but it is not a dead horse either.

Rank	OS	2015 (units)	2015 (share)	2014 (units)	2014 (share)	2013 (units)	2013 (share)
1	Android	1,168.8	81.3%	1,062	78%	767	65%
2	iOS	231.4	16.1%	193	16%	153	20%
3	Windows Phone	28.6	2%	35	3%	33	3%
4	BlackBerry	4	0.3%	9	2%	23	5%
5	Tizen	3	0.2%	-	-	-	-
Others		1.5	0.1%
TOTAL		1,300.6		695		486

*all units in million

Total installed base

With this last year's figures in mind, it's worth taking a separate look at the total installed base of devices at the end of 2015. Android holds a 76% market share with a total installed base of 1.889 billion, while Apple's iOS captures 20% share with 497 million devices in use.

Rank	OS	Units	Market share	2014 (units)
1	Android	1,889.0	76.0%	76%
2	iOS	497	20.0%	19%
3	Windows Phone	44	2%	2%
4	BlackBerry	15	1.0%	2%
Others		10	0%
TOTAL (installed base)		2,475.0

*all units in million

Quarter 4, 2015: Samsung and Apple rule, Chinese company continue strong growth

Finally, we have the results for the latest, Q4 2015. The Holiday quarter is traditionally the strongest one for phone makers and what is evident from the quarterly results is that Samsung and Apple continue dominating the picture, while Chinese phone makers proceed with their steady, sure growth.

At number 10, we also see Chinese brand Vivo come to the place previously occupied by Sony, as the well-known brand has lost its sales power and dropped out of the top 10.

Rank	Brand	Q4 2015 (units)	Q4 2015 (market share)
1	Samsung	82.4	20.5%
2	Apple	74.8	18.6%
3	Huawei	30.6	7.6%
4	Lenovo	22.6	5.6%
5	Xiaomi	18.6	4.6%
6	ZTE	17	4.2%
7	Oppo	16	4.0%
8	LG	15.3	3.8%
9	TCL-Alcatel	12.4	3.1%
10	Vivo	10.2	2.5%
Others		102.3
TOTAL		402

*all units in million

Conclusion

One trend seems to shape up very clearly: Samsung and Apple have solidified their positions as market leaders in 2015, but they are getting a very fierce fight from emerging companies of China that are pricing their phones aggressively and that have now started to pay attention to design as well.

It's particularly telling that many of these Chinese brands are not even available for purchase in the United States or Europe. Our Western markets are now considered saturated by many, and a lot of the growth in smartphone sales comes from developing markets. People there often cannot afford to buy the expensive Galaxy S series or Apple iPhones.

REVOLUTIONARY INNOVATION IS HARDER TO COME BY

It's also worth noting that now 2.5 billion of the people on the planet own a smartphone. That's a jaw-dropping figure. We've never had so many people with access to information. On the flipside of things, there is still billions who don't have a phone and that's a huge opportunity.

One thing is certain: in 2016, Samsung and Apple will need to provide excellency on all fronts. It's no longer enough to have a phone that runs well and is designed good, as the Chinese companies have that as well. In such a saturated and hugely competitive market, innovation and differentiation will be harder to achieve. If innovative features do arrive, though, the phone market is a multi-billion dollar opportunity.