Picking Up From Where We Left Off
When we met EnBW, they told us of their plans to explore new business fields and Smart City was one of the areas that caught their attention. They would like to look to other countries that have done well in the area of Smart City development and had Asia in their consideration. Being in Asia for several years now, MING’s community consisted of numerous Smart City-related companies, and we decided to organize a Smart City tour for the executives of EnBW. Four tours had been completed in Singapore, Shanghai, Japan and Korea. In our first series, we looked at what went on during the Singapore tour. From Singapore, we learnt the importance of having the government as a contributor and player for the drive of Smart Cities. Singapore’s government does so by investing heavily and opening up access to data for companies to utilize.
China, China, China
In this second series, we turn our attention to China. A country known for a lot of red tape and strict government regulations, China is actually at the forefront of developing Smart City innovation. Up until 2016, China had 542 cities under Smart City development and that number is expected to only increase (China Academy of Information and Communication Technology, 2018) with rising government investment into this industry. It is stated that the annual amount of investment into Smart City projects will rise from 375.2 billion CNY (approximately USD 55 billion) in 2017 to 1.23 trillion CNY (approximately USD 181.7 billion) in 2021.
Similar to Singapore, China only placed greater emphasis on Smart City projects and movement in recent years. However, the country has undergone a rapid transformation over the years and has already entered phase 2.0 in just five years. In Smart City 1.0, the focus was on infrastructure, the implementation of technology and data collection. There was an introduction of RFID (radio frequency identification) throughout the nation and QR codes could be found at every shop, on every street of the country. The government also set up infrastructure that would support seamless wireless connection throughout the island. Simultaneously, there was a boom in the usage of smartphones — 690 million in 2019 compared to 430 million in 2013 — and all these were important contributors to the whole Smart City drive.
Now in their current phase — Smart City 2.0 — there is a shift of emphasis towards greater digitalization and having more user-focused solutions.
The boom in smartphone usage in China brought along an influx of data generated from its users. With the presence of smartphones, contribution to the drive of Smart City is no longer restricted just to corporations. Citizens can now also play a part and contribute to the drive of Smart City by innovating better solutions and creating apps that benefit society. With the citizens now involved in the drive for Smart City, solutions are expected to be developed even quicker. The key ingredients usually needed for reliable and useful Smart City solutions are usable data and contribution from different stakeholders. China has shown us just that and for the rest of the article, we will explore how China is doing it.
Good Data, Bad Data And Usable Data
It is common knowledge that China has a wealth of data. When EnBW met with the different companies, they realized that in comparison to Germany, there are not many restrictions to data access in China. But one particular meeting changed everybody’s prior perception of data access in China. Tezign is a technology startup that serves as a platform to connect creative talents with clients through the use of large data and intelligent matching technology. Their business relies heavily on data to match clients to design agencies based on their budget and marketing requirements. Hence, they have to crunch a large amount of personal profile data and analyze this data on a daily basis. Companies in China like Tezign may not be concerned about data restrictions, however, they are struggling with receiving data of minimum quality.
When it comes to data, there is good data and bad data. Good data is usually reliable, accurate and can still be used after a certain period of time. Bad data, on the other hand, refers to data that has been maliciously tampered with or has not yet been verified (Accenture, 2018). The impact of having fake data around is detrimental, especially for companies utilizing technology such as AI and Machine Learning. These technologies require large amounts of data fed into them to learn. Hence, when fake data is fed into AI, what follows is a technology that does not serve its intended purpose. Microsoft’s AI-powered chatbot, Tay, is a classic example of just that, as it eventually started giving racist comments online when its creators trained it with Twitter comments.
Fake data is usually provided by companies or organizations to make them look larger in size than they actually are. In 2018, news about regions in China submitting fake data surfaced. Inner Mongolia admitted to falsifying data that influenced the growth of their GDP in 2016. The region inflated their actual earnings by 40% and the revised figures for Inner Mongolia showed that its economy in 2016 shrank 13% from the previous year.
Even though China has a large amount of data available for use, not all of that data is reliable and usable for companies.
The quality of data is especially important for companies innovating Smart City solutions since the success and effectiveness of these solutions are heavily dependent on data. Hence, companies are usually concerned about the minimum quality of data. Good, usable data would help companies feed accurate information into their technology, analyze and gain accurate insights, and eventually have precise Smart City solutions.
Maximizing The Potential Of Different Stakeholders
Over the years, China has worked hard to build a supportive environment for the development of Smart Cities via a top-down approach. In China’s current ecosystem for Smart City solutions, the government is leading the pack, while businesses and citizens have been encouraged to join in this movement and to contribute in their various capacity. Among the businesses, there are startups with very niche expertise and specialized skillsets contributing to the creation of new technology. And there are bigger corporations with the resources and capital to initiate large-scale projects, new research and development, and scaling products to a higher quality.
What is unique about China is the close collaboration and synergy between all these stakeholders, with data flow and access being in the center of it all.
Startups’ Contribution
“A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed.” — Neil Blumenthal, Co-Founder and Co-CEO of Warby Parker
Startups are important in a country’s drive for Smart City. Startups are typically defined by their lean teams and their heavy focus on a niche area, usually related to the problems they are solving. Having a lean team, startups usually have agile processes, and this helps to get things done efficiently. Furthermore, being subject-matter experts of their field would help save time in projects since corporations are usually just experts in one or two fields. Having different experts would increase the variety and creativity of solutions, hence increasing the overall quality of innovation.
In China, startups like Tezign and Readsense have been contributing to the overall Smart City effort through ways such as being involved in projects — Tezign’s contribution to the City Brain project — or even through the products they create. Readsense is a Chinese AI company that focuses on deep learning and embedded vision solutions. Their facial recognition technology is embedded into doors for smart homes and in shopping malls to track customer behaviors. When startups offer their specialized skillsets to the overall drive for Smart City, it speeds up progress and maximizes efficiency.
Larger Corporations’ Involvement
When the drive for Smart City relies only on startups, there will be a lack of scalability. As startups are small in nature and may not have the resources to scale new innovations and products, it is necessary for the larger businesses to step in and contribute, especially for a huge market like China. Therefore, large corporations such as Alibaba and Wanxiang Group have been contributing to the overall drive for Smart City. The City Brain project in Hangzhou mentioned earlier was initiated by Alibaba while Wanxiang Group embarked on a project called the InnovaCity. The City Brain project utilizes traffic surveillance systems and sensors to optimize routes, hence reducing traffic jams in the city. Previously, it would take approximately 40 minutes to travel 3 kilometers on the roads of Hangzhou during rush hour periods. However, the project has reduced traveling time on highways during the rush hour period by 4.6 minutes. Hangzhou has also improved its ranking from 5th to 57th in the list of ‘most congested city’ in China.
The InnovaCity project, on the other hand, will see homes, research facilities and eco-friendly smart manufacturing factories, all built on a mere ten hectares of land space. Although the project is still in its construction phase, it was impressive to see how far they have come in just two years. With the number of resources large corporations have, they can invest and commit assets into these projects. China’s unique ecosystem of stakeholders has allowed the country to move quickly in their pursuit of Smart Cities.
The Importance Of Citizens As A Stakeholder
“Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.” — Jane Jacobs, urbanist and activist, 1961
Support cannot just come from the government and businesses since the main consumers of these solutions are the citizens. Solutions must address the needs of users, but at the same time, users must be receptive and accepting of the direction the country is moving into. Without this mutual contribution, solutions will not be maximized, and investments would just go to waste. The Chinese government recognized the need to involve citizens in their Smart City movement. In 2014, the National Development and Reform Commission (NDRC) issued “The Guidance on Promoting Healthy Smart City Development” with other government ministries and agencies. According to a report by UNDP, it serves as an action plan to guide and coordinate different government stakeholders in developing Smart Cities in China. Since then, the government has been introducing new initiatives to promote participation from the citizens. One such example is the introduction of microblog Weibo and mobile instant message platform WeChat for online discussion and to encourage more collective action offline. In 2007, these online platforms were used to gather 10,000 citizens for an “anti-PX leisure walk” in protest against the building of a PX chemical plant near residential areas in Xiamen. As a result, the Xiamen Municipal Government backed down from the initial plans of building the chemical plant at the intended location.
By creating platforms to encourage public participation, citizens would be empowered to play a greater role in contributing to the overall Smart City movement. Although the contribution from the citizens in China is currently done through the participation of government initiatives, the government is taking the right first steps in encouraging more bottom-up solutions from their people. Eventually, the state of Smart City would turn into one that is for the people, created by the people.
What We Learnt From China
China and Germany have their strengths in different areas. China is strong in delivering products quickly and efficiently getting to an operational stage, whereas Germany has a legacy in precision and producing quality products. From our trip to China, we learnt the importance of data access and flow in Smart City solutions. Beyond just data access and flow, it is also important for data to have a minimum quality in order for effective solutions to be produced. Also, we saw how the different contributors should not work in silos but come together for more effective solutions to emerge. With greater access to data and the ease of data flow, it will help companies innovate solutions effectively and to maximise their solutions. The Chinese government also saw the need to set up proper infrastructure and have regulations in place to make Smart City solutions happen. In addition, it is important for the West to understand the value of different technology and see the huge benefit to the lives of citizens when technology is used effectively.
China was by far the most technologically advanced country we’ve visited in Asia and it is an exciting place to experience the Smart City movement.
Fang Dong is Senior Community Manager and Randall Wong is Marketing Intern at MING Labs.
MING Labs is a leading digital business builder located in Berlin, Munich, New York City, Shanghai and Singapore. We guide clients in designing their businesses for the future, ensuring they are leaders in the field of innovation.
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