IDC: China’s manufacturing IoT spending to hit US$128 billion by 2020 as industry shifts from production to services

31 Aug 2016

Beijing, September 01, 2016 —— Chinese manufacturing enterprises’ spending on the Internet of Things (“IoT”) is expected to reach US$127.5 billion (approximately RMB848.3 billion) by 2020, with a compound average growth rate of 14.7% during 2016 to 2020, according to the China Manufacturing IoT Market Forecast, 2016-2020, released by IDC China recently. In the process, software and services will lead the way for the fast growth of IoT spending in the manufacturing industry, with a combined market share of over 60%, the report predicted.

IoT, which has been enshrined in China’s 13th Five-Year Development Plan, has become a strategic emerging industry in the country. Made in China 2025 is the first 10-year action plan for the Chinese government to implement its strategy of building China into a manufacturing powerhouse. With the policy and financial support of the Chinese government, pushing forward the development of smart manufacturing, raising the level of networked, collaborative manufacturing and speeding up the manufacturing industry’s transformation into services have become the main development direction for the manufacturing industry. It will drive the continuous fast growth of IoT spending in the manufacturing industry in the next three to five years.

“Many Chinese manufacturers have started to implement an IoT strategy with a view to improving their production and operational efficiency and speeding up their transformation from production to services,” said Wang Yue, Senior Research Manager at IDC China.“With the promotion of smart manufacturing, the fast integration of IT (information technology)and OT (operational technology), and the prevalence of the “digital twin” concept, IoT technology will have more room for development in the manufacturing industry.

IoT is still in its fledgling phase of development in the manufacturing industry, its applications in China are therefore continuously expanding in both breadth and depth, and new application scenarios are continuously emerging. With the integration of emerging technologies (such as cloud computing, big data and mobile technology) and IoT into this industry, and the integration between IT and OT, the potential of IoT technology will be released at an accelerated pace. IDC forecasts that IoT in China’s manufacturing industry will show the following three major development trends in the next two years:

IoT platform competition will intensify.

As more and more enterprises deploy IoT applications, IDC believes that manufacturing IoT platforms will represent one of the main directions for the change and development of smart manufacturing. Future platforms may come from the hardware or software fields. In the hardware management field, IoT platforms are mainly used for production equipment connection management. In the software field, IoT platforms will mainly include enterprise application management platforms, enterprise information display and reporting platforms, and ente

IoT applications will accelerate innovation in the manufacturing industry.

Manufacturing IoT applications will guide manufacturing enterprises to enter a new era of innovation and change. With their advantages of low-cost sensing, high-efficiency data collection, real-time data recording, distributed computing and advanced data analysis, IoT applications are bound to speed up the in-depth integration between IT and the manufacturing industry and innovate enterprises’ R&D, production, operation, marketing and management. In addition, continuous breakthroughs in machine learning technology will also promote faster and more accurate data analysis in the manufacturing industry.

Edge computing will become the next hotspot.

With the large-scale deployment of IoT devices, IoT-generated data is expected to witness exponential growth. Therefore, data filtering and processing through scattered devices and IoT gateways will become an important direction for IoT applications in the manufacturing industry. Meanwhile, data will gradually become an important asset for enterprises. Edge intelligence will ensure data security and help enterprises to avoid risks when there are network or data center malfunction.

“The combination of IoT with cloud computing, mobile technology, big data and other emerging digital technologies will further release the potential of IoT and lay a solid technological foundation for establishing a closed IoT ecological loop” Wang Yue said. “We believe that with the gradual maturing of the ecosystem, IoT platform-based industry and sub-industry applications will grow faster in the future.”