The shared enthusiasm of companies and governments for the Internet of Things (IoT) is moving Asia from being a production centre to an innovation hub, according to a new report by law firms Osborne Clarke and Conventus Law.
The report, released last week, draws on in-depth interviews with senior individuals from industry, including technology, manufacturing, logistics sectors as well as government agencies, in China, Hong Kong, India and Singapore.
Executives were asked how the the realisation of IoT in the industrial space, referred to as ‘Industrial IoT’ (IIoT) will transform industry in Asia.
China and and Hong Kong are key markets where companies are planning to or are already using advanced technologies, according to the report.
In the foreword, Adrian Bott, partner, Osborne Clarke, said: “The change in dynamic for China, for example, which involves no longer being primarily a manufacturing base but now being a centre of innovation, is going to force US and European companies to think again about their business strategies.”
The developments in China are partly due to a government initiative, ‘Made in China 2025’, which provides high-tech industries such as robotics and AI, with subsidies, low-interest loans, rent-free land and tax breaks, the report said.
This plan aims to stimulate “indigenous innovation” and “self-sufficiency” and has set a target of Chinese technology suppliers’ having an overall domestic market share of 70% by 2025. It also aims to cut operating costs, production cycles and product defect rates by 50%.
One example of a company benefiting from the technology is telecommunications equipment manufacturer Ericsson, which has implemented IIoT applications at its assembly factory in Nanjing.
The company has partnered with China Mobile to convert the facility into a smart wireless manufacturing plant by connecting more than 1,000 high-precision screwdrivers with integrated motion sensors. Previously the screwdrivers needed to be calibrated and lubricated manually based on the amount of usage.
The changes led to a 50% maintenance workload reduction and a cost reduction of between 10% and 12%.
While the costs of IIoT adoption are considerable, China’s manufacturers cannot continue to rely on “historical advantages – such as low-cost labour – in the long term” according to the report.
In Hong Kong, the Smart City Blueprint, released in December 2017, maps out development plans covering six major smart areas. It includes more than 70 initiatives to revitalise traditional industrial sectors such as manufacturing by encouraging investment in smart factories and industrial parks geared towards advanced R&D.
“While it makes sense to keep traditional manufacturing on the mainland, Chinese businesses interested in working with international IIoT experts may find it easier to do so in one of Hong Kong’s advanced industrial parks,” the report said.
Singapore’s IIoT development is being driven by its Smart Nation strategy, backed by Singapore Management University’s new Centre for AI and Data Governance, which has received a S$4.5m (US$3.3m) government grant. “Singapore’s support for IIoT has allowed the city to steal a march on other Asia-Pacific countries and state support is likely to continue.”
In India the logistics sector is driving the IIoT revolution, the report stated. “While manufacturers have been slower to integrate IIoT into their operational processes, they will eventually adapt as investment cycles free up funding for new initiatives.”
In terms of the wider region, it said: “As IIoT slowly penetrates Asia’s manufacturing sectors, factory owners will be presented with the choice of whether to invest now, later or not at all.”
And the report warned: “Given the scope of change that greater device connectivity promises, those that opt not to enter the race at all are not just risking being left behind, but could vanish altogether in time.”