This report begins with an examination of the global IoT industry and continues by looking into the Chinese IoT industry and its innovators. The report concludes with an analysis of the possible future opportunities and implications that China's expanding IoT industry could entail for Finland.

1. OTSIKKO
ALAOTSIKKO, KUUKAUSI VUOSI
CHINA’S INTERNET OF THINGS AND RISING DISRUPTORS
MODULE 2.10
INTERNET OF THINGS

2. AUTHORS
Dr. Edward Tse
Founder and CEO
Team Finland Future Watch Report, February 20182
Mr. Bill Russo
Managing Director and Auto Practice
Lead
Ms. Jackie Tang
Senior Consultant

3. Internet of Things
TOPICS
3
1. WHAT IS IOT? WHY NOW?
2. CHINA’S IOT STATUS AND INNOVATORS
3. FUTURE OPPORTUNITIES AND IMPLICATIONS FOR TEAM FINLAND
Team Finland Future Watch Report, February 2018

4. Internet of Things
A Brief History of the Internet of Things
1982
A connected Coca-Cola
vending machine in
Carnegie Mellon
University
1999
The term “Internet of Things”
was coined by Kevin Ashton.
Radio Frequency Identification
(RFID) was seen as a prerequisite
for IoT at that time
2009
IBM’s CEO, Samuel
Palmisano, outlined the
agenda of building a
“Smarter Planet”
2011
Chinese government
announced to make IoT a
strategic priority in the
12th Five Year Plan
4
WHAT IS IOT?
Source: 36Kr, IoT Analytics, Gao Feng analysis
 IoT is the network of physical devices, vehicles, home
appliances and other items embedded with electronics,
software, sensors, actuators, and network connectivity.
 IoT is an extension of the current Internet, expanding
from connecting people to everything.
Definition of
Internet of
Things (IoT)
Team Finland Future Watch Report, February 2018

5. Internet of Things
5
THE IOT NETWORK WILL BE OF MORE VALUE THAN THE CURRENT
MOBILE INTERNET
Metcalfe’s Law
 According to Metcalfe’s Law, the
value of a network grows by the
square of the number of
connected nodes in a network
 The more interactions in a
network, the more data will be
generated
 Businesses can capture more
inherent value from the data
generated from the interactions
and build a wider data network
 Big data analytics can help to
mine the information and help
businesses make better decisions
Source: 36Kr, Ericsson Internet of Things forecast, Gao Feng analysis
Number of Connected Devices Forecast
(2016 vs. 2022, billions)
 There will be around 18 billion IoT
devices1
by 2022, which include
connected cars, meters, wearables, etc.
 Key growth drivers for IoT are
emerging applications and new
business models, IoT technologies
standardization, and falling device
costs
Remark 1: Wide-area IoT consists of devices using cellular connections (3GPP-based with some CDMA), as well as unlicensed low-
power technologies. Short-range IoT consists of devices connected by unlicensed radio with a typical range of up to around 100
meters, such as Wi-Fi, Bluetooth and ZigBee as well as devices connected over fixed line local area connections.
Team Finland Future Watch Report, February 2018

6. Internet of Things
6
FOUR KEY LAYERS OF IOT
Source: 36Kr, Gao Feng analysis
Sense and
Identification
Network
Information
Processing
Platform
Application
Micro-Electromechanical
Systems (MEMS) Sensors
Microcontroller
Unit (MCU)
Communication
Module
Actuator
Smart Devices: wearables, shared bikes, smart home appliances, meters, etc.
Short-range
Communication
Long-range
Cellular Network
Long-range Non
Cellular Network
 Bluetooth
 RFID
 ZigBee
 NFC
 eMTC / GSM (2G)
 NB-IoT / LTE (4G)
 Z-Wave
 LoRa
 WiFi
Device Management
Platform
Connectivity
Management Platform
Application
Enablement Platform
Business Analytics
Platform
Cloud Services, especially cloud computing (IaaS, PaaS, SaaS)
To Consumers To Businesses
NOT EXHAUSTIVE
 Smart Home
 Wearables and
smart watches
 Smart Mobility
 Vehicle Connectivity
 Smart parking
 Smart Factory
 Smart City (smart
roads, waste
management, etc.)
 Smart Logistics
 Smart Agriculture
 Smart Environment
 Smart Metering
Team Finland Future Watch Report, February 2018

7. Internet of Things
7
GLOBAL IOT LANDSCAPE
Source: 36Kr, Huatai Securities, Gao Feng analysis
Team Finland Future Watch Report, February 2018
Sense and
Identification
Network
Information
Processing
Platform
Application
MEMS Sensor MCU
To Consumers To Businesses
Telecom Operator
Infrastructure-as-a-Service
Platform-as-a-Service &
Software-as-a-Service
Communication
Device
NOT EXHAUSTIVE

8. Internet of Things
8
BOTH INTERNET GIANTS AND STARTUPS ARE BETTING ON THE IOT RACE
Source: Company official websites, 36Kr, Venture Scanner, Gao Feng analysis
AWS IoT Services
A system of ubiquitous devices connecting the
physical world to the cloud
Amazon also provides physical kits, through
partnership with hardware suppliers, to
accelerate prototype development
Global ICT Companies in IoT
(Selected Examples)
Microsoft Azure IoT Suite
A Platform-as-a-Service product for IoT, mainly
targeting enterprises by providing solutions
including remote monitoring and predictive
maintenance
Jasper
A global leading IoT platform that helps
companies launch, manage, and monetize
connected IoT services
HomeKit
A system that connects Smart Home
appliances and enables the management of
them by integrating with Siri
IoT Funding
(2007-2017Q1, USD Billion)
2.7
6.3
5.2
6.8
3.9
2.1
1.5
1.01.0
0.4 0.5
20122010 2011 17Q120162013 2014 201520092007 2008
Global IoT startups in 20 categories
Team Finland Future Watch Report, February 2018

9. Internet of Things
9
IOT IS TRANSFORMING THE WAY WE LIVE, WORK AND PLAY
Source: Huatai Securities Research Institute, Gao Feng analysis
Potential Economic Impact of IoT by Use Case
(2025E, USD Billion)
110
275
475
545
885
1,700
2,450
Healthcare
Cities
Worksites
Vehicles
Home
Offices
Factories
Smart Factories
A connected network among physical machines, allowing
direct communication between product and machine
Optimize the layout of factories, shorten manufacturing life
cycle by 20-60%, decrease logistics and moving cost
Smart Cities
Urbanization drives economic expansion but some heavily
populated cities are becoming increasingly congested, polluted
and unlivable. Smart city solutions and analytics enable better
decisions, sustainable economic growth and innovation
Key elements include mobility, environment, energy and
resources, public safety and health
Connected Vehicles
Turn the vehicle from a traditional hardware to a connected
and smart moving device
Enable a wide range of services, such as predictive
maintenance, real-time fleet management, usage-based
insurance, etc.
Team Finland Future Watch Report, February 2018

10. Internet of Things
10
COUNTRIES ARCROSS THE WORLD ARE LEVERAGING IOT TO IMPROVE
THEIR GLOBAL COMPETITIVENESS
United States European Union China
 Focus on developing an advanced
manufacturing system based on the
Industrial Internet of Things
 US IoT spending is expected to
grow to USD 357 billion in 2019,
16.1% CAGR from 2016
 Manufacturing and transportation
sectors recorded highest IoT
investment in 2016
 In 2016, US Senate introduced a
bill, Developing Innovation and
Growing the Internet of Things
(DIGIT) Act as a response to the call
for a national IoT strategy
 The EU’s IoT vision is based on 3
pillars: a thriving IoT ecosystem, a
human-centric IoT approach, and a
single market for IoT
 In Mar. 2015, European Commission
launched Alliance for Internet of
Things Innovation (AIOTI) to
support the creation of an industry-
driven IoT ecosystem
 In May 2015, Digital Single Market
Strategy was adopt to further
accelerate IoT development
 The EU invested ~EUR 200 million
in IoT research from 2014-17
 Manufacturing is one of the key
areas of IoT application for China in
the 13th Five Year Plan Period
 In May 2015, State Council issued
“Made in China 2025” prompting
manufacturing development
 The Chinese government is
encouraging the integration
between IoT and other
technologies, such as cloud
computing, big data, artificial
intelligence and 5G
Team Finland Future Watch Report, February 2018
Source: China Academy of Information and Communications Technology IoT White Paper, Gao Feng analysis

11. Internet of Things
11
THE CONVERGENCE OF IOT, BLOCKCHAIN AND ARTIFICIAL INTELLIGENCE
Source: Forbes, IoTAgenda, IBM Infographic, Gao Feng analysis
A more connected,
more efficient and
more secure world
Blockchain
Key benefits of using Blockchain for IoT: 1) enhance security
(inherent transparency and permanence), 2) reduce network
traffic and 3) accelerate transactions (distributed ledger
technology allows devices to communicate directly)
Artificial Intelligence
Make the connected devices smart: the large amount of data
collected from the IoT devices can be used to teach and refine the
deep learning and machine learning algorithms
According to Forrester, as much as 60 to 73% of data within an
enterprise goes unused for analytics
IoT
A network of connected devices
One of the key fundamental issues of IoT is Internet security
Another challenge is the maximization of the value from the
generated data
Team Finland Future Watch Report, February 2018

12. Internet of Things
TOPICS
12
1. WHAT IS IOT? WHY NOW?
2. CHINA’S IOT STATUS AND INNOVATORS
3. FUTURE OPPORTUNITIES AND IMPLICATIONS FOR TEAM FINLAND
Team Finland Future Watch Report, February 2018

13. Internet of Things
13
Source: Statista, Gartnert, RFID China, Gao Feng analysis
917
743
601
486
390
2012 20142013 2015
+24% 1.130
+19%
1.391
2016 20192018 2020
1.900
1.710
2017
Global IoT Market Size
(2012-2020E, USD Billion)
China IoT Market Size
(2012-2020E, USD Billion)
385
292
231
185
146
115
867056
+27%
2017 201920152012 202020182016
+28%
20142013
CHINA WILL EMERGE AS A KEY DRIVING FORCE OF GLOBAL IOT
DEVELOPMENT
Team Finland Future Watch Report, February 2018

14. Internet of Things
14
CHINA’S DEVELOPMENT MODEL PLAYS A CRITICAL ROLE IN DRIVING IOT
INNOVATIONS
Source: Literature research, Gao Feng analysis
Central Government
Top Down Directive
 From the top, China’s central
government actively directs
the country’s economic
development
 In the IoT context, China has
positioned IoT as a national
strategy in 2011 and has laid
out a guiding plan in 2017
for the next 5 years
Local Government
Coopetition
 Various local governments
across China are both
competing and collaborating
with each other providing
additional impetus for
innovation
 Each city clusters in China
may have different
emphasizes when pursuing
new technologies
Bottom up Entrepreneurial
Environment
 With the central and local
government’s blessing a
vibrant innovation and
entrepreneurial
environment was born at
the grassroots level
 New business models are
emerging by applying IoT
technology to traditional
sectors
Team Finland Future Watch Report, February 2018

15. Internet of Things
15
CHINESE CENTRAL GOVERNMENT HAS BEEN ISSUING DIRECTIVE POLICIES
ON IOT SINCE 2010
Source: Government Policies, Gao Feng analysis
NOT EXHAUSTIVE
Release Date Issuing Authority Policy Key Highlights
Oct. 2010 State Council Decision of the State Council on Accelerating
the Cultivation and Development of
Strategic Emerging Industries
Defines IoT as one of the first batch seven
strategic emerging industries
Mar. 2011 State Council China’s 12th Five-Year Plan Elevate IoT to a national strategy
Mar. 2013 State Council Mid and Long-term Plan for National Major
Science and Technology Infrastructure
Development (2012-2030)
Achieve commercial application of IoT and
encourage diversified capital to invest in the
IoT market
Sep. 2013 National
Development and
Reform
Commission
(NDRC)
Internet of Things Development Action Plan
(2013-2015)
Introduce 10 specific action plans in the areas
of top-level design, tandard setting,
technology R&D, application, related
industries support, business model, talent,
etc.
Aug. 2014 NDRC Guidance on Accelerating Smart City
Development
Highlight the importance of IoT in Smart Cities
May 2015 State Council Made in China 2025 Prompt to apply IoT in industrial applications,
including real-time monitoring, remote
diagnostic, supply chain tracking, etc.
Dec. 2016 State Council 13th Five Year Plan for National
Informatization
Mentioned IoT 20 times in the plan, with an
emphasis on building IoT sensing
infrastructure plan and open loop applications
Team Finland Future Watch Report, February 2018

16. Internet of Things
16
EACH CLUSTER IS A BIG REGIONAL MARKET AND HAS ITS OWN FOCUS IN
IOT DEVELOPMENT
Source: Huatai Securities, Gao Feng analysis
Jing-Jin-Ji
Cluster
Yangtze River
Delta
Pearl River
Delta
Chengdu-
Chongqing
Four major city clusters in China Key IoT Development Focuses by City Clusters
Jing-Jin-Ji Cluster
Focus on e-government IoT development, leveraging
existing resources such as infrastructure, RFID and sensors
to prompt IoT applications in Smart Cities
Beijing and Tianjin are leading IoT development
Yangtze River Delta
Focus on sensing network development
Shanghai (RFID R&D) and Wuxi (“Reading China” IoT
Center) are dual core in this cluster along with Suzhou
(hardware manufacturing) and Nanjing (IoT software)
Pearl River Delta
Focus on the integration with its electronic products
manufacturing industry
Shenzhen is the core in this region
Key IoT application areas are in RFID, GPS, etc.
Chengdu-Chongqing
Focus on IoT software development, information
services and sensors
Chongqing and Wuhan are key cities of IoT development
in the mid-west region
Team Finland Future Watch Report, February 2018

17. Internet of Things
17
Source: 36Kr, Gao Feng analysis
NOT EXHAUSTIVE
Consumer Internet of Things Applications Industrial Internet of Things Applications
Smart Mobility
Wearables
Smart Home
Smart Manufacturing Smart Cities
Energy IoT Robotics
Team Finland Future Watch Report, February 2018
NEW BUSINESS MODELS ARE EMERGING IN DIFFERENT VERTICAL
INDUSTRIES IN CHINA

18. Internet of Things
18
OFO, THE LARGEST BIKE SHARING PLATFORM IN CHINA, LEVERAGES
IOT TECHNOLOGY TO IMPROVE OPERATION EFFICIENCY
Source: Huawei official website, Gao Feng analysis
About the Company:
A free-floating bike sharing
startup founded in 2014
Backed by Didi Chuxing and
Alibaba’s financial arm, Ant
Financial, ofo has become the
largest bike sharing platform in
China, with more than 7.5M
shared bicycles providing 32M
rides every day
In Jun. 2017, ofo, China Telecom
and Huawei jointly developed NB-
IoT and applied the new
technology to ofo’s IoT Smart
Locks, accounts for NB-IoT’s first
commercial use in mobile scenario
IoT Smart Lock
Team Finland Future Watch Report, February 2018
 NB-IoT
 Bluetooth
 Global Navigation
Satellite System
Power Saving
Model (PSM)
 Tri-Axial Sensor
Pain Points:
Users have difficulties in unlocking
the bikes and making payments
Inefficient equipment
management
Ofo cannot predict bike demand
Solutions:
Smart bike management to improve
operation efficiency
− Optimizes lifecycle management
− Collect information such as
equipment status, user data and
operating data
Usage hot spot identification
Rapid maintenance
Traditional Lock
CASE EXAMPLE

19. Internet of Things
19
LYNK & CO TOGETHER WITH ERICSSON TO DEMONSTRATE THE WORLD’S
MOST CONNECTED CAR
Source: Gao Feng analysis
Connected Mobility
EXTERNAL
Active
Safety
Assisted
Driving/
Parking
Remote
Diagnostics
Navigation
Platforms
CONNECTIVITY
V2VV2I
EV
Eco-system
V2X
ELECTRIC
VEHICLE
On Demand
Mobility
Ride Hailing/
Car Sharing
Leasing
Telematics
Congestion
Manage-
ment
Parking
Information
System
Autonomous
Vehicles
In-vehicle
Navigation
V2V: vehicle to vehicle - increased safety
as vehicles can communicate with each
other and pass warning messages on
dangerous situations such as wet roads
V2I: vehicle to infrastructure –
sensing the road infrastructure, e.g.
traffic jams, red lights, paying tolls,
etc.
V2X: vehicle to external
communication – communication
with any Internet capable device
V2E
V2E: vehicle to enterprise – connect to all
existing and future ecosystem players,
from gas stations, car park operators, to
music streaming, navigation, insurance
providers and new web services
Connectivity is transforming the automobile into an intelligent platform for
a wide variety of in-vehicle and external services
Team Finland Future Watch Report, February 2018
CASE EXAMPLE
Key highlights:
Lynk & Co, a connected car brand
launched by Geely, aims to provide
personalized and customized
mobility services to young buyers
Use Ericsson’s digital key
technology as a enabler for car
sharing services; like Airbnb for cars
Cloud technologies will enable a
complete range of new services and
functionality to the users

20. Internet of Things
20
HAIER LAUNCHED AN IOT PLATFORM, HAIER U+, TO ENABLE SMART
HOME SOLUTION PROVIDER
Source: Literature research, Gao Feng analysis
Haier Group, a consumer electronics and home appliance company, is
transforming traditional products to Internet connected appliances
Team Finland Future Watch Report, February 2018
U-Home
Ecosystem
Smart Security
Smart Living
Room
Smart
Bathroom
Smart Dining Room
Entertain-
ment
…
Haier U+ is an Open Technology
Platform Enabling Smart Home
UHomeOS U+Connectivity U+Big Data
U+EcosysetmU+AI U+Services
 First Smart Home operating system in China
 Covers more than 1.000 use cases
 Owns 1.026 patents and complies with 23
international and China standards
 Builds a partnership ecosystem ranging from
product manufacturers and technology
providers to service providers
CASE EXAMPLE

21. Internet of Things
21
Source: China Daily, Gao Feng analysis
Team Finland Future Watch Report, February 2018
MIDEA BUILDS A SMART FACTORY WITH ROBOTIC ARMS AND SENSORS
CASE EXAMPLE
Midea is a leading Chinese home appliance supplier specialized in manufacturing
air conditioners and washing machines
Smart Factory – Robotics-based Manufacturing
 Enable Consumer to Manufacturer (C2M): the
factory can deliver products within 12 days after
receiving the order with real-time monitoring
 Improved overall production efficiency by 30%
Key Enablers – Robotics + Industrial IoT Platform
 Leading industrial
robots solution
provider
 An Israel-based
Motion Control
System developer
 The Industrial IoT
Platform of Media,
providing big data, cloud
computing and smart
manufacturing services

22. Internet of Things
TOPICS
22
1. WHAT IS IOT? WHY NOW?
2. CHINA’S IOT STATUS AND INNOVATORS
3. FUTURE OPPORTUNITIES AND IMPLICATIONS FOR TEAM FINLAND
Team Finland Future Watch Report, February 2018

23. Internet of Things
23
FINLAND IS LEADING THE INDUSTRIAL INTERNET OF THINGS
Source: Literature research, Gao Feng analysis
Team Finland Future Watch Report, February 2018
Ranking Countries Based on Capability of Utilizing
Industrial Internet of Things (IIOT)
21
30313233
4647
515254545455
5959
6262636464
Sweden
Finland
Netherlands
UnitedKingdo
Russia
Denmark
Italy
Australia
UnitedStates
Switzerland
Norway
Spain
Germany
Japan
SouthKorea
China
Brazil
France
Canada
India
Remark: The ranking is based on the National Absorptive Capacity (NAC) Index which measures the
extent to which countries have woven the IIoT into their economic fabric
Comments
 Finland ranked third globally in utilizing
Industrial IoT while China lags behind
 Finland’s advanced digital
infrastructure, combined with its
strength in electronics and
cybersecurity have contributed in
transforming traditional industry
verticals
 Finland is a frontrunner in the 5G
technology which is a key enabler in
connecting all things in the future
 Finland’s Vision 2020 states that Finland
can become the Silicon Valley of the
Industrial Internet
 The IoT makes things more efficient and
enables new disruptive business models

24. Internet of Things
24
THERE IS AN INCREASING AMOUNT OF IOT STARTUPS IN FINLAND
Source: Business Finland, Finpro, Gao Feng analysis
BaseN
 A global full stack IoT
operator founded in 2001
 A distributed system that
collects, stores, analyzes,
visualizes and controls data
from millions of things
Creoir
 A product development
company specialized in
wireless device design
 A customizable platform
tailored for each IoT
application
Rugged Tooling
 Creates test tools for 5G, IoT,
and any IP-based networks
 Real-time traffic visibility
platform ensures security
and reliability of IP networks
CASE EXAMPLES
“Finnish companies are ideal partners when
connecting physical industrial assets via IoT
networks, cloud and building smart
applications and new services.”
- Reijo Smolander, Senior Advisor and Program
Director for Industrial Internet at Business
Finland
Sense of Intelligence
 A smart IoT wearable device
company, specialized in
wearable technologies for
animal wellbeing
 Provides real-time tracking
and monitoring services
Team Finland Future Watch Report, February 2018

25. Internet of Things
25
RECENT IOT COLLABORATION BETWEEN FINLAND AND CHINA HAS LAID A
GOOD FOUNDATION FOR FUTURE COLLABORATION
Source: Business Finland, Daily Finland, NASDAQ, Gao Feng analysis
Team Finland Future Watch Report, February 2018
Sino-Finnish Call For Proposals
For Joint R&D Projects (2016)
 Finland announced a joint call
together with the Ministry of
Science and Technology of
PRC for proposals for joint
R&D and innovation projects
 One of the key areas of
cooperation is ICT, including
but not limited to 5G and IoT
technologies and platforms
Agreements and MoUs on Sino-
Finnish Cooperation (2017)
 In Apr. 2017, Finland and
China signed a number of
agreements and MoUs during
the visit of President Xi
Jinping to Helsinki
 Further strengthen the
cooperation between the
two nations in many areas,
such as fintech, IoT, Medical
services, intelligent
transportation, etc.
Nokia-China Unicom Deal on
Small Cells Deployment (2017)
 The small cells deployment
will help China Unicom to
densify 3G and 4G networks
in urban cities and improve
performance in rural areas
 The ability to upgrade the
small cells via software paves
the way for future
introduction of NB-IoT and
5G services to connect
sensors and support new
smart services

26. Internet of Things
26
POTENTIAL SINO-FINISH IOT COLLABORATION OPPORTUNITIES
Source: Gao Feng analysis
Team Finland Future Watch Report, February 2018
Augmented Reality (AR)
277 cities in China are making efforts
towards Smart Cities
Finland is one of the leading European countries
in developing Smart Cities
More advanced fundamental research on
sensing and data analytics
China lags behind in developing core sensing
technologies
Cooperation in NB-IoT and 5G technology
development
Increasing demand for affordable, efficient and
reliable connectivity technologies in China
Globalization of Chinese IoT applications
Market insight on Western consumers
Overseas R&D capability to tailor products for
local markets
From Finland to China From China to Finland
Opportunities for Finnish ICT players to co-
develop relevant technologies with China
Opportunities for Finnish Smart City
solution providers to partner with Chinese
local governments
Share Smart City design concepts
Opportunities for Finnish researchers to
participate in cross-border research projects
E.g., Sino-Finnish joint R&D project
Opportunities for Finnish to co-found
innovation and R&D labs
Demonstrate Finnish companies’ know-how on
product innovation to European markets