Developing a Smart City in China

What if China could reduce the time of traffic delays for its millions of commuters? Reduce the impact of the population growth on the environment? Or supply medical advice readily available through webcams at Chinese homes? All this is not some fantasy about life in the future, but a vision that is already here with more cities hopping on the ‘Smart City’ bandwagon. Along with many developed countries, China has also recently focused more efforts on building ‘Smart Cities’ in order to manage the challenges of the increasing population in its major cities. It is prospected that the investment in these projects might exceed 1 trillion RMB (about 159 billion U.S. dollars) by 2015. Although this is a substantial investment, China’s Smart Cities offer numerous opportunities to stimulate further economic growth by creating new jobs and attracting more investment.

What is a Smart City?
A ‘Smart City’ is an initiative that optimizes the every-day operations of a city through the integration of information and communication technologies. In particular, areas such as traffic management, health care, and environmental protection all will benefit from these technologies. With regard to traffic management a ‘Smart City’ enables access to real-time, valuable information on traffic conditions, which eventually reduces the amount of time spent on daily travel. In addition, advanced technologies will allow operators to respond quickly to emergency situations occurring throughout the road network. In this sense, a Smart City provides leaders with the tools needed to analyze data for better decisions, anticipation of problems, and faster resolution to drive more sustainable growth and prosperity.

How did it all start?
Is there no project that IBM doesn’t have a finger in the pie? In 2010 IBM started the ‘Smarter Cities Challenge’ with the goal to help 100 cities over a three-year period to address some of their most critical challenges. IBM’s first ‘Smart City’ project was established in the Brazilian city Rio, which involved the establishment of an emergency response center. This center accumulates information from various services, such as police, traffic, and energy utilities to facilitate the leaders with data for rapid decision-making. Up to today IBM has successfully implemented projects towards ‘smarter’ cities in 61 places with 2012 seeing the most completed projects.

An example of a Smart City in China
Interestingly, Chengdu in China was one of IBM’s first ‘Smart City’ projects with focus on food safety, education, and telecommunications, coupled with the plan to make use of an integrated “cloud” delivery service. Since then, more than 154 Chinese cities have shown interest in “becoming smart” and are currently constructing plans with China’s telecommunication service providers. While this hype around ‘Smart Cities’ does not completely meet the actual numbers of construction (See graphic 1), it presents a $153 billion opportunity across around 54 projects. Fifteen smart city projects are so far under construction, mostly in Tier A and B cities that have the needed resources. One of these projects takes place in Karamay in Northwest China, who with the help of IBM successfully integrated technologies into all aspects of life in the city. Part of this project is that every bus station is equipped with electronic screens that display information on bus times. Moreover, residents can even check the exact arrival time of a bus on their mobile devices. In order to support the health sector, the city installed emergency buttons in all elderly homes that inform emergency units, first aid, and relatives in the case of an emergency.

Another useful implementation of advanced technologies in Karamay represents the local social security system that alerts officials when the unemployment rate becomes too high. Although Karamay is a remote city in China, it has become the first wireless communication city in northwest China, focusing on transmitting information and services via mobile technologies. Karamay is on the right way to become a full functioning Smart City in China. However, the main obstacles remaining are employing specialized personnel that can show them how to apply the advanced technologies.

China’s boom in ‘Smart City’ projects could mean great business opportunities for overseas enterprises, required that the government offers an open platform for enterprises to get involved and guarantees the continuity of these programs. As the construction of a Smart City in China requires the involvement of many sectors, these projects require the work of a variety of enterprises. The key for foreign companies to take part in the development of ‘Smart Cities’ is localization, as the cooperation with local companies allows for a deeper understanding of Chinese cities’ needs.

China has become one of the biggest markets for the development of ‘Smart Cities’, as it will face the most challenges with its fastest-growing population in the big cities. During times of economic slowdown it becomes particularly important for China to invest in sustainable projects such as these Smart Cities. In the future we will see more and more new technologies revolutionize the operations of China’s growing cities. This gives foreign enterprises the unique opportunity to take part in a new business model. Enterprises will not only deliver something to the client and take home the profit, but could also actively engage in the governance of these new ‘Smart Cities’.