1、Commercial Applications and Development Trends of Innovative Technologies in ChinaJune 2022Blue Book of Chinas Commercial Sector:Annual Report on Chinas Commercial Sector(2021-2022)Blue Book SeriesIntroduction The COVID-19 outbreak has brought unprecedented challenges to businesses,affecting their o

2、perations and performance to varying degrees.Moreover,the pandemic also highlighted the importance of digitalization for business development.In response,many businesses have accelerated their digitalization efforts in order to better adapt to dynamic changes in the market,furthering the development

3、 and application of various innovative technologies.The government has also introduced a series of measures and policies to encourage businesses to adopt new technologies within the commercial sector.In particular,the government has launched several assistance programmes targeting SMEs and their dig

4、ital transformations.This report highlights several key technologies,including cloud computing,Internet of Things,blockchain,5G network,smart supply chain(smart manufacturing and smart logistics)and their current commercial applications.It provides an overview of the current use of new technologies,

5、policy support as well as future development trends.The content of this report is based on our recently published Blue Book of Chinas Commercial Sector(2021-2022)(in Chinese).I.Overview of the Current Use of Technologies in the Commercial Sector Cloud Computing Internet of Things(IoT)Blockchain 5G N

6、etworks Smart Supply Chains II.Government Policies and Regulations to Support Technological Innovation Government Policies and Regulations Supporting Measures for SMEsIII.Development Trends Combination of New Technologies to Drive Innovation Rapid Growth of Cloud Computing Calls for Greater Focus on

7、 Cloud Security Technologies in Building Smart Cities Technological Innovation Conducive to Sustainable DevelopmentContentsI.Overview of the Current Use of Technologies in the Commercial SectorAccording to the US National Institute of Standards and Technology,cloud computing is a model for enabling

8、convenient,on-demand network access to a shared pool of configurable computing resources(works,servers,storage,applications,and services)that can be rapidly provisioned and released with minimal management effort or service provider interaction.Cloud ComputingAlibaba Cloud Engineers Working In Data

9、CentersThis cloud model is composed of:Five key characteristicsOn-demand self-serviceBroad network accessResource poolingRapid elasticityMeasured serviceThree service modelsCloud Software as a Service(SaaS)Cloud Platform as a Service(PaaS)Cloud Infrastructure as a Service(IaaS)Four deployment models

10、:Private cloud(for internal use)Community cloud(for shared use by several organizations)Public cloud(for open use by the general public;e.g.AWS,Alibaba Cloud paid access offered by third-party providers)Hybrid cloud 5Chinas cloud computing market has maintained rapid growth in recent years.The pande

11、mic has boosted remote working and online education,further fueling market growth and development.In 2020,the total market size of Chinas cloud computing market reached 178.1 billion yuan,with a year-on-year growth of more than 33%.An increasing number of traditional industries and businesses are mi

12、grating to cloud.Public cloud is preferred by enterprises,due to its low costs,non-requirement for maintenance,pay-per-use model and reliability.According to a survey report on cloud computing development by the China Academy of Information and Communications Technology,66.1%of enterprises had adopt

13、ed cloud computing in 2019,up 7.5 percentage points from 2018.Among them,41.6%of enterprises were usingpublic cloud,14.7%were using private cloud,and 9.8%of enterprises were using both.In 2023,the total market size of cloud computing is expected to reach 380 billion yuan,with the public cloud market

14、 expected to exceed 230 billion yuan.Chinas Cloud Computing Market Source:China Academy of Information and Communications Technology Chinas cloud computing market 2017-2023Chinese enterprises usage of cloud computing 42.6852.5464.5279.1296.78118.47144.6826.4843.7468.9399.06134.04176.68230.740%10%20%

15、30%40%50%60%70%05010015020025020172018201920202021E2022E2023EMarket size(billion yuan)Private cloud market sizePublic cloud market sizePrivate cloud growth ratePublic cloud growth rate41.4%33.9%36.4%41.6%14.1%14.7%8.1%9.8%0%20%40%60%80%100%20182019Not using cloud computingPublic cloudPrivate cloudHy

16、bird cloud6IoT refers to everything that uses sensors(such as RFID,infrared sensors,GPS),software and other technologies to connect to the internet for the purpose of exchanging data and information with other devices and systems.By combining these connected devices with automated systems,it is poss

17、ible to gather information,analyze it and create an action to help someone with a particular task,or learn from a process.IoT has broad commercial applications.Commercial IoT is commonly used in retail,F&B,and lifestyle stores to provide smart services for businesses and consumers.o Smart operations

18、:facial recognition,digital price tags,anti-theft devices,etc.o Smart money management:POS,payment tools,etc.According to a report by China Economic Information Service,the total size of Chinas IoT market has reached 1,700 billion yuan in 2021.International Data Corporation forecasts that the overal

19、l market size is expected to reach$300 billion(2,000 billion yuan)by 2025,accounting for 26.1%of the global IoT market.Internet of Things(IoT)7Chinas AIoT Market IoTs adoption in the commercial sector is usually combined with the use of AI.The rapid development of AI and the broad application of IoT

20、 has increasingly deepened the integration of the two technologies.Use cases:healthcare(e.g.surgical robots),smart cities(e.g.traffic control),retail(e.g.point of sale),manufacturing(e.g.automated production)Avery Dennison has partnered with the Fung Group to create a RFID-enabled smart store8Blockc

21、hain Blockchain is defined as a shared,immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.Gartner forecasts that the business value-added of blockchain will grow to slightly more than$176 billion by 2025 and will exceed$3.1 trillion by 2

22、030.Distributed ledgerAll network participants have access to the ledger and the record of transactions.Transactions are recorded only once,eliminating the duplication of effort.Enhanced transparencyEvery transaction on the blockchain is visibleImmutable recordsTransactions recorded cannot be altere

23、d by anyone.If a transaction record includes an error,a new transaction must be added to reverse the error,and both transactions are then visible.Decentralized systemIt doesnt have any governing authority or a single person looking after the frameworkKey elements of blockchain9Commercial Application

24、s of Blockchain Main applications Financial settings:supply chain financing,trade financing,payment and settlement,etc.Supply chain traceability:recording and encrypting supply chain data which can be accessed downstream(by businesses and by in-store consumers)Other industries:healthcare,government,

25、manufacturing,etc.In combination with other technologiesIoT:improving data security,real-time data sharing Big data:increasing the value of dataAI:improving the level of automation in business processesCloud computing:reducing the cost of blockchain deployment105G Networks China has made 5G a nation

26、al priority.According to the outline of the 14th FYP,China will accelerate large-scale deployment of 5G networks and increase its penetration rate to 56%over the next five years.China started the commercial use of 5G in June 2019 when the Ministry of Industry and Information Technology issued commer

27、cial 5G licenses to China Mobile,China Unicom,China Telecom and state-owned broadcaster China Broadcasting Network.As of end-2021,China has deployed a total of 1.43 million 5G base stations nationwide with 5G network covering all prefectural-level cities,over 98%of county-level urban areas and 80%of

28、 township-level urban areas,according to Chinas Ministry of Industry and Information Technology.In the next few years,China will continue to promote 5G network construction,widespread application,technological development and improved security.The China Academy of Information and Communications Tech

29、nology forecasts that between 2020-2025,5G commercialization will:11Create 3.3 trillion 3.3 trillion yuan in added economic valueIndirectly drive total economic output of around 24.8 trillion 24.8 trillion yuanDrive 10.6 trillion 10.6 trillion yuan in total economic outputCurrent Commercial Applicat

30、ions of 5G5G represents significant improvements across various performance indicators.Commercial applications of 5G tend to rely on its increased speed and consistency,as well as the latency reduction it offers.There are a plethora of opportunities for 5G technology given its flexibility,unused spe

31、ctrum availability and low-cost solutions for deployment.Peak data rateover 20 x of 4GOver 20 Gbit/sConnection Density10 x of 4G1 million/km2 Mobility1.5x of 4G500 km/hArea traffic capacity100 x of 4G10 Mbit/s/m2Latency1/10 of 4G1 msSource:Recommendation ITU-R M.2083 by International Telecommunicati

32、on UnionSmart LogisticsAutonomous vehicles,accelerated packing and labelling,real-time GPS location tracking and reporting,etc.Smart ManufacturingProduction optimization,supply chain integration,preventive maintenance,etc.New Retail TechnologiesHigher-quality videos,virtual product displays,AR fitti

33、ng rooms,smart cameras,etc.Smart CitiesTraffic management,instant weather updates,energy management,smart power grids,water resource management,crowd management,emergency/crisis management,etc.Current commercial applications of 5G12Smart Supply Chains Smart supply chains combines various innovative

34、technologies to enable digital transformations and automations across the supply chain(i.e.manufacturing,logistics,distribution and consumption)Smart ManufacturingSmart manufacturing integrates various technologies and solutions into the traditional manufacturing process.It can predict production re

35、quirements,identify errors,self-learn,self-adapt,self-execute,as well as better optimize the manufacturing process.China carried out 305 pilot projects for smart manufacturing during the 13th Five-Year Plan(2016-2020)and will continue to carry out a series of pilot projects to accelerate the develop

36、ment of smart manufacturing during the 14th Five-Year Plan period.China aims to fully digitize its manufacturing enterprises by 2035.Alibabas“Xunxi Digital Factory”uses leading technology to improve manufacturing efficiency and reduce production time and costs.Delivery time shortened from 15 days to

37、 7 daysMinimum order quantity reduced from 1000 to 10013Smart LogisticsSmart logistics utilizes technologies such as IoT,AI,big data,cloud computing to facilitate self-learning,analysis,and problem solving across the logistics systems(including transportation,warehousing,packaging,distribution and d

38、elivery).Smart logistics can help companies optimize their operations,predict risks,reduce costs,increase efficiency,as well as better serve customers.Chinas smart logistics market has grown by about 20%per year from 2012-2019.The market size is expected to exceed 1 trillion yuan in 2025.COVID-19 fu

39、rther accelerated the development of contactless,unmanned and autonomous delivery technologies such as unmanned vehicles and automated guided vehicles(AGVs).Beijing High-level Automated Driving Demonstration Area issued Chinas first road test licenses for autonomous delivery vehicles in May 2021.JD.

40、com,Meituanand Neolixwere the first three companies to receive licenses to test unmanned delivery in Beijing.Besides warehousing,transportation and distribution,smart logistics is also used in supply chain planning and management of logistics systems to improve efficiency and reduce costs.Suning lau

41、nched its first 5G unmanned warehouse in August 2020The warehouse integrates driverless vehicles,AGVs,robotic arms,automatic packing machines Robots can pick 600 items in an hour,5x faster than human workersItems can leave the warehouse 20 minutes after the order is placed 14II.Government Policies a

42、nd Regulations to Support Technological Innovation Government SupportThe Fifth Plenary Session of the 19th CPC Central Committee emphasized that innovation is the primary driving force for the nations development.China will further improve the national innovation system and speed up efforts to build

43、 the country into a scientific and technological powerhouse.The Outline of the 14th Five-Year Plan(2021-25)for National Economic and Social Development and the Long-Range Objectives Through the Year 2035(the“14th FYP Outline”)includes“Accelerating Digital Development and Building a Digital China”as

44、an independent chapter.Specifically,the Plan calls for further fostering and growing emerging digital sectors including AI,big data,blockchain,cloud computing and cybersecurity,and enhancing production standards of industries like communications equipment,core electronic parts and components and key

45、 software.The Plan also calls for developing 5G applications and its ecosystem,as well as launching pilot demonstration projects in sectors including smart transport,smart logistics,smart energy and smart medicine.China will improve the legal and policy environment for scientific and technological i

46、nnovation,and strengthen the protection of intellectual property rights.On top of the governments heightened efforts to launch major technology projects and build scientific research centers,businesses will also be given more policy support to conduct scientific research and carry out innovation.16G

47、overnment Policies and Regulations to Support Technological Innovation Issuance DateIssuing Authority RegulationSummary8 May 2015State Council Made in China 2025As the governments 10-year strategic plan to further develop the manufacturing sector,the strategic plan defines 10 core industries,such as

48、 robotics,power equipment,and next generation IT,in which China aims to achieve breakthroughs and set up globally competitive companies.17 January 2017Ministry of Industry and Information Technology Development Plan for the Big Data Industry(2016-2020)Lists out 7 key tasks,8 key projects and 5 suppo

49、rt measures for the big data industry.10 August 2018Ministry of Industry and Information Technology Implementation Guidelines for Promoting Cloud Adoption(2018-2020)Encourages enterprises to adopt cloud computing to accelerate digital transformation to streamline processes,improve productivity,bette

50、r manage business processes,and optimize costs18 March 2020Ministry of Industry and Information Technology Special Action Plan for Digital Empowerment of SMEsProposes 13 key tasks and 4 promotion measures to help SMEs to resume work and production through digitization,network and intelligence24 Marc

51、h 2020Ministry of Industry and Information Technology Notice from the MIIT Regarding Promoting the Accelerated Development of 5GCalls for accelerated construction of 5G network and its applications.The notice specifically cites industrial Internet,the“Internet of Vehicles”,and healthcare as focus ar

52、eas7 April 2020National Development and Reform Commission,Cyberspace Administration of ChinaImplementation Plan for Smart Cloud Adoption to Promote New Economic DevelopmentPromotes the digital transformation of enterprises and strengthen support and resources for enterprises21 April&24 July 2020Mini

53、stry of Industry and Information Technology Recommended Catalogue of Digital Empowerment Services and Activities for SMEs(Phase 1&2)Includes 8 categories of service providers,including Alibaba,Tencent,JD.com,etc.offering services and activities to SMEs.SMEs are encouraged to make use of services fro

54、m these companies according to their needs.17Government Policies and Regulations to Support Technological Innovation(Contd)Issuance DateIssuing Authority RegulationSummary4 August 2020State CouncilPolicies to Promote the High-quality Development of the Integrated Circuit(IC)and Software Industries i

55、n the New EraProposes policies in 8 areas(finance and taxation,investment,R&D,import and export,intellectual property,etc.)aiming at optimizing the development of the IC and software industries,as well as deepening international cooperation21 September 2020General Office of the State Council Opinion

56、s on Accelerating the Development of New Consumption through New Business Forms and ModelsProposes 15 targeted policies to promote new modes of consumption,including improving IT infrastructure,promoting the integration of online and offline consumption and innovative application of smart technology

57、;the goal is to cultivate a number of demonstration cities and leading enterprises by 2025 and promote new consumption models(e.g.Internet+services”)13 January 2021Ministry of Industry and Information Technology Industrial Internet Innovation and Development Action Plan(2021-2023)Notes China will pr

58、omote new models and formats of industrial Internet,further improve infrastructure,and build 30 fully 5G-connected factories in 10 key sectors by 202329 January 2021Ministry of CommerceNotice on Accelerating the Development of Digital Commerce and Serving the Establishment of a New Development Patte

59、rnEncourages businesses to focus more on innovations in hi-tech areas including 5G,big data,artificial intelligence,blockchain etc.to improve the level of business digitization,and to drive the development of Chinas digital economy12 March 2021Central CommitteeOutline of the 14th Five-Year Plan(2021

60、-2025)for National Economic and Social Development and the Long-Range Objectives Through the Year 2035Calls for reinvigorating the country through science and education,strengthening domestic talent,innovation-driven development,improving the national innovation system,and accelerating national scie

61、nce and technology development 28 December 2021Ministry of Industry and Information Technology The 14th Five-Year Plan for Smart Manufacturing DevelopmentGuides the development of Chinas smart manufacturing industry;the goal is that by 2025,domestic manufacturing enterprises above designated size wi

62、ll achieve basic digitalization and key business enterprises will have digitally transformed their businesses18Government Policies and Regulations to Support Technological Innovation(Contd)Issuance DateIssuing Authority RegulationSummary12 January 2022State CouncilThe 14th Five-Year Plan for Digital

63、 Economy DevelopmentGuides the development of Chinas digital economy;the goal is that by 2025,the digital economy will be in full expansion mode,with the added value of core industries in the digital economy accounting for 10%of GDP2 July 2022Ministry of Science and Technology,Ministry of Commerce,a

64、nd 3 other ministriesAction Plan to Facilitate the Digitalization of the Consumer Goods Industry(2022-2025)Proposes 10 tasks to facilitate the digitalization of the consumer goods industry,such as developing internet+consumer products”,and popularizing the application of key technologies;the goal is

65、 to achieve notable improvement in the integration and application of digital technologies in the consumer goods industry by 2025 15 August 2022Ministry of Science and Technology,Ministry of FinanceAction Plan to Boost the Capacity of Enterprises for Technological Innovation(2022-2023)Proposes suppo

66、rtive measures in 10 areas,including establishing a mechanism for enterprises to participate in the countrys sci-tech innovation decision-making,implementing tax incentives for frontier basic research,calling for financial support for enterprise innovation and greater enterprise access to sci-tech r

67、esources and application scenarios28 October 2022National Development and Reform Commission,Ministry of CommerceCatalogue of Encouraged Industries for Foreign Investment(2022 Edition)Encourages foreign investment in advanced manufacturing aiming at improving the level of the industrial chain and sup

68、ply chain,and accelerating the upgrading of technologies9 November 2022Ministry of Industry and Information TechnologyGuideline to Facilitate the Digital Transformation of SMEsCalls for the creation of digital applications in instant communication,long-distance collaboration and project management,a

69、nd strengthening the construction of new infrastructure,such as industrial internet,artificial intelligence,5G and big data11 November 2022China Securities Regulatory Commission,State-owned Assets Supervision and Administration Commission of the State Council Notice on Supporting Central SOEs in Iss

70、uing Sci-tech Innovation BondsSupports central SOEs to raise funds for sci-tech innovation via the issuance of sci-tech innovation corporate bonds,and launches REIT pilots related to new infrastructure,such as data centers,industrial internet and artificial intelligence19PlatformSupport Areas for SM

71、EsCloud services,traffic support,start-up subsidies,training certificationsAI,cloud computing,blockchain,big data,digital procurement platformBlockchain,cloud services,AICloud resources,remote working apps,online operation tools,building traffic,digitalization toolsInternet Giants Supporting Measure

72、s for SMEsMicro,small,and medium enterprises make up 99%of enterprises in China and contribute more than 70%of technological innovations.The government has introduced various policies and measures to support the digital transformation of these enterprises.For example,the government has partnered wit

73、h leading internet companies to launch digital transformation support programmes for SMEs in terms of software and hardware support,supply chain support,consulting services,professional training,financial support,etc.20III.Development Trends Combination of Technologies to Drive InnovationTechnologie

74、s,such as cloud computing,IoT,AI,blockchain and 5G,continue to drive global digital transformations.The combination of these technologies will bring huge opportunities for innovation,as well as create new business opportunities and user experiences.In particular,industrial Internet,empowered by 5G,i

75、s considered a key to Chinas digital transformation.Currently,China has more than 1,100 projects empowered by 5G technology and industrial Internet,and over 30 industries have seen the application of industrial Internet.Retail applications(5G+AI/VR/cloud)In-store technology:cloud-connected product d

76、isplays,customer identification and virtual shopping guides to bring better shopping experience to consumersCloud stores:24-hour store operation through upgraded VR experience and virtual shopping guidesIndustrial applications225G+machine vision+AI:visual inspection of production lines through 5G-en

77、abled cameras connected to the cloud to minimize errors in manual inspectionsTraceability of raw materials(5G+RFID+AI)Security measures:5G+infrared cameras,5G+robot inspections,5G+electronic fence,etc.Rapid Growth of Cloud Computing Calls for Greater Focus on Cloud Security 23The Chinese government

78、has released a number of policies to support the development of the cloud computing industry.It is expected that the average annual growth rate of Chinas cloud computing market will exceed 30%between 2021-2023.The scope of cloud applications will also continue to expand.Globally,the proportion of sp

79、ending on cloud security is relatively low.Global spending on cloud security only accounted for 1.1%of total cloud IT spending in 2020.As the market matures and businesses gradually move to the cloud,greater focus will be placed on cloud security.Chinas cloud security market is still in its initial

80、phase of development but is growing rapidly.The market size is estimated to reach 11.57 billion yuan in 2021.With the increasing awareness on the importance of cloud security,and the gradual improvement of industry policies and regulations,it is expected that the development of cloud security produc

81、ts and services will speed up.Technologies in Building Smart Cities24Smart city is a new concept of urban development,using information and various technologies,such as cloud computing,5G and AI,to improve operational efficiency,share information with the public and provide a better quality of gover

82、nment service and citizen welfare.Construction of smart cities in China is entering a rapid growth phase.Nearly 800 Chinese cities have implemented smart city pilot programmes,which accounts for more than half of the total smart cities around the world.Investment in smart cities and smart community-

83、related projects is expected to exceed 230 billion yuan by 2024,mainly focusing on public safety,transportation,government services,environmental protection,and emergency management.It is predicted that 40%of urban products and services will be provided digitally by 2026.In the future,various techno

84、logies will be further implemented in the public service and commercial sectors to improve urban governance and living services.01030204Technological Innovation Conducive to Sustainable Development25The progress of technological innovation not only leads to a new round of industrial upgrading,but al

85、so effectively promotes sustainable development.Allow businesses to share computing resourcesResearch from Accenture has found that shifting from on-premise data centres to the public cloud can reduce energy usage by 65%and cut carbon emissions by more than 84%on average.Power data centres through r

86、enewable energyExample:The cloud computing arm of Alibaba Group aims to have its global data centresrunning entirely on clean energy by 2030.Improve the efficiency of resource utilizationBig data analytics can be used to better predict consumer demand,thereby lowering inventory levels and reducing w

87、astage of raw materials.Monitor environmental impacts“Cloud computing+big data+AI”,along with other technological applications,can help businesses monitor the environmental impacts of business activities more accurately and adjust operation processes promptly.Fung Business Intelligence11/F LiFung To

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