By 2022, my country's smart city market will reach 25 trillion yuan.

2014-2022 China Smart City Market Scale and Forecast (Source: Qianzhan Industry Research Institute)

What is a smart city? Why do we need to build smart cities? How does it affect governments, businesses and individual citizens? Why is it the hot word in the field of digital economy in recent years? What is the purpose of the giants' layout? What are the characteristics of the upstream and downstream of the industrial chain? ······A series of questions, we will use an article to decode the opportunity and pattern of this 25 trillion market for you.

The Development of Cities and the Emergence of "Urban Diseases"

Cities are an important part of human civilization, and cities develop along with human civilization and progress. It is generally believed that a city in the true sense is the product of industrial and commercial development.

According to Wikipedia, a city refers to an area with a relatively dense population and relatively developed industry and commerce. It generally includes functional areas such as residential areas, industrial areas, and commercial areas, and has administrative jurisdiction. There are buildings, streets, and parks in cities. infrastructure.

The earliest cities originated in the Middle East about 10,000 years ago. After the development of the agricultural revolution, industrial revolution and information revolution, today's urban forms are diversified (small cities, large cities, international metropolises, urban agglomerations), and the population is growing rapidly. .

The latest figures are:The global population is about to reach 7.6 billion, and the urban population exceeds 4 billion; among them, China's total population is close to 1.4 billion, and the urban population reaches 830 million.

but,Accompanied by the rapid population growth and the rapid expansion of the city scale are the emergence of "urban diseases", such as traffic congestion, housing shortage, insufficient water supply, energy shortage, environmental pollution, disorder and other problems.

▲ Urban traffic congestion

Taking Beijing as an example, according to the data in the "Beijing Commuter Travel Characteristics and Typical Regional Analysis" recently released by the "Beijing Transportation Development Research Institute",The average commuting time within Beijing’s Sixth Ring Road is as high as 56 minutes, and the average commuting distance is 12.4 kilometers. For many commuters living in the suburbs, the average commuting distance is about 25 kilometers, and the one-way commuting time is nearly 2 hours.

This means that various "urban diseases" have become important factors that seriously hinder the economic and social development of cities. How to solve these problems through more intelligent means is becoming the common concern and intensive cultivation direction of governments and major manufacturers in the world.

What is a smart city? Why was it built? Who will build it?

What is a smart city? This is the most basic question.

According to Baidu Encyclopedia's explanation, smart city is the urban informatization that fully applies the new generation of information technology (5G, cloud computing, IoT, AI, big data, etc.) advanced form,Realizing the in-depth integration of informatization, industrialization and urbanization will help alleviate the "big city disease", improve the quality of urbanization, realize refined and dynamic management, improve the effectiveness of urban management and improve the quality of life of citizens.

Who first came up with this concept? American company IBM.

▲ IBM's "Smart Planet" program

In November 2008, IBM (International Business Machines Corporation) proposed the concept of "Smart Earth"; in August 2009, IBM released the "Smart Earth Wins in China" plan; in 2010, IBM officially proposed the vision of "Smart City"—— These were relatively avant-garde ideas at the time.

After research by IBM, a city is composed of six core systems related to different types of networks, infrastructure and environment related to the main functions of the city: organization (people), business/government affairs, transportation, communication, water and energy. These systems are not fragmented but interconnected in a collaborative manner. The city itself is a macro system composed of these systems.

At the same time, many domestic companies have also proposed a framework system under the inspiration of the concept of "smart city", and the government has also actively mobilized.

In my country, there are four main forces driving the development of smart cities:

1) Industrial information system: consider the development of the industry;

2) Housing construction system: optimization of urban space and pattern;

3) Development and reform system: the development context of the macro economy;

4) Network information system: cross-department and cross-field overall coordination, mechanism and model innovation.

There is both division of labor and cooperation between these systems. From the job responsibilities of these departments, it can be seen that smart cities involve attributes such as industrial collaboration, information network development, housing construction, and macro-control.

China's urbanization transformation process of more than 10 years can be roughly divided into four stages:

1) Concept introduction. In 2008, IBM proposed a smart earth, "perceiving China" to promote the construction of the Internet of Things.

2) Pilot promotion, in 2012, the Smart City Demonstration Project of the Ministry of Housing and Urban-Rural Development;

3) Driven by demand, in 2015, promoting the construction of new urbanization;

4) Smart integration, in 2018, digital China, cities will go to the cloud, and artificial intelligence will enter the scene.

For example, in 2012, the list of the first batch of national smart city pilots was announced, and 90 domestic cities including Shanghai Pudong New Area were shortlisted; Eight ministries and commissions including the Ministry of Housing and Urban-Rural Development and the Ministry of Communications issued the "Guiding Opinions on Promoting the Healthy Development of Smart Cities", requiring all regions and relevant departments to implement the tasks proposed in this guiding opinion to ensure the healthy and orderly advancement of smart city construction; in 2020, Many places have clearly proposed to build a smart city in the new infrastructure construction plan...

The reason why the country and the local government attach importance to the construction of smart cities is that although the starting point is the emergence of urban diseases and solving urgent problems, smart cities can also promote the development of traditional industries and strategic emerging industries.

On this basis, a wide range of industrial integration will be formed, which will have a linkage and demonstration effect on various sectors of the national economy, greatly reduce energy consumption, promote changes in the organizational form and production methods of industry, agriculture, and service industries, and continue to create new economic growth. point.

Global smart city development: the urbanization rate will double, and Asia will have a great advantage as a latecomer

According to the forecast of the United Nations, within 100 years from 1950 to 2050, the global urbanization rate will double,In 2050, 68.4% of the world's population will live in cities.

In the past ten years, countries have invested heavily in the construction of smart cities, and the amount of investment has increased year by year.expected to peak within the next five years, Asian countries and regions have more room to play in the construction of smart cities due to their latecomer advantages and huge development potential.

The management consulting company Deloitte released the latest report "Super Smart City 2.0, Artificial Intelligence Leads the New Trend" in July this year, clearly pointing out that Asia has a population of more than 60% in the world and will be the fastest urbanizing region in the world.The infrastructure investment gap in Asia is more than US$1.4 trillion per year, and China and India will lead the way.

▲ Global "smart city" investment amount map (source: Deloitte)

According to public information, Singapore's smart city model has been recognized globally, but due to differences between cities, major countries and regions are formulating different development strategies.

For example, the Ministry of Industry and Information Technology of China led the establishment of the China Smart City Industry Alliance in 2013, planning to invest 500 billion in smart cities during the 12th Five-Year Plan period; 1.6 trillion; in 2016, India plans to use the APP model to build 100 smart cities, and announced that it will invest 7.5 billion US dollars within 5 years...

Data Display,The scale of China's smart city market has maintained a growth rate of more than 30% in recent years. The fields of smart logistics, smart buildings, and smart government affairs occupy a relatively large market share.

▲ China's future smart city market size (source: Deloitte)

The development level of China's smart cities: Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou lead the way, with differences in regional characteristics

From the point of view of time, my country launched a large-scale pilot of smart cities in 2012, and raised smart cities to a national strategy in 2014.At the end of 2016, the development direction of a new type of smart city was determined, and the construction of a new type of smart city was confirmed as a national project.

Since then, relevant ministries and commissions have begun to issue detailed policies in specific areas. In this process, as the country has deepened its emphasis on smart cities, the competent units and the cultivation methods of key cities have also changed accordingly.

• Primary smart city exploration stage (2012~2015)

Adopt the development method of 'extensive cultivation', encourage active pilot projects all over the country, less supportive policies at the national level, and the Ministry of Housing and Urban-Rural Development shall be the leading and leading unit.

• New smart city promotion stage (2016~present)

The development mode has shifted to "removing the dross and selecting the essence". Supporting policies at the national level have been introduced one after another, and policies in subdivided fields have gradually appeared.

With the gradual upgrading of the understanding of smart cities, the definition of smart cities has gradually been developed, and the connotation of new smart cities is more abundant.

After the new smart city strategy was put forward, China's smart city pilots and construction showed a development trend of hierarchical construction, multi-point flowering, and quality and efficiency improvement. Most of the cities and regions selected as national smart city pilots are located along the Bohai Rim and the Yangtze River Delta urban agglomeration.

Each major city presents different characteristics: Beijing is building a big data + smart economy, promoting the capital’s informatization and Internet of Things development; Hangzhou is a city data brain 2.0 + smart economy, promoting cloud computing and big data industry centers, and smart traffic dispatching Public transport vehicles; Guangzhou promotes the development of smart transportation and implements the "Digital Education City" project; Shenzhen's urban security projects are comprehensively deployed, and smart transportation builds demonstration roads; Chongqing is information + smart infrastructure construction, strengthening network coverage.

▲ The Construction of Urban Big Data Platforms (Source: CAICT)

Currently, the first echelon of smart city construction includes Shenzhen, Beijing, Shanghai, Guangzhou, Hangzhou, Suzhou, Wuhan, Tianjin, Nanjing, and Chengdu; the second echelon includes Qingdao, Chongqing, Ningbo, Zhengzhou, Changsha, Wuxi, Jinan, and Changchun ; The third echelon includes Guiyang, Shijiazhuang, Xiamen, Fuzhou, Dalian, Shenyang, Yancheng, and Harbin.

Overall, there is a positive correlation between the development of smart cities and the economic level, but there are also cases where the development of smart cities lags behind the level of economic development.

Smart City Industry Chain

Smart cities include various "smart" solutions: smart power, smart medical care, smart transportation, smart finance, etc., so it also has a long and complicated industrial chain.

According to the classification of iResearch, the smart city industry map can be divided into five layers, namely:

1) The top-level design layer of the smart city: including manufacturers such as Taiji, Digital China, Inspur, and CETC;

2) Perception and communication layer: including China Mobile, China Telecom, China Unicom, ZTE, Datang Telecom and other manufacturers;

3) Platform and infrastructure layer: including Alibaba Cloud, Ping An Technology, H3C, Sugon, Taiji, etc.;

4) Urban computing layer: including JD Digital, Alibaba Cloud, Tencent Cloud, Baidu Cloud, HKUST Xunfei, Ping An Technology, etc.;

5) Subdivided scene application layer: Qianfang Technology, Hikvision, Jiadu Technology, Xinzhongan, Yihualu, etc.

▲ China Smart City Industry Map (Source: iResearch)

In addition, there are some manufacturers that specialize in urban security, such as 360, Sangfor, AsiaInfo, Anheng Information, and Han private, which run through the upstream and downstream of the industry.

Overall, for manufacturers,In the big projects in the future, there will be me among you and you among me, both competition and cooperation, but in the final analysis, the characteristics are different, and they are all delivering differentiated value.

At present, the main domestic players focusing on smart cities are still giants. Among them, JD Digits, Alibaba Cloud, Tencent Cloud, Huawei, Ping An Smart City, and Inspur have leading solutions.

Alibaba Cloud promotes the city brain project in the form of a traffic brain, starting from the optimization of traffic lights in Hangzhou City, and extending it to projects such as the Traffic Management Bureau, Public Security Bureau, Industry and Information Technology Bureau, among which cloud resources are the main business;

Tencent Cloud is also a major provider of cloud services, launching the WeCity future city solution. Digital Guangdong, a joint venture between Tencent Group and the three major operators, focuses on digital government construction, and community projects mainly provide connection tools;

Huawei started with network communication equipment and established urban IOCs (urban operation centers) in many places, and cloud resources have also become the focus;

Inspur enters in the form of urban computing power such as servers, and cooperates with software and hardware manufacturers;

Based on the financial scene, Ping An Smart City is doing the "I Shenzhen" project for Shenzhen, focusing on the government affairs sector.

Although major giants have poured into the track, but because the construction of a smart city is a complex and huge system project, it is unrealistic for a company to solve all the problems of the entire city by itself.Platforms and ecology have gradually become the methodology for giants to break through.

For example, JD City, a subsidiary of JD Digits, is building mature components and modules based on the city operating system platform by focusing on the "Smart City Operating System" to give full play to its ecological attributes and allow other third parties to efficiently build their own applications relying on the system to reduce duplication Construction, the establishment of a benign ecology.

▲ JD Smart City Operating System

Currently, JD Digits is building a city-based operating system for Xiong’an New District.Block Data Platform, it will fully support the digital twin of the new district, cultivate digital industries and ecology, and lay the foundation for Xiongan to become a model of global smart cities.

Motivation and Resistance of Smart City Development

At present, smart city construction is still a "strongly policy-driven" field, which is inseparable from its "top leader" attribute. After all, smart city projects launched in various places are important for the government.

Coupled with the call for "new infrastructure" (new infrastructure construction) issued by the state on March 4, 2020, many places have already planned the development of smart cities in the new "14th Five-Year Plan". Beijing, Shanghai, Chongqing, Shenzhen, Chengdu and other places have introduced new infrastructure policies to encourage investment in urban construction.

▲ Seven areas of new infrastructure (source: CCTV)

In addition, demand is an important factor driving the acceleration of smart city construction. Enterprises and the public have become accustomed to the convenience brought by information technology, and new production and lifestyles are being reshaped. In addition, due to the emergence of big city diseases, people's demand for a "people-oriented" living, working and traveling environment is more urgent.

However, the development of smart cities is not smooth, and it still faces problems. Borrowing the opinion of Dr. Zheng Yu, President of JD City, the construction of a smart city needs to face:

1) Need for ecology: The city neither wants an isolated system full of chimneys, nor does it want to be dominated by a single company, because it is not conducive to urban safety, and it is impossible for companies to do everything. An ecology is needed that can unify the platform and Can serve everyone;

2) There is a contradiction between data security and data fusion: the barriers of various departments in the city are very high, and some barriers are due to data security considerations, which makes data fusion face obstacles;

3) Lack of professional talents: The construction of smart cities involves all aspects, and there are very few talents with professional backgrounds. Coupled with the defects of the university training model, it is very difficult to apply what they have learned;

4) A good operating model of self-hematopoiesis cannot blindly rely on government subsidies.

Ecological construction, data integration construction, industry-university-research construction, self-hematopoietic cycle... each of them is a grand topic, and each of them needs to be faced urgently.

Despite the difficulties and twists and turns, smart cities are huge blue ocean markets—no one disputes that.

From a technical point of view, with the blessing of a new generation of information technology, the rapid development of computing power algorithms and data technology, AI companies have also "forced" themselves to the limit of landing, digital twins have entered the background of urban management from industry and construction, and Chinese drones have become civilian Technology has surpassed that of the United States, and China is leading the world in 5G. Various technical elements in the new infrastructure are penetrating into every nerve of the city.

From an industry perspective, "all traditional industries are worth redoing" has become the basic logic. Industrial manufacturing, agriculture, aviation, and transportation are all being changed with each passing day. More traditional companies have embarked on the route of digital transformation and are moving forward.

From a policy perspective, the signal flares of new infrastructure pointed the way. Investments in various regions started rapidly, and the government also began to actively look for good projects, good technology and good companies, from informatization transformation and road infrastructure in third- and fourth-tier cities to operating system deployment in first-tier cities.

We believe that with the blessing of multiple favorable factors such as technology, industry and policy, the construction of smart cities in the future will build a "new infrastructure" of urban governance that is co-constructed, shared and co-governed, and will fundamentally improve the urban governance system and governance capabilities The level of modernization brings citizens a safer and more convenient new life in smart cities.