It's easy to assume that because Silicon Valley has some of the biggest and most innovative companies in the world, that the US then receives the best technology available. But when it comes to sheer connections and mass adoption of the Internet of Things, China is leading the way.
For those keeping up the Internet of Things (IoT), this may not be much of a surprise, but China's lead is only getting bigger.
Connecting things like never before
According to a report released by GSMA over the summer, 27% of all global machine-to-machine (M2M) connections are in China, while all of Europe has 29% and the US has 19%.
These connections are important because they're a major part of the Internet of Things, and they point to China's focus of tying the physical world to digital analysis and management. For example, China Mobile (NYSE:CHL) is the largest telecom in the world and it's built smart city connections throughout China to manage sensor connections for air pollution, sewers, transportation, emergency rescue, city lighting, and much more. China Mobile currently has "wireless city" contracts like this in 217 cities throughout the country.
If you think the US is keeping up, you many want to consider what Stacey Higginbotham of Gigaom wrote recently: "China is adapting to the Internet of things like it adapted to mobile -- by leapfrogging earlier infrastructure efforts and letting the consumers adopt services with rapidity not seen in the U.S.," she said.
Part of China's IoT growth comes from its government pushing the nation, and its companies, to adopt new technologies. In fact, the Internet of Things is officially part of the Chinese government's current five-year plan. In the decade leading up to 2020, China's government has committed to spending $603 billion for M2M connections.
Others see China's opportunity too
Cisco Systems (NASDAQ:CSCO) is betting big on the Internet of Things, and the company said back in March that China could represent 12% of the total value ($14 trillion at the time) of the Internet of Things by 2022 -- Cisco has since upped its global IoT estimates to $19 trillion.
A recent Venture Beat article noted that China is in a great position to continue leading in the IoT because it has the manufacturing capacity and expertise to do so. The site mentioned China's also building its brand power around the world, and will do even more so through the Internet of Things. Chinese company Yifang Digital Technology's NexTurn home automation platform will be on US shelves in the coming months.
But what's still unknown is which companies will benefit the most from China's growing Internet of Things. Cisco and other US companies are already firmly in the country, but China is increasingly building brands of its own with very positive results -- think Xiaomi's growth in smartphones. The Chinese e-commerce companies Alibaba and JD released Internet of Things platforms over the summer, though it's still uncertain whether they'll really take off.
At the end of last year China had more than 50 million M2M connections -- compared to the US' 32 million and Japan's 9.3 million. And the close relationship between the government and mobile carriers is helping to push China's M2M connections even higher.
"Proactive government support has benefited China and its mobile operators, whereas in many global markets, regulatory uncertainty has held back the deployment of M2M solutions," the chief technology officer at GSMA, Alex Sinclair, said in a statement.
If this trend continues, it appears the rest of the world will continue following in China's IoT footsteps.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends China Mobile and Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.