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TEDA: an Ecosystem for Wearable Technology to Flourish In

China is hungry for wearable technology – that at least is what recent surveys suggest.

Research institution iiMedia predicts that the market size of Chinese wearable devices (WDs) would reach $1.87 billion with shipment of 40 million units by 2015.

Meanwhile an online survey by Chinese search giant Baidu found about three-quarters of respondents would consider buying a WD, with smart bracelets and smart watches most attractive potential products.

Health was the dominant reason – Baidu found almost half of respondents hope WD can help them stay fit. Users said they were interested in features such as body-sensing interaction and cross-platform cloud data.

“WD is closely related with life and health, including, heart disease, body movement, sleep quality and gym reports. Wearable devices connect people with information about their lives,” says Zou Fang, Deputy Director of the Investment Promotion Bureau at the Tianjin Economic-Technological Development Area (TEDA), which is manoeuvring to become China’s top WD center.

“China’s socioeconomic situation means there is an unparalleled opportunity for WD. This can be seen in the government’s endorsement of ‘information-consumption’ and increasing attention paid to care for children and the elderly, among other things,” Zou adds.

TEDA – which has been ranked China’s top development park by the Ministry of Commerce for the last 15 years in a row – has been bent on building an innovative hub for China’s new-generation IT industry.

Earlier this year, TEDA received a boost after Chinese President Xi Jinping said some activities now located in the capital Beijing – about half an hour away by high-speed train – would be better off in Tianjin as part of an integrated development plan for the Beijing-Tianjin-Hebei region in northern China.

That could see more companies in Beijing’s dynamic but expensive ‘Silicon Hutong’ district shift to TEDA, where there are already more than 150 companies in six internet clusters -- ranging from cloud computing to big data, e-commerce, internet service provision, online security, mobile internet and gaming. The clusters include some of China and the world’s best-known names, including Tencent, Sohu, 58.com Inc., NVIDIA, HP and Kaspersky.

“The central government is encouraging better integration between Beijing, Tianjin and Hebei,” says Zou. “Innovation-focused firms are more likely to select Tianjin. As Tianjin’s core economic engine, TEDA is particularly inviting for such new-generation IT segments as WD, internet, e-commerce and IoT.

“We have the right ecological circle for them at TEDA. The electronics industrial chain and the IT chain rely on each other, making TEDA the best digitalization area in China.”

TEDA will also play a major role in the China Wearable Computing Promotion Alliance, according to news from the Fifth China Internet of Things Conference held in Beijing early in April.

At TEDA, firms benefit from favorable policies including tax relief, subsidized office rental and extra funding. Overall investment in IT research and development in TEDA has reached $1.25 billion, producing over 800 patents.

At the top end, Samsung, one of TEDA’s landmark tenants, is already working on WD-related product lines such as liquid crustal module (LCM) and light-emitting diode (LED) at its Tianjin locations.

But TEDA also provides a not-for-profit Integrated Circuit Design lab offering services and training to smaller tech companies, while the Internet of Things Industrial Base provides incubation services and access to venture capital funding.

And the Beijing-Tianjin Interconnected Entrepreneurship Promotion Center – located in the Binhai New Area Cloud Computing Park – offers incubating services aimed at start-ups relocating from Beijing. Chinese Premier Li Keqiang visited the center on December 27, 2013. So far it has 30 tenants and is expected to accommodate up to 100 by the end of the year.

One of these companies, Oranger, in March announced that it was launching a set of WD products, cloud-based oximeters, which measure the amount of oxygen in the body. This means a TEDA-based company is on course to start selling China’s first ever medical-purpose WD product.

For Kevin Wu, China Director at SEMI, the global semiconductor industry association, creating a supportive ecosystem for WD technology will be key to its success in China.

“The bottleneck for WD industry is that the supply chain infrastructure is not yet complete,“ he says. “We are yet to find the killer application for WD, and the other big issue is the business model. WD is used to connect humans to the equipment. But how to process the data acquired by the wearable device, and how to manage the data, and how to use the data to develop new business model, that’s a critical task.”

John Havens – author of ‘Hacking Happiness: Why Your Personal Data Counts and How Tracking it Can Change the World’, and Founder and Executive Director of The H(app)athon Project – says WD firms should first offer apps on existing platforms such as smartphones in order to draw in consumers.

“While early tech adopters and people focusing on health may buy things like Fitbits or Jawbone's Up, most people experiment with tracking their data via downloading and testing free apps before making a purchase of an external device,” he says. “So any WD maker would do well to create an app or online version featuring the benefits they provide regarding their algorithms, insights, or other benefits so people can experience their brand in multiple mediums that may lead to them purchasing the wearable.”

He believes as many partners that can work together (e.g. digital partners, hardware suppliers, product developers), along with a core group of consumer beta testers, the better.

Havens also says government policy will be a factor in deciding which companies are the big winners in the Chinese market for WD.

“It depends on the device and how many competitors China would allow or feature in their markets,” he says. “Apple, for instance, has just filed for a patent to have the sensors in their iPhones function like a wearable device to measure multiple aspects of user health data along with emotional analysis. The penetration of iPhones in China would then be a good way to measure how these new features would become available to the general population already owning iPhones.”

Another factor could be better intellectual property protection – an area where China has a chequered record and where Chinese entrepreneurs are increasingly calling for improvement.

“We are advocating to the Chinese government to change its IP policy, so that universities have an incentive to transform their patents and IP into commercial value,” says Dr Chen Jinping, vice general manager of Tianjin MicroNano Manufacturing Tech, a company that emerged from cooperation between TEDA and Tianjin University. “I hope within next 10 years, it will be realized.”

His company’s specialties in MEMS, micro machining processes and measuring and equipment building are all crucial to wearable technology.

Still, there is confidence in China that on the technology side at least, the country is catching up with Silicon Valley.

“There are a lot of smart engineers in China,” says SEMI’s Kevin Wu. “They can develop innovative technology for us. China is potentially huge market for application products. China has also introduced a lot of technology and new ideas.”

TEDA’s Zou Fang also expresses her ambition to attract big American WD companies such as Fitbits and Jawbone to Tianjin.

She believes that despite China’s growing mastery of technology, local companies can benefit further from being in proximity to international companies.

“Locating in China rather than Silcon Valley in the US is a double-edged sword,” she says. “The China model sees the government support with tax policies and other preferential treatments, which helps engineers focus on their expertise. But on the other hand, Chinese engineer teams really need to think about the market instead of focusing solely on the technology. We need to encourage them to be more market-oriented and have sharper customer insight.

“So if diverse WD firms, including the multinationals, do come, their presence would be the final ingredient in the TEDA ecosystem to nurture the Chinese WD sector.”

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