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The proliferation of IoT will inevitably generate a colossal amount of data. As anticipated by IDC, by 2020, data stored by the PRC will reach approximately 39ZB, of which around 30% will come from devices linked to IoT.

As to blockchain technology, not only has it dramatically altered and transformed the financial industry, but it will also revolutionise the IoT sector. The transformation of IoT to blockchain network could happen at a speed far exceed current expectation. When IoT truly connects everything, blockchain will be of immense value.

Business Layout

Beijing Orient LegendMaker Software Development Company Limited* (“Orient LegendMaker”), a subsidiary of the Group, has extended its coverage from traditional database business to big data mining and security business in 2018. It is working closely with Symantec and other renowned international security solution companies to tap into the growing demand for big data from IoT corporations.

The Group’ s subsidiaries will all step up their investments and efforts in the research and development of the blockchain IoT operation.

Pipeline

Next-generation IoT telecommunication technologies such as NB-IoT and 5G are facilitating IoT applications including smart manufacturing, internet of vehicles and industry of internet. They have also redefined corporate value chains with new business models, products and even markets. The cross-industry, integrated, innovative and large-scale development of IoT is speeding up. IoT is combining with new form of industrialisation, urbanisation, informatisation and agricultural modernisation. Industrial, manufacturing, consumption, complete transportation and travel, smart home, medicine and healthcare sectors are also creating demand for IoT applications, and a grand smart internet ecosystem will eventually emerge for the next generation.

Business Layout

Shenzhen Hexicom Technologies Company Limited* (“Hexicom”) and Hangzhou Lepei Telecommunication Company Limited* (“Lepei”), both subsidiaries of the Group, have provided telecommunication operators with a large number of Ethernet over coax (“EoC”) and fibre-optic communication products and services. In the future, they will offer more auxiliary means of communication, such as homeplug and indoor Wi-Fi systems, and focus on business opportunities brought by new IoT communication technologies.

Endpoint

Current successful applications of AI in IoT usage scenarios concentrate on image, speech and semantics recognition. Deep learning, a method or concept of AI, is a machine learning method. The key to the transformation of the colossal amount of big data into valuable assets lies in AI’ s deep learning ability to disentangle big data for feature mining with practical algorithms. The Group expects that this technology will boost the development of the IoT industry in the near future.

The essence of edge computing is to perform computing at the edge of the system near the source of the data instead of some cloud platforms or data centres, thereby effectively reducing the bandwidth needed while providing quick and timely response and high efficiency.

Business Layout

Shenzhen CNEOP Technology Company Limited* (“CNEOP”) and Guangzhou Wealth-Depot Logistics Technology Company Limited* (“Wealth-Depot”), both subsidiaries of the Group, have successfully applied human, vehicle and object tracking technologies to logistics, storage, smart communities and other IoT areas. In 2018, they will apply the deep learning ability of AI to launch new businesses such as risk control over car loans and automated storage systems.

Fujian Start Computer Equipment Company Limited* (“FSCE”), a subsidiary of the Group, will maintain its focus on the research, development, production and sale of applications and equipment using edge computing, such as cloud terminal equipment and smart point-of-sales (“POS”), so as to be closely in line with the current IoT development strategies and market trends.

PROSPECT OUTLOOK

Technology believes that the IoT market will maintain a rapid growth in the next few years and the Group will therefore continue to focus on market expansion, product development, investment, merger and acquisition in the IoT sector.

Market Circumstances

Worldwide IoT Spending Maintain Rapid Growth

2017

US$674.0
billion

2018

US$772.5
billion

2020

US$1,000.0
billion

2021

US$1,100.0
billion

Data Sources:IDC [ International Data Corporation ]

Policy environment

The PRC has also formulated a number of national IoT development policies and plans to nurture the IoT industry.

The PRC has also formulated a number of national IoT development policies and plans to nurture the IoT industry. In January 2017, the Ministry of Industry and Information Technology of the PRC (the “MIIT”) promulgated the [Internet of Things Development Plan (2016-2020)] (《物聯網發展規劃(2016-2020年)》), which envisaged an IoT industry capable of competing in the international market with a gross value of [RMB]1,500.0 billion by 2020.

The MIIT issued the [Notice on the Full-Scale Construction and Development of Narrowband Internet of Things (NB-IoT)] (《關於全面推進移動物聯網(NB-IoT)建設發展的通知》) in June 2017.This policy pressed for an NB-IoT network with 400,000 base stations that connects all major cities such as municipalities and provincial capitals by the end of 2017, and a nation-wide NB-IoT network with 1.5 million base stations that infiltrates indoor areas, transportation networks, tunnels and other usage locations by 2020.

It is foreseeable that IoT will enjoy exponential growth in 2018. The gradual implementation of national IoT policies will create endless new IoT application scenarios spanning from tradition agriculture to industrial manufacturing as well as from internet of vehicles to daily consumption. Such ever-growing demand will then promote and propel the Group’ s business growth.