The Asia Pacific is considered the fastest-growing region in the global Internet of Things (IoT) market. The rising digital transformation of each country and the continuous technological advancements have led the key players to strengthen their capabilities through research and investments in new market upgrades and strategies.
Research firm International Data Corporation (IDC) has projected IoT spending in the region will reach $435 billion by 2027, which is over $100 billion from an estimated $277.5 billion in 2023, rising at a compound annual growth rate (CAGR) of 11.7% within five years.
Discrete and process manufacturing industries are forecast to lead the largest IoT spending in 2023, with 38.2%, or about $106 billion, of the total estimated investments. State and local government and professional services are the next biggest industries in IoT spending. The key factor affecting these sectors' spending is their aim to enhance the quality, efficiency and customer experience of their products and services through IoT integration.
"Organizations are more focused on data-driven operations to address specific business goals and customer challenges, and investing in the IoT ecosystem is crucial," said Sharad Kotagi, a market analyst at IDC IT Spending Guides, Customer Insights & Analysis.
China’s Dominance by the Numbers
China remains the biggest IoT spender, accounting for more than 60% of total spending in 2023.
Among the companies that have contributed to this IoT spending reputation is China Mobile, which accumulated a total IoT revenue of $2.5 billion in 2022 — the majority of this from wireless connectivity services, computers, controllers and gateways. Another IoT company based in China, Quectel, earned $1.9 billion, while Huawei Technologies generated $1 billion during the same year.
China's spending on IoT is expected to reach around $300 billion by 2024, with a CAGR of 13% in the next five years. According to the IDC data, in 2024, the country's spending on IoT will account for 26.7% of global spending in the sector, followed by the United States at 23.8% and Western Europe at 23.4%.
Jonathan Leung, a senior market analyst with IDC China, shared that the country witnessed interference in the IoT market due to COVID-19, which caused the reduction of IoT spending across all industries in early 2020. "As China continues along its road toward recovery, we expect the market to bounce back in the coming years as enterprises begin to grasp the vital role of IoT in epidemic prevention and control, as well as their capabilities in mitigating market disruptions," he said.
The Made in China 2025 initiative, for instance, focuses on upgrading Chinese industries and IoT infrastructure. This initiative was inspired by Germany's "Industry 4.0" plan, initially discussed in 2011. Among its guiding principles are to have manufacturing be innovation-driven, highlight quality over quantity, achieve green development, optimize the structure of Chinese industry and look after human talent. The main goal is to comprehensively upgrade the Chinese industry, making it more efficient and integrated to better occupy the superior parts of global production chains.
Aside from China, Singapore and Hong Kong are also expected to demonstrate among the fastest-growing IoT spending in 2023. This will be powered by the implementation of smart factories and Industry 4.0, together with government-backed IoT programs.
China is known to produce a massive amount of the world's electronics, including technologies like sensors and microchips that are fundamental to IoT. The country is primed to be the backbone of IoT-integrated infrastructure and developments globally moving forward.