Index > Briefing
Thursday, June 24, 2021
How to Design and Operate Smart Cities?

China is quickly moving towards the era of smart cities. With the release of policy dividends and the massive fund investments, smart cities in China are thriving under the massive surge of development. According to the Worldwide Smart Cities Spending Guide issued by the Internet Data Center (IDC), in 2020 China has spent US$ 25.9 billion developing its smart cities, a year-on-year increase of 12.7%. This is higher than the global average and second only to the global average. As the country with the largest expenditure after the United States, this figure is estimated to reach US$ 38.923 billion in 2023. In fact, ongoing statistical research show the number of smart cities in China has exceeded 500, making China the country with the most smart cities in the world.

Despite this, China faces numerous challenges in developing its smart cities, and they are jarring issues at that, since most of the focus is loaded into the construction and not its operations. Director of the Information and Industrial Development Department of the National Information Center, and the Smart City Development Research Center Shan Zhiguang believes that the current smart cities in the country are far too focused on its construction, whilst leaving its management and operational works more to be desired. He pointed out that many buildings are erected without a clear purpose, and little thought is given to the people who should manage, operate, and add value to it. Most of such cities are driven purely by technology, and lack sustainability in their designs. This could lead to a wastage in resources, even rendering its construction useless, which is like an upscale residential area that has been built without any accompanying facilities, and it is only a matter of time before it becomes rundown.

What purpose do smart cities actually serve? Vice President of McKinsey Global Institute China Cheng Zhengmin thinks the era of Smart City 1.0 had a top-down, technology-for-science approach. Meanwhile Smart City 2.0 adopts a residents-centric approach. This includes time and living cost savings, and safety improvements, all which contributes to a healthy environment with employment opportunities and social platforms.

To achieve this, Zhengmin believes it is necessary for the Chinese government to open up the barriers in every corner of smart cities, and think about the needs of the residents. In the past, smart cities made the mistake of over-intelligentization in specific scenarios and downplayed systematic connectivity. Smart cities are a project of global optimization. This means economic prosperity, governance, people's livelihood, and the wellbeing of various industries are vital to the cities. The crucial component of a smart city is its people, and this does not just include the residents, but also the builders and operators of these smart cities. The future lies in successfully integration of business and technology, management and business.

Tackling the issue of managing and operating smart cities has become a new bottleneck in the development of smart cities for China. To resolve this issue, China needs to successfully integration construction and operation together first, and improve the liquidity of data to realize its maximum potential.

The act of integrating construction and operation is otherwise known as the integration of business and technology, and management. In this regard, the best way is to let the builders of smart cities to assume the role of operators.

In the past, developers and builders tend to focus concept delivery, but on a superficial level. Once the cities are built, the builders would leave the management to a third party, without further utilizing the data of the cities.

These days, the local governments has made it a pre-requisite for smart city builders to provide a comprehensive plan. Some cities even deemed it compulsory for builders to pre-invest before bidding. That way, they can assume the identity of an operator, which benefit smart cities. On one hand, the builders are familiar with their work, which allows them to manage the cities with ease. On the other, it places additional burden on them as they need to spend additional time ideating on the operations in the early stages of the project, which involves planning ahead and ensuring it is problem-proof for most parts later on.

One way to improve the management and operation of smart cities is to improve the circulation of data. If the data collected through software and hardware cannot be circulated without obstacles, then the value of the data will be greatly reduced. For example, smart software has played an important role in curbing the COVID-19 outbreak in China, and they boast a large amount of data. However, in some cities, cross-regional, cross-level, and cross-departmental data sharing has not been established, resulting in the inability to achieve active and accurate tracking.

Throughout the development of smart cities, after the government's information-based construction, infrastructure coordination and other stages, the next will be the critical stage of data coordination. Only by breaking down the barriers between government departments and pulling data together can China enter a new stage of business integration. Systems-wise, China has established a Big Data administrative department that is specifically tasked with the interconnectivity of data, though there is still room for improvement. This Big Data administrative department has yet to break the information barriers between government departments. It is therefore necessary to further strengthen its power of information and data management.

Additionally, the data between private enterprises also needs to be circulated and shared. However, due to business confidentialities and other reasons, many companies have difficulty trusting each other when participating in smart city operations. Consequently, the project fails to achieve the expected results or is abandoned halfway. For example, AutoNavi, a Chinese navigating service provider, took the lead in developing a smart city project to improve the efficiency of road use. It needed the web mapping service application Baidu Maps to share certain data to improve the integrity of Big Data, yet it is difficult for companies to coordinate with one another. Technically, the government can take the reins and use its credibility to coordinate the data resources between both parties. That being said, it can let relatively neutral data holders in other industries such as Huawei, to take the reins too, as a way to prevent vicious business competition between enterprises of the same category.

In short, if a smart city wants to develop sustainably, technology should not be its only prime focus. In fact, it needs to focus on top-level designs, streamlining operations and integrated growth.

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