Competing with China is about software – and software is about trust.

Competing with China is about software – and software is about trust.

SENSATIVE list
SENSATIVE list

We read the other day that China’s 14th Five Year Plan for National Informatization flags a “new sensory infrastructure for Internet of Things (IoT) data communication.”

The idea is to combine the use of AI with decision making capability enabled by sensor data.

China’s planners even coined two new words for this process: “Intelligentization”, to go with “informatization”. The plan highlights the intelligentization of infrastructure in public safety, transportation, urban management, and environmental protection, among other sectors.

With this as a country strategy, it is no wonder China has recently emerged as a dominant player in the sensor market, offering low-cost, high quality sensors for large-scale deployments.

In the face of formidable hardware competition, what is the European stance? What is our experience at Sensative here in Lund, Sweden?

It’s a story of two Europes adding up to a competitive advantage. Western Europe excels in design expertise, and Eastern Europe offers a cost-effective and highly skilled manufacturing base. 

(For reference, although our Swedish-designed sensors use base materials from China, our smart components are European. Our sensors are manufactured in Poland, making our cost base competitive with China.)

However hardware alone is not enough to compete with China. You have to think about software. 

For sure, China is capable of great software. They are leaders in many data-intensive industries.

However software is a geopolitical issue.

Almost all industrial hardware has embedded software. Even if only an MCU, there is a software library on that firmware. Since most hardware is connected, there is almost always some kind of cloud support and update process. 

(In Sensative’s case there’s a surprising amount of software on the sensor itself, from power management over a battery’s 10 year life, to data collection, to radio communication. And in our case there is a huge stack in our Yggio platform that analyses sensor data.)

Software requires continuous refinement and improvement. The original developers will always be communicating with and updating embedded software. 

That’s why software is a big geopolitical trust problem.

Given this challenge, Western companies in categories where there is competition from China should market hardware solutions that are a fusion with software.

Hardware-software fusion fosters trust that can withstand Chinese competition.

For example, Apple and Tesla are examples of such a “trust fusion” that is a viable alternative to China Inc. Even though significant manufacturing takes place in China, the design, development and management of their software takes place in the West.

(At Sensative, we impishly believe we are the third option on this list of providers standing up to China, alongside Apple and Tesla! Our software is a big deal in building trust.)

European software is distinguished by stringent EU regulations, including the General Data Protection Regulation (GDPR) and six other major data acts (Network and Information Security Directive, Cybersecurity Act, Data Act, Artificial Intelligence Act, Digital Services Act, Digital Markets Act, and the proposed ePrivacy Regulation). 

Meeting these standards is a significant investment, but it distinguishes those who invest in certifying compliance with a powerful “trust” proposition in the global market.

So, where does that leave us?

In summary, while China poses a significant challenge in manufacturing, European companies have a unique advantage.

First, we can be cost-competitive in the context of high quality leveraging the different competencies across Europe. 

More importantly, by emphasising the seamless integration of software and hardware, especially for those adhering strictly to European regulations, we offer a level of trust that resonates globally.

This is our key message at Sensative: European-made and certified sensors, combined with integrated software, create a trustworthy solution for IoT projects worldwide. Our tightly integrated hardware and software embody a trust proposition that can compete effectively on the global stage.

We hope this is useful.

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