From the Earth up to the cloud

A Shanxi-based IT company got its start by helping to modernize the province's accident-plagued coal industry. Now it's eyeing bigger things, reports Li Yang in Taiyuan.

When Li Wei set off for the United States to study, he probably never thought he'd eventually find his future in the dirty and dangerous coal mines of Shanxi province.

After finishing college in China in 1994, he headed to the US. There, he went to graduate school, became a market strategist and met Taiwan-born Calvin Teng, who would become his business partner.

Li was looking for something different to do with his life. He decided that there was a market in using technology to clean up the coal industry in Shanxi province.

With Teng and several other partners, Li formed a smart equipment production company in Taiyuan in 2003. That enterprise was RocKontrol Industry Co Ltd.

Li is now board chairman of RocKontrol, the domestic leader in the nascent field of the Internet of Things.

Rather than linking sources and users of information, as the Internet does, the Internet of Things is a network of physical objects, also linked by the Internet.

A single "chain" in the IOT consists of sensor chips, radio-frequency identification or other transmission channels, a computing center and an interface (in most cases, software).

The software can achieve remote control of the sensor chips in physical objects-a car, for instance, or a monitor in a tunnel, irrigation equipment on a farm or any one of hundreds of other items.

The expansion of the Internet and cloud computing in China are lifting the IOT to the next level in the nation. "The growth of cloud computing ability makes the IOT commercially viable," Teng said.

The IOT connects the information of "everything" for calculation, analysis and application. It requires so much data-processing capacity that it's almost impossible to achieve without cloud computing.

"The real significance of the cloud is that it lets people share limited resources," said Teng.

IOT systems have to handle tens of thousands of sets of heterogeneous data, which is derived from all sorts of equipment based on different standards.

"Portal agreements and computing methods are the core technologies for IOT enterprises," said Li.

R&D base

Just a year after the company was founded, it built an industrial park in Taiyuan, covering 100,000 square meters.

The park has about 1,000 research and development staff in three specializations: industry project engineers, software programmers and application experts. The latter group translates abstract data into concrete uses.

Bao Liangyu, aged in his 20s, who studied automation in college, said of her work: "This is really a high-technology enterprise. All of the employees are experts in their fields. The management is like a foreign company."

The Wangcun coal mine project, started in 2010, is an example of RocKontrol's partnership with the mining industry. The mine, in the nearby Shaanxi province, has an annual output of 2.1 million tons.

RocKontrol set up 19 application sub-systems covering 12 mining and management departments. It also created three-dimensional "live" maps of every road in the mine. On computer monitors, the maps display a range of real-time safety data.

The mine's managers can remotely control all underground equipment through their office computers. They can also get real-time information on every miner in the pit.

Wang Quanli, the director of the mine, said: "The condition of every pipeline is now easily seen on the monitor. The new IOT system makes the mine safer and more efficient.

"For example, the conveyor belt, which was operated by five workers before, can now run with just one."

RocKontrol started making intelligent equipment in 2003, the year it was established. It started research on mission control center chips in 2005 and data-mining software in 2006.

RocKontrol was awarded the Carnegie Mellon Software Engineering Institute's certification of capability maturity model integration in 2009, which gave it recognition as a world-class software provider.

The production of IOT-capable devices-sensors, RFID chips, instruments and meters-and embedded system development, remain backward in China compared with developed countries.

Most IOT enterprises in China import equipment and systems. Only a few make their own hardware. RocKontrol is one of them.

"I want to offer customers our own cloud-computing services," he said. "I found that customers don't just want us to build the system; they also want us to provide them with more timely services.

"As a real IOT enterprise, we must have our own cloud-computing team."

Li established a strong cloud-computing team in 2010 so that the company wasn't limited to cooperation with cloud-computing service providers.

"It's meaningless to operate a local area network. We offer real-time service. The business model is the large-scale collection, analysis and application of big data. The massive data bring value,"

"Customer loyalty is high in this field. After-sales services are the key factor that will determine the prospects of the industry." Energy conservation and environmental remediation are other major markets for RocKontrol.

"At first, companies were cool to us when we proposed helping them monitor their pollution conditions. But after they learned that we could help them trade their pollution quotas to better fit their production conditions, their attitudes changed," Li said.

Clean energy

The first carbon emissions exchange in Shanxi was founded using RocKontrol systems in 2011. "They began to realize that it's more difficult to hide their pollution than to make everything transparent and tradable."

The company ensures it maintains good relations with governments at various levels in China. And even some State leaders, such as former president Hu Jintao, President Xi Jinping and Premier Li Keqiang have all visited the company.

Sales hit 2 billion yuan ($328 million) in 2013. Net profits from the IOT operations reached about 700 million yuan.

After a new industrial park in Taiyuan is finished this year, "profit may rise to 1.5 billion yuan", Li said

While most information on the Internet can be collected free, it costs money to obtain data for the IOT.

That makes the IOT business a value-added application process for data, Li noted.

"It's hard to forecast the overall value of the IOT market in China in the near future. But the government is now playing an important role in deciding if the market can grow in a sound way, because most data comes from fields under tight government control.

"That's different from the US, where most of the valuable data comes from companies," Li said.

During the first national work videoconference for the IOT held last month, Vice-Premier Ma Kai vowed to cultivate new economic growth points, promote industrial restructuring, improve social governance and improve public services through the IOT.

"The main breakthroughs to be involve research and development activity for chips, intelligent sensors and other core technologies," said Ma.

"Industry, agriculture, energy conservation, environmental protection, logistics, resources, social affairs, city management and production security are the main fields that will benefit from the IOT."

Although the industry is still in its infancy, by 2012 most of China's provincial-level governments had designated the IOT for special support.

In 2010, 37 colleges won approval to offer the first group of IOT majors. More than 100 colleges now have IOT-related specialties.

Special support

RocKontrol already has 5,000 servers that were put into use in 2011. It will have 50,000 servers, which are equivalent to 400,000 virtual servers, in use by October, when its new IOT park is finished.

"We don't recognize any competitors in China. I don't mean there are none. What I mean is, we really cannot see competitors with our capabilities. We develop project-processing ability and strong applications on the base of the IOT," said Teng. "Our own language in interpreting the communication protocols and computing methods are the data's value-added process and the core competitiveness of RocKontrol."

There's growing public concern about IOT enterprises, which have access to huge volumes of data related to national security and personal information.

Although analysts have urged the government to step up supervision of data security when it comes to the public interest, there's been scant progress so far.

The Ministry of Industry and Information Technology only drew up China's first IOT five-year development plan in 2012 and issued the first guidelines in early 2013.

"It will take a certain period of time to formulate, revise and implement rules covering the 'new turf' of the IOT," Teng said.

Contact the writer at liyang@chinadaily.com.cn.

What IOT is and how it works

The Internet of Things refers to the concept of devices connected to the Internet, where information gathered by devices is pooled, processed, analyzed and reported to users.

The users can act on the received data, which is represented through various software platforms designed for certain purposes.

In some cases, the devices themselves are set up to act on the data.

Efficient data transmission, analysis, processing, reception and implementation are the core of the technology concept.

Kevin Ashton, a network technology professor at the Massachusetts Institute of Technology, initially proposed the concept in 1991.

The global market value of the Internet of things is estimated to reach about $8 trillion by 2020.

In China, the market has been estimated at $70 billion as of 2013, with 40 percent of it concentrated in Jiangsu province in East China.