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Global Cities and Future OpportunitiesInsights into five overseas markets and cities for new opportunities for UK SMEs
2 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
2
3 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
1.4 UNITED STATES Overview 53Public Sector Initiatives Supporting R&I 55Potential Partnership Areas – Where do the Opportunities Lie? 57‘Fund’ Opportunities: R&D to facilitate knowledge transfer and learning 59Supporting Factors for UK SMEs Entry 60Challenges to Market Entry for UK SMEs 61Routes to Market – How can UK SMEs Access these Opportunities? 62Recommendations for SMEs –Better Access to Opportunities 63
1.5 JAPAN Overview 66Public Sector Initiatives Supporting R&I 67Potential Partnership Areas – Where do the Opportunities Lie? 70 Supporting Factors for UK SMEs Entry 73Challenges to Market Entry for UK SMEs 76 Routes to Market – How can UK SMEs Access these Opportunities? 77 Recommendations for SMEs – Better Access to Opportunities 80 Addressing Challenges 80
Chapter 2: City Typologies 83
2.1 OVERVIEW 2.2 Methodology 84 2.3 Process Map 852.4 Outcomes 88 2.5 City Profile Case Studies 88 CASE STUDY – Target High Growth ‘Goldilocks’ Cities for B2G opportunities: Varanasi (India) 90 CASE STUDY – Target Lower Growth B2B markets: Tokyo (Japan) 92CASE STUDY – Target Middleweights with Strong R&I Potential: San Diego (US) 101
EXECUTIVE SUMMARY 4 INTRODUCTION 6
Chapter 1: Priority Countries: Opportunity Overview and Recommendations 7
1.1 AUSTRALIA
Overview 9Public Sector Initiatives Supporting R&I 9 Other Supporting Factors for UK SMEs Entry 11 Barriers to Market Entry for UK SMEs 13 Where do the Opportunities Lie? 13 Routes to Market – How can UK SMEs Access these Opportunities? 15 Recommendations for SMEs – Better Access to Opportunities 20
1.2 CHINA Overview 22 Public Sector Initiatives Supporting R&I 24 Other Supporting Factors for UK SMEs Entry 25 Barriers to Market Entry for UK SMEs 26 Potential Partnership Areas – Where do the Opportunities Lie? 29 Routes to Market – How can UK SMEs Access these Opportunities? 32 Recommendations for SMEs – Better Access to Opportunities 33
1.3 INDIA Overview 34 Public Sector Initiatives Supporting R&I 35 Supporting Factors for Market Entry for UK SMEs 38 Barriers to Market Entry for UK SMEs 41 Potential Partnership Areas – Where do the Opportunities Lie? 45Routes to Market – How can UK SMEs Access these Opportunities? 49 Recommendations for SMEs – Better Access to Opportunities 51
4 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
EXECUTIVE SUMMARY
UK small and medium businesses that are
seeking to work in overseas markets need
to have a clear understanding of country
and city markets and the opportunities
available in each of them. This report provides
multiple levels of insights across countries
and cities as well as both specific in-country
ecosystem mapping and broader approaches
to five Innovate UK priority countries.
The report also provides a framework for
city typologies that can help businesses
determine the best approach to working
in various cities around the world.
Chapter 1 delves into five priority countries:
Australia, China, India, the United
States and Japan. For each country the
report provides a general overview, public
sector support for R&I, support factors for
UK SME entry, barriers to entry, sectoral
opportunities, routes to market and specific
country recommendations.
Australia provides some natural synergies
for UK urban innovation, given advanced
infrastructure in its cities and a good citizen
quality of life. The Australian government
provides strong support and funding for R&I
activities and has backed it with their Smart
Cities Innovation Plan, The National innovation
and Science Agenda as well as the Australian
Public Service Innovation Act.
China’s smart city market is growing rapidly
to meet increasing urbanisation demand,
which provides both large-scale opportunities
and large-scale challenges. China has a
top down approach to urban development
and has recently launched several national
initiatives, including the National New-Type
Urbanisation Plan; China’s 13th Five Year
Plan; the Made in China 2025 strategy; and
the Greater Bay Area Scheme.
India’s urbanisation rate has led to an
increased focus on smart cities with Prime
Minister Narendra Modi’s 2015 launch of
the national Smart Cities Mission programme.
The UK is well placed to support India in
its urban development journey having
already built a strong bilateral relationship.
India’s public-sector support for R&I from
the Ministry of Housing and Urban Affairs
includes the Smart Cities Mission, Smartnet
and the Atal Mission for Rejuvenation and
Urban Transformation (AMRUT). Programmes
from the Department for Electronics
and Information Technology include:
Digital India, Centre for Excellence
for IoT, the National Innovation Foundation,
and Startup India.
The United States remains an important
part of the global economy story, although
overall performance of US cities has varied.
5 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Public sector initiatives include: The White
House Smart City Initiative, Metro Lab
Network, the National Science Foundation,
and the Smart Cities USA PPP.
Japan presents both opportunities and
challenges. Whilst Japan’s overall economy
has steadily declined, a renewed set of
economic programmes by Prime Minister
Shinzo Abe may present focused areas
of business growth opportunities. Public
sector opportunities supporting the science
and technology sectors include: National
Strategic Special Zones with business-
friendly conditions; a refreshed Science
and Technology Basic Plan; the Realizing
Society 5.0 programme with themes for
cyber security, IoT, big data, and A.I.;
expansion of the national Science,
Technology and Innovation programme;
and ‘New Tokyo. New Tomorrow – The
Action Plan for 2020’.
Chapter 2 of this report moves from
National to City focused markets with a
unique methodology for City Typologies.
This ‘hybrid’ approach begins to account
for the ever changing political, economic,
social and technological dynamics within
the landscapes of cities that are playing
a bigger role in determining the overall
market potential and attractiveness for
innovative, urban businesses.
Increasingly, essential services including
water, energy, clean air and waste are
being managed at the city level, rather
than by national authorities. This implies
varying models of urbanisation are adopted
across cities. These differences make it
imperative to understand how cities can
be understood both individually and as
clusters, based on their performance
across a set of parameters – in this case,
parameters that help determine the
attractiveness and market potential of
cities within the innovation and urban
services domain.
The core typologies framework
categorises cities on a simple two by
two matrix, looking at growth per capita
and by population, alongside city size. This
creates multiple lists of cities that could,
for example, be high growth and size,
high growth and medium size or low
growth and small size, among others. Users
can then select the ‘type’ of cities that
they want to examine further to determine
their capacity for cities with a high-public
sector demand (B2G), cities with promising
business-to-business (B2B) markets, and
cities with strong R&I opportunities, all
scored on a spectrum through rigorous
data and research.
This methodology produces a dynamic
mix of cities from the initial filters to
reveal emerging and established
market opportunities and highlights
cities beyond the ‘usual suspects’ for
cities primed for partnership, growth
and market development.
This report illustrates the uniqueness,
usefulness, and usability of the city
typology methodology by highlighting
several city case studies of cities that land
within different categories on the typology
including: Tokyo, New York, Varanasi,
Nanyang, San Diego and Ningbo.
6 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
The purpose of this study is twofold. Firstly, the
study undertakes a country-level gap analysis for
the five ‘priority countries’ 1 of Australia, China,
India, Japan and the United States (US) to provide
more granular insights into these markets.
Secondly, the study aims to define and create a
‘City Typologies’ framework to classify cities across
the globe based on their Research & Innovation
(R&I) attributes and market potential for businesses
in the urban services sector. This work stream is
intended to take the country-level gap analysis
to the next level and account for the growing
prominence of city dynamics in determining market
potential and attractiveness, as well as to account
for the high level of variation between dynamics
of cities within the same country.
This typology is further intended to guide the
overseas strategy of SMEs, based on different
market attributes of various cities across the globe.
1 The five priority markets were identified based on an
opportunity analysis of eight countries indicated by IUK.
INTRODUCTION
7 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
This chapter is intended to provide a more nuanced understanding and ‘gap analysis’ of the five countries identified as ‘priority markets’ in our previous work on ‘Country Overview and Innovation Ecosystems’. 2 In particular, it provides a snapshot of each country’s various government initiatives and other factors conducive to the entry of UK SMEs within the advanced urban services and related sectors, potential sub-sector opportunities, potential routes to market for UK SMEs.
2 The five priority markets were identified based on an
opportunity analysis of eight countries indicated by IUK.
CHAPTER 1
PRIORITY COUNTRIES: OPPORTUNITY OVERVIEW AND RECOMMENDATIONS
8 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Sydney
9 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
1.1 AUSTRALIA
OverviewAustralia is a highly urbanised country with around
90% of its population (22 million people) living in
urban areas, as of 2017.i The country’s urbanisation
rate is forecast to reach 93% by 2050.ii This
urbanisation, however, is highly localised with most
of the population concentrated around the more
hospitable coastal areas in the South and South-East.
60% of the Australian population lives in its
five largest cities – Sydney, Melbourne, Brisbane,
Perth and Adelaide. Outside of these areas, the
country is sparsely populated. Due to its sheer
size and relatively small population, Australia’s
population density ranks among the lowest in
the world, with studies reporting just 3 people
per square kilometre.
While the US, India and China (three of the other
four priority markets) have huge urban systems with
many large, medium-sized and niche cities, Australia
only has five large cities (populations over 1 million)
and only 6 medium-sized cities (populations
between 200,000 and 1 million people).
However, Australia’s cities are the drivers of the
nation’s vast economy, with the five largest cities
accounting for 79.1% of the national GDP in 2015-
2016. In addition to driving the national economy,
Australia’s cities consistently perform well in
various Quality of Life and Liveability indices. For
example, Mercer’s 2017 Quality of Living Rankings
place five Australian cities within the top 30 cities
taking into account measures such as the political,
economic and environmental situation, personal
safety, health, education, transportation and other
public service factors.
The relatively advanced infrastructure of its cities
and better quality of life of its citizens provides
for natural synergies between Australian and UK
cities and by extension, between the two countries’
urban innovation landscape.
Public Sector Initiatives Supporting R&I
“The Australian Government recognises the vital role
new knowledge and innovation plays in the economic,
cultural and social advancement of a nation. In
2016-17 alone, the Australian Government invested
over $10bn in science, research and innovation.” —
Department of Industry, Innovation and Science,
Australia, 2017
The Australian government has recently launched
a number of initiatives to boost its innovation
agenda across sectors, and to channel new sources
of economic growth in the country. These initiatives
lay the groundwork for international Research and
Innovation (R&I) within the infrastructure, transport,
design and engineering and other such advanced
urban sectors in the country.
The recently published Smart Cities Planiii
sets out the Australian Government’s vision for
its cities—metropolitan and regional—and its
commitment to three pillars of Smart Investment,
Smart Policy and Smart Technology.
The Smart Investment pillar prioritises projects
that have clear economic and city-improvements
objectives such as creating more jobs, increasing
available housing and producing healthy
environments. It also lays the foundation for more
innovative funding packages and highlights the
need for more private-sector involvement.
10 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
The Smart Policy pillar emphasises the use of
‘City Deals’ to enable governments, industry
and communities to develop collective plans for
growth. These deals will allow cities to earmark
specific investments and make reforms required
to drive business and industry development
and ensure community wellbeing. As of January
2018, the government has signed four deals
for Launceston, Western Sydney, Townsville
and Hobart. Another deal is underway for
Geelong City.
The final Smart Technology pillar supports the
use of disruptive technologies, such as sharing
economy or the Internet of Things (IoT), to
improve how cities are planned and how
they function. There is also considerable
support for open data driven solutions and the
commercialisation of new innovations.
Secondly, The National Innovation and Science
Agenda (NISA)iv , launched in December 2015, is
the government’s flagship innovation and science
policy. It includes initiatives worth AUD 1.1 bn
over four years, and covers a range from sectors
including ICT, healthcare, education, agriculture,
defence and transport. Among other things,
it focuses on growing collaboration between
industry and researchers to find solutions to real
world problems and to create jobs and growth.
The Global Innovation Strategyv – the key
international measure of NISA – provides an
overarching framework to guide Australia’s
international industry, science and innovation
collaboration. The strategy promotes global
engagement on entrepreneurship and innovation,
building strong research and business connections
internationally. It is underpinned by funding
initiatives that support international collaboration,
particularly between researchers and industry.
These initiatives include:
l Global Innovation Linkages: Supports Australian
businesses and researchers to collaborate with
global partners on strategically focused, leading-
edge research and innovation projects. It supports
projects focused on developing high quality
products, services or processes that respond to
industry challenges, with funding of up to AUD 1m
per grant over a maximum period of four years.
l Global Connections Fund: Supports global SME-
to-researcher collaborations to enable viable
projects to grow and test commercialisation in
industries of strategic growth in Australia. There
are two types of grants under the Fund. Bridging
Grants are grants of up to AUD 50,000 as seed
funding to enable viable projects to grow in scope
and scale, test commercialisation and proof-of-
concept activities. Second, Priming Grants are
grants of around AUD 7,000 to enable Australian
SMEs and researchers to meet and collaborate
with international partners to further develop
their ideas.
Thirdly, the Australian Public Service Innovation
Action Plan aims to drive innovation in the public
sector through initiatives such as the Public-Sector
Innovation Network, an innovation blog and an
innovation tool kit. Efforts were considerably
stepped up with the arrival of the Turnbull
government, which in December 2015 accounted
for a new Australian national innovation and
science strategy that featured 20 policy reforms
and AUD 1bn in new investments.vi
Finally, the National Collaborative Research
Infrastructure Strategy (NCRIS) fosters research
excellence and collaboration between academia,
research institutes, government and industry to
deliver research excellence and practical outcomes.
It supports international collaboration through
facilities and projects covering capabilities such as
high-performance computing, data, environmental
11 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
and earth monitoring, advanced fabrication
and instrumentation, biology and therapeutic
development and astronomy.
Other Supporting Factors for UK SMEs Entry
Apart from various public-sector initiatives, at
a practical level there are a number of other
factors that strengthen the case for collaborative
R&I between Australia and UK.
l Common Economic, Cultural and Legal Practices:
In addition to the synergies arising from similar
levels of infrastructure and economic growth,
Australia and UK share a common language and
have similar cultures, business and legal practices
(such as IP protection) and technical standards.
These commonalities impart the UK businesses
certain advantages over other global players
when looking to enter the Australian market.
l Australia’s liberal stance to global businesses:
Australia’s reliance on overseas markets for
consumption and international trade has led to
the country developing a political and economic
environment which supports globalised business.
To this end, Australia is a strong proponent of
trade liberalisation having entered into ten free
trade agreements.
l Strong investment patterns between Australia
and UK: The UK is the second largest foreign
investor in Australia after the US, with stock
worth almost AUD 500bn. Over 1,000 British
businesses already operate in Australia, including
well-known companies like HSBC, BP and BT,
as well as hundreds of SMEs. These companies
provide a strong foundation for further R&I
collaboration between the two nations and
can act as potential ‘gateways’ for UK SMEs.
l UK SME Capabilities: UK SMEs have strengths
and sector expertise that particularly cater to
Australian needs and city challenges of urban
sprawl, congestion, an ageing population
and climate change.
l Strong IP Protection Practices: To increase
collaboration and commercialisation of
intellectual property, IP Australia, an agency
of the Australian Department of Industry,
Innovation and Science, has developed
Source IP – a digital marketplace specifically
created to help businesses and researchers
collaborate by facilitating quick and easy
contact. It helps businesses access public
sector inventions and technology available
for licensing, and to identify potential
collaboration opportunities.
l Government Support for R&I: The Australian
Government provides significant support
to Australian businesses, universities and
research for R&I, including international
collaboration, so many Australian partners may
be able to self-finance their participation. This
makes collaborating with Australian partners
financially less straining for UK counterparts.
l UK’s vast pool of talent and research
infrastructure means that the two countries
can join up resources for R&I into niche or
novel areas that would otherwise be difficult
to cater to owing to limited financial and
human resources.
l Finally, Australia’s relatively late entry to
the wave of smart cities gives UK SMEs
an opportunity to showcase and promote
solutions, technologies and models that
they have tried and tested within the UK,
giving Australian partners more confidence
on their capabilities.
GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
13 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Barriers to Market Entry for UK SMEsDespite a number of encouraging factors,
there are few barriers that pose mild threats
to UK SMEs to form successful partnerships
and do business in Australia. However,
compared to other countries assessed,
these challenges are of less serious
nature and can be overcome with
appropriate offerings. The main
challenges identified are:
l Growing Focus on Home-Grown SMEs.
Recognising its own strengths in areas
such as advanced manufacturing, clean
technologies, road safety and infrastructure
finance, Australia has launched a number
of initiatives that focus on promoting its
home-grown businesses in its domestic
and global markets.
These initiatives include the CSIRO
Innovation Fund, Incubator Support
Initiative and its Global Innovation
Strategy that has led to the creation of
‘Landing Pads’ in global innovation
hotspots such as Berlin, San Francisco,
Singapore and Shanghai. These Landing
Pads provide Australian businesses and
research institutions with access to the
innovation ecosystems in these locations.
l Localisation Barriers. Australia has also
put in place several localisation barriers
to trade which may inhibit the ability of
international businesses from accessing
the Australian market. These include
Local Content Requirements (LCRs) which
require producers to use a minimum
percentage of locally produced output
(e.g.: components, IP, etc) and Local
Production Requirements (LPRs) which
mandate local production of a product
or service as a fundamental condition of
market access.
l Logistics and Resources for Long Travel.
Australia’s eastern cities are approximately
24 hours away from the UK by plane and
the country is between 7 and 11 hours
ahead of the UK in terms of time. This can
create communication difficulties and
requires significant financial commitment
to travel regularly.
l Inter-state Variations in Laws and Regulatory
Structure. Owing to its federal system, laws
and regulatory practice can change between
Australian states. This requires organisations
looking to operate across states to tailor their
inter-state operations accordingly.
Where do the Opportunities Lie?vii
In our previous work, we undertook an
in-depth sectoral analysis to identify
collaboration or ‘Connect’ Opportunities and
knowledge exchange or ‘Fund’ opportunities’,
as described below.
These opportunities showcase only some of
the potential collaboration areas and should
not be treated as an exhaustive list.
The ‘Connect’ opportunities imply R&I
activities intended to lead to commercial
business. These opportunities have been
identified by aligning UK commercial and
innovation strengths with challenges faced by
Australian cities that are currently not being
met by the domestic suppliers.
14 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
OPPORTUNITY DESCRIPTION AND REASONING
Urban design and planning
The UK has a well-established land-use and planning system. Recently, the UK’s focus has moved to planning at an urban scale to address a more fundamental agenda. Its specialities include: urban and regional development, master planning and urban design, urban regeneration, heritage and conservation, environmental assessment and sustainable development. Due to the rapid expansion of suburbs, Australian cities are suffering from urban sprawl and could benefit from the UK’s world-leading expertise in planning and regeneration.
Smart City Standards Development
Capabilities in regulatory and standards development has placed the UK at the forefront of developing new standards for green building, smart cities, open data, urban design, public service delivery and community governance. Australia has chosen to adopt UK-developed ‘smart city’ standards in the past (Hypercat), therefore there is an opportunity for the UK to export further smart city standards, which in turn will give UK companies a better opportunity to access the Australian market. In turn, Australia has launched the IoT Alliance Australia which aims to shape regulatory and collaboration frameworks to enable Australian industries to harness IoT opportunities. Learnings from this initiative may prove useful to the UK.
Innovation Ecosystem Development
Australia has a strong science base with strong universities and high public sector R&D expenditure. However, while Australia excels in terms of innovation inputs, it falls behind on turning research into commercial products and services. It performs particularly poorly in terms of innovation efficiency. The UK on the other hand has a strong innovation ecosystem, having founded more than a third of Europe’s ‘unicorn’ technology firms (worth over $1bn). The UK could share some of this expertise with Australia, particular in the area of venture capital funding which is struggling in Australia.
Digital Technologies
The UK’s diverse creative services combined with its fast-growing digital sector are producing innovative digital services for cities. The UK’s digital economy is estimated to comprise over 120,000 firms and represents around 8% of the UK’s GVA. Australia does not have a particularly developed digital technology industry. It has no companies on the Global Fortune 500 technology list and was assessed to have average capabilities in the areas of digital technology adoption and readiness by studies conducted by the OECD and WEF. Therefore, there is a good opportunity for the UK to export digital technology goods, services and expertise to Australia.
Service Design and Citizen Engagement
Due to a historic lack of government support, smart city development in Australia has been fragmented and characterised by strong private sector engagement. This has led to generic solutions being deployed which have not be customised to the needs and habits of citizens. While this is changing, there are still opportunities to better engage citizens in the design and implementation of smart city technologies in Australia. The UK has expertise in citizen engagement methods, with many design-led businesses creating innovations to promote public engagement with respect to urban development. The UK could offer knowledge and services around combining social and digital capabilities to deliver services to citizens in a more integrated way.
Table 1
15 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
The ‘Fund’ Opportunities imply R&I activities
to facilitate knowledge transfer and learning.
These opportunities (listed below) have
been selected by identifying mutual challenges
faced by the UK and Australian cities that
are currently not solved by either domestic
market, or they are areas where both countries
have complementary skills which could be
brought together to better solve a particular
market challenge.
Routes to Market – How can UK SMEs Access these Opportunities? The Australian government, as evidenced from
its strategy documents, is keen to promote
international R&I partnerships. Through a recent
publicationviii, the government itself recommends
that organisations looking for collaboration
opportunities with Australia first find a suitable
partner or partners. These partners could range
from businesses to public sector R&I bodies or
even academia.
OPPORTUNITY DESCRIPTION AND REASONING
Clean Tech
Australia has a strong clean tech sector, with a large number of companies in the water, waste and solar energy verticals. The sector is also supported by considerable public-sector investment (AUD 1m), therefore is likely to progress rapidly in coming years. The UK could benefit from learning from Australia’s expertise in order to achieve our Paris Agreement commitments.
Smart Ageing
Both countries have aging populations and this demographic shift will require significant changes to the way cities are planned and to the way services are delivered. Healthcare in particular will need to be delivered in new ways in order to meet increasing demand. To date, neither country has made major inroads in this area, creating opportunities for the two countries to work together in order to develop ‘smart aging’ solutions.
Infrastructure Finance
Both the UK and Australia have strong skills in innovative infrastructure financing. Australia’s pension funds have pioneered the way in investing in infrastructure and Australia’s Asset Recycling Initiative is a new approach to financing new infrastructure while simultaneously driving investment into existing infrastructure. The UK has world-class business and professional services capabilities, providing urban development financing, real estate and project management skills. The UK is also a pioneer of the Public-Private Partnership model, which Australia has used extremely successfully. Together the two countries could develop further innovative infrastructure financing approaches.
Sustainable funding sources and diversified business models
Like many other countries, the UK and Australia are struggling to implement and sustain innovative smart city solutions past initial demonstrator or pilot stages which typically involve public sector subsidies or grants. The two countries together could explore innovative ways to secure sustainable funding and diversified business models for smart cities projects.
Green design and building
Both the UK and Australia have capabilities in green design and building. The UK has pioneered the BREEAM sustainability rating system while Australia has created its own Green Star system. These systems are both used internationally and have different strengths and weaknesses. There may be an opportunity to collaborate to improve both systems and incorporate new approaches into them.
Table 2
16 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Melbourne
17 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Partnerships with national science, research
and innovation agencies: One seemingly
‘easy’ way to access the Australian market
is to partner with some of the nation’s
leading R&I bodies active in various sectors.
These organisations often bring partners
together to respond to particular challenges
or areas of research. Some of the key
organisations include:
a) Innovative Manufacturing Cooperative
Research Centre (IMCRC): The AUD 40m
IMCRC aims to bring industry together
with world-leading research capability.
Through the development and application
of new materials, systems and technologies,
the IMCRC will create new products,
processes and business models. The
IMCRC is working closely with the Advanced
Manufacturing Growth Centre to ensure
an integrated approach to overcoming
challenges and developing market
opportunities for local businesses.ix
b) Commonwealth Scientific and Industrial
Research Organisation (CSIRO)xi:
Australia’s national science agency and one
of the largest and most diverse research
agencies in the world. It has more than
1,800 registered patents, making it the
country’s largest patent holder, and has
already resulted in more than 150 spin-off
companies. Using several dollar-matched
funding schemes, it helps Australian start-
ups and SMEs find the right research
expertise and capabilities to develop
new products, improve processes and
increase their competitive advantage.x
c) SMART Infrastructure Facility: The SMART
Infrastructure Facility at the University of
Wollongong is an international leader in
applied infrastructure research.
SMART, which stands for Simulation,
Modelling, Analysis, Research and
Teaching, brings together experts from
the areas of transport, water, energy,
economics and data analytics and
provides a state-of-the-art facility to
support collaborative research.
d) Australian Housing and Urban Research
Institute (AHURI): A national independent
research network which aims to deliver
high quality research on the Australian
housing and urban environment sectors,
as well as engaging and influencing policy
development in these areas. It is funded
in part by government and universities
and makes up the remainder of its funding
needs from professional services contracts.
e) Australian Urban Research Infrastructure
Network (AURIN): An online platform for
accessing, analysing and visualising urban
research data. Funded by the Australian
government, the AUD 28m AURIN initiative
is building the e-research infrastructure
to help understand and analyse Australia’s
urban areas. The network is led by the
University of Melbourne along with more
than 60 institutions and data providers
across the country.
f ) Industry Growth Centres: Australia has
established six Industry Growth Centres
to drive innovation, productivity and
competitiveness and help Australia
transition into smart, high value and export
focused industries. Each Growth Centre
engages with international markets and
accesses global supply chains, as well
as creating national and international
collaborative opportunities. They are a
18 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
key source of knowledge and network
opportunities in each industry sector.
The six Growth Centres include: Food
and Agribusiness, Mining Equipment,
Technology and Services, Advanced
Manufacturing, Medical Technologies
and Pharmaceuticals, Oil, Gas and
Energy Resources and Cyber Security
g) Cooperative Research Centres (CRCs):
The CRC Program is administered
by AusIndustry, a division within the
Department of Industry, Innovation
and Science. The Program aims to
promote high quality research to solve
industry-identified problems through
industry-led and outcome-focused
collaborative research partnerships
between industry entities and research
organisations. The CRC Program
contains two funding streams:
• Medium to long term industry-led
collaborative research
• Short term, industry-led collaborative
research CRC Projects (CRC-Ps)
h) The Australian Research Council
(ARC): As Australia’s primary funding
agency for research grants, the ARC
provides an array of opportunities
to support international research
collaboration across most disciplines.
All ARC funding schemes are open
to international researchers, but
applications are required to be made
through an eligible Australian institution.
The ARC’s funding schemes include
support for fundamental research,
fellowships and collaborative
research with industry, government
and the community.
l Partnerships with Universities: UK
already enjoys a robust university to
university collaboration ecosystem with
Australia. There are currently around 500
agreements between Australian and UK
universities and over 6,000 joint research
publications are produced annually.xii All
of Australia’s 42 universities engage in
research and several of them have
campuses in other countries. Strengthening
research connections is a specific objective
for most of these universities. UK SMEs
could either draw on existing UK-Australia
academia R&I relationships or partner,
where possible, directly with R&I programmes
of Australian universities.
Melbourne
19 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Figure 1: Australia Business Expenditure on R&D (BERD), Top 10 Industriesxiii
Industry
Manufacturing
Professional, Scientific and Technical Services
Financial and Insurance Services
Mining
Wholesale trade
Information Media and Telecommunications
Construction
Administrative and Support Services
Electricity, Gas, Water, and Waste Services
Agriculture, Forestry and Fishing
0 1.000 2.000 3.000 4.000 5.000
2013-142015-16
Industry
NSW
Vic.
Qld
SA
WA
Tas.
NT
ACT
Overseas
0 1.000 2.000 3.000 4.000 5.000 6.000 7.000
2013-142015-16
Figure 2: Australia: Business Expenditure on R&D, by Locationxiv
(a) Ranked by 2015-16 BERD
Source: Australian Bureau of Statistics
20 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Partnerships with Local Businesses:
Businesses account for the highest
proportion of research expenditure in
Australia. Australia has world leading
innovative companies in areas such as
clean energy, finance, and agriculture.
Australia also has a strong home-grown
tech sector, with start-ups and entrepreneurs
being a large contributor to new jobs and
innovation in Australia. The Australian
Government supports business innovation
through the Research and Development Tax
Incentive, which provides a wide range of
market driven assistance for all industries.
UK SMEs have opportunities to collaborate
with Australian companies or enter into joint
ventures to complement and further enhance
their innovative offerings and capabilities.
The Australian government also recommends
Austrade, Australia’s trade and investment
commission, as a first point-of-contact for
international organisations seeking to
build partnerships and invest in Australia’s
innovative businesses.
Recommendations for SMEs – Better Access to Opportunities
l Link and Monitor Bodies in Australia
to Explore Opportunities for SMEs:
CSIRO, for instance, could be a good
potential partner and offer practical
insights, assist in finding Australian
partners as well as provide networking
opportunities to UK SMEs.
UK bodies in Australia, such as the Australian
British Chamber of Commerce, could enable
UK SMEs to obtain a foothold through major
industry conferences and publications either
by providing sponsorships or publicity through
its own physical and online platforms.
l Showcase Unique UK Capabilities and
Proven Expertise: Given Australia’s own
growing capabilities in the Advanced Urban
Services (AUS) domain, the Australian
government may be less accessible to
foreign entities competing with its home-
grown businesses. Hence, it may be beneficial
to offer R&I capabilities and expertise that
currently are not available within Australia’s
domestic markets. The Chamber, through its
membership-based model, supports bilateral
trade by providing networking opportunities
for businesses.
A recent report by KPMG xv particularly draws
out UK’s expertise in smart city standards as
an area that can be leveraged by Australian
cities. These include the British Standards
Institute’s PAS 181 Smart city framework,
TM Forum’s digital maturity model and
collaborative working groups, and Hypercat’s
standard for a secure and interoperable
IoT for cities.
The UK also enjoys the specific advantage
of having piloted a number of advanced
urban solutions in its own cities, while
Australia has only recently embarked on
its Smart Cities Plan.
l Missions and Programmes Tailored to
Australian Cities’ Needs: Australia has
already demonstrated its trust in UK capabilities
by adopting the concept of ‘City Deals’ based
on the UK’s own City Deals policy.xvi xvii
21 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Sydney
22 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Joining IUK missions and DIT trade missions
can accelerate the integration of SMEs with
the Australian ecosystem as well as creating
synergies with local businesses/entities.
l Identify Partnership Areas Based on
Sustainable Development Goals (SDG): In
the case of Australia, the key goals recommended
to be embedded into bilateral agreements
both at a government and at a private/industry
level include:
• Goal 6 – Clean Water and Sanitation:
Ensure availability and sustainable
management of water and sanitation
for all
• Goal 7 – Ensure access to affordable, reliable,
sustainable and modern energy for all
• Goal 11 – Sustainable Cities and Communities
Make cities and human settlements inclusive,
safe, resilient and sustainable
• Goal 13 – Climate Action Take urgent action
to combat climate change and its impacts*
UK COMPANY SECTOR EXAMPLES OF PROJECTS IN AUSTRALIA
Turner & TownsendProject management and consultancy in the real estate, infrastructure and natural resources sectors
High-profile projects include expansion programs at Brisbane International and Domestic Airports, Sydney Metro Northwest Rail, the 298-bed tertiary-level Perth Children’s Hospital and The Jewel, an iconic AUD1b three-tower mixed-use development on the Gold Coast.
John McAslan + Partners Architecture and DesignOne of the two architectural partners delivering the Sydney Metro upgrade to Central Station, a key component of Australia’s largest public transport project.
BT Australasia Telecommunication Infrastructure
BT in Australasia is part of BT Global Services, a global leader in managed networked IT services, serving the needs of more than 6,500 large corporate and public-sector customers worldwide. BT has been operating in Australia for 30 years, employing over 250 people across Sydney, Melbourne and Perth.
ARUP Engineering and ConsultingSydney CBD and South East Light Rail, Port of Melbourne Webb Dock Redevelopment; Cost-benefit assessment called Smart Grid, Smart City
Table 3
Source: Brody Hannan, FCO Blogs, August 2017
1.2 CHINA
OverviewOver the past two decades, China’s urbanisation
rate has increased dramatically, rising from 31%
in 1995 to 55.6% in 2015, resulting in over
700 million people living in cities.xviii This trend
is set to continue with the National New-type
Urbanisation Plan (2014-2020), the country’s first
official plan for urbanisation, stating that the number
of permanent urban residents will reach 60% of the
population by 2020. This will require the urbanisation
of a further 100 million individuals in 5 years.xix
This rapid urbanisation represents a huge
challenge for national, provincial and local
government and is driving China to speed up
the process of transforming its cities so they
can cater to the growing needs stemming from
the rapid urbanisation.xx
23 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Shanghai
Shanghai
24 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
In response to this rural-urban shift, China’s
smart cities market has grown rapidly and is
predicted to be worth USD 4.6bn by 2025.xxi
The emphasis of smart city transformation in China
is largely focused on reforming, renewing and
targeting investment at existing cities, rather than
building new cities from scratch. However, there
are some notable exceptions to this such as the
establishment of Xiongan New Area in April
2017. In general, greater progress has been
made in first and second tier cities in eastern
and central China due to their higher level of
economic development and more advanced
use of information technology. Transforming the
less economically developed cities of western
China has proven more challenging but ongoing
developments and investment programmes
promise the region’s development expansion
into sophisticated urban clusters.
China’s strong government investment programme,
the largest ICT market globally with over 160 cities
of over 1 million inhabitants offers huge potential
for bilateral and multilateral R&I partnerships. The
country’s R&D spending has grown 20% per year
since 1999 and now accounts for roughly 2% of
GDP. This investment is propelling China up the
Global Innovation Index rankings, transforming
the traditionally low-cost, quantity-driven
manufacturing economy into a quality-
focused technology innovation powerhouse.
Public Sector Initiatives Supporting R&I
China takes a top-down approach to initiating
and promoting urban development with a
number of national government departments,
as well as city and local governments cooperating
to accelerate the sector. The government has
recently introduced a number of guidance
notes which aim to steer the country’s
urbanisation onto a human-centred and
environment-friendly path. A number of
ongoing national-level plans and ambitious
initiatives entail substantial collaborative
R&I opportunities in the country.
The National New-Type Urbanisation Plan (2014-2020) describes the desired direction
of smart cities in China highlighting the need
for wideband networks, digitised management,
intelligent infrastructure, convenient public
services, modern industry and fine governance.
Notifications include the ‘Notice to speed up
the project implementation of smart cities’
and ‘Guidance on promoting the sustainable
development of smart cities.’
Furthermore, China’s 13th Five-Year Plan (2016-2020) aims to optimise urban spaces
in China through public transportation, high-
capacity infrastructure, mixed-use development
and green city planning. Under the plan, China
aims to invest heavily in science and technology
and boost science spending by 9.1% this year to
c. US$41bn.xxii The plan also provides a list of
priority research areas for its plans. These
include quantum communications and
computations and big data applications.
China’s ‘Made in China 2025’ strategyxiii , a roadmap released by the State Council in
2015 to guide the country’s advanced industrial
manufacturing, has seen steady progress
in industrial capability, smart manufacturing,
innovation, as well as product quality and
branding. The strategy encourages investment
into ten strategic industries. One of these is
“New Information Technology”, that relates
to innovative technologies and solutions. UK
SMEs have the opportunity to tailor their
offerings that speak to this strategy.
25 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
In addition to these, China’s ambitious Greater Bay Area scheme that aims to link the cities of – Hong
Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan,
Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing
– into an integrated economic and business hub,
promises a number of opportunities for UK businesses in
sectors such as infrastructure, advanced manufacturing,
transport and professional services.xxiv Two of the seven
key cooperation areas in the Framework Agreement for
the Greater Bay Area focus on developing the area into
a global technology and innovation hub and building a
modern system of industries, reflecting the plethora of
opportunities it presents for R&I in the region.xxv
Similarly, China’s Belt and Road Initiative, proposed by
the Chinese government to connect China to other Asian
nations, Europe and beyond has resulted in a number
of large infrastructure projects. While major transport
infrastructure projects tend to be awarded to Chinese
contractors xxvi, there is potential for UK SMEs to win,
smaller, more advanced technology projects, arising
from the initiative.
Other Supporting Factors for UK SMEs Entry
l The UK-China Joint Strategy for Science, Technology
and Innovation Cooperation, signed in December 2017
xxvii outlines a new commitment for both nations to
catalyse science and innovation collaboration. This
strategy is built on top of ongoing UK China Research
and Innovation Partnership Fund (channelled through
the Newton Fund in the UK). Some of the principles
outlined by the strategy include effective protection
of IP for all stakeholders, project-focused bilateral
cooperation3 and open access to non-proprietary data.
l Our interviews with experts based in China indicate
that China is keen to encourage
3 Priority areas of common interest to be identified for a focused approach
foreign investment into non-sensitive industrial
sectors. This includes most of the smart city
and urban services domain including ICT,
urban planning, architecture and construction
services. The Chinese Ministry of Commerce
publishes a handbook of different industries
in which FDI is encouraged. Overseas
companies working in these industries
wanting to set up in China stand to receive
favourable tax incentives, cheaper land costs
and simplified approval procedures.
l According to a study by European
Commissionxxviii, China has improved access to
its own
R&I funding programmes – for instance,
China’s National Key R&D Programme (NKP)
now encourages joint research by Chinese
and foreign applicants. In January 2017, the
Chinese Department of International
Cooperation introduced a new section of
projects on international scientific and
technological cooperation under the NKP.
l Ongoing efforts to tackle issues pertaining
to growing urbanisation, poor air quality and
climate change have led to a strong demand
for technology solutions adapted to Chinese
needs, mostly in energy, transport, water
and recycling.
l UK’s existing bilateral relationships,
complemented by ongoing efforts to create
long-standing relationships with Chinese
counterparts, provide a strong platform for
UK SMEs. The Future Cities Catapult, supported
by IUK, has cultivated a strong relationship
with the UK Embassy in Beijing, who see us as
a trusted partner and gateway to urban
innovation in the UK
26 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Some of the existing relationships between
Chinese and British cities include:
• Guangzhou: Established partnership with
Bristol city and strong links with FCO Beijing
• Shanghai: Long-standing partnership with
Liverpool city
• Wuhan: Established partnership with
Manchester city, UK engineering firm Arup
and Chinese IT firm Digital China
• Other established UK and Chinese cities
partnerships include: Birmingham and Nanjing,
Leeds and Hangzhou, Sunderland and Harbin,
Newcastle-upon-Tyne and Taiyuan, Nottingham
and Ningbo, Belfast and Heifei, Sheffield and
Chengdu, and Milton Keynes and Jinjiang
Barriers to Market Entry for UK SMEs
l High Competition from Other Global SMEs:
There is strong competition in the Chinese
urban services, infrastructure and technology
sector, with the following countries presenting
compelling offers:
• USA: US companies have excellent
capabilities in the areas of urban transport,
networking technologies, cloud computing,
big data, cyber security and smart grids.
In 2016, the US Department of Commerce
identified the ‘urban sector’ as a critical area
for future export opportunities.
• Nordics: The Nordic nations have
significant capabilities in the smart city
sector and are spearheading the UN’s
New Urban Agenda. Sweden is home to
three of Europe’s ten largest architects,
while Danish consulting engineering firms
generate nearly £3bn in revenue from
global activities, especially in urban
buildings and infrastructure.
• Singapore: Singapore’s expertise in
smart cities, urban planning and water
management makes its firms highly sought
after across the Asia-Pacific
• France: France is aiming to export
its expertise in areas such as 3D
design, urban cleantech, engineering
consultancy, waste management and
traffic management.
• Korea: Korean firms are highly popular
in the areas of Intelligent Transportation
Systems, GIS and low-energy housing
• Others: Japan, Germany, Australia and
Spain have all allocated resources in
order to help their firms become leaders
in advanced urban services
Despite this competition, the UK’s world-leading
status in urban innovation, its specialisms in
niche, advanced areas and its efforts to create
long-standing relationships with China should
help stand out from the competition.
l Growing Domestic Competition: China’s
rapidly maturing domestic competition and
technological capabilities, arguably, present
the most significant challenge to overseas
entities. Chinese firms have become adept
at mastering technologies and offering
solutions at lower prices, thus making it
more difficult for international firms to
compete. Through its five-year plans, the
Chinese government has made major
financial commitment to grow its own
innovation capabilities within the next few
27 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
years. However, this potentially could
mean additional collaboration opportunities
for UK SMEs aimed at helping China build
its capabilities.
l Cultural and Linguistic Barriers: Our
survey found that SMEs often have to
bear high, recurrent translation costs
when looking to work in China. UK SMEs
also tend to find Chinese business culture
complex and are often required to be
patient to build up trust and networks
within Chinese R&I and business
ecosystem. The right local Chinese
partners can help to navigate
the complexity of the market and also
the cultural and language barriers.
l Intellectual Property Environment:
China has a reputation for having limited
IP protection. This is also reflected through
our survey of UK SMEs, which revealed
that ‘IP protection costs are too high in
China, and UK SMEs need funding to
address this’.
“Our potential German customers are
owned by Chinese companies and our
concern is about our equipment being
copied after installation in China.” –
Survey Respondent
“In China there is a strong possibility
that a local partner, even at the level
of a joint venture, might be necessary
so IP is certainly an important topic.
The IP situation in China is much
improved however local knowledge
and support would be very welcome.”
– Survey Respondent
However, IP regulation and enforcement
is improving in China. There is support
available from a number of sources e.g.
through China-Britain Business Council
(CBBC) or the British Embassy) to help
companies with their IP strategy in
China. China has also made some
encouraging recent policy moves such as
the loosening of JV ownership restrictions
for foreign automakers.
l Unfamiliar Regulatory Environment: UK
SMEs have limited access to relevant
regulatory information and face difficulty
in understanding the regulatory
environment in China. There are often
faced with lengthy administrative
procedures. Moreover, there are regional
differences regarding the implementation
of national policies due to the autonomy
of local government. Often, they do not
have the resources and expertise to
effectively deal with high volume of
administration work.
l Hard to Access Public Sector: UK SMEs
have also reported that they find it difficult
to navigate through China’s governance
structure, or to access government officials,
infrastructure and data.
“China does everything by the rules handed
down from the top. There is a rule for
everything. The width of roads, everything.
That is how they have developed so fast,
by being totally prescriptive. We wanted to
change the rules in Dongtan, to do everything
different. But when it comes to it, China
cannot deliver that,” – Peter Head, Arup’s
Project Manager, 2009
28 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Inadequate Understanding on UK offerings:
Identified by several reports, a key challenge
for UK is that Chinese counterparts find it hard
to fully comprehend the UK value proposition,
as our offering is often more ‘intangible’ than
a hard technology offering. The ‘softer skills’
offered by the UK, such as planning, financing,
architecture and evaluation, are more difficult to
sell without strong foundational relationships,
brand recognition and demonstrated value. In
recognition of this, effort should be made to
clarify the UK’s urban innovation and smart city
offering in order to ensure value is conveyed.
l Marketing and Sales Challenges:
UK SMEs often find undertaking marketing and
sales challenging in
China, particularly when they do not
have a physical presence in the country.
l Other major challenges to doing business
in China includexxix:
• Large parts of the economy are still
closed to full foreign participation
• Anti-monopoly legislation exists in
relation to foreign firms
• Competition from well-resourced
and positioned State-Owned Enterprises
(SOEs)
• Local subsidisation in the form of
non-tariff barriers and practises that favour
domestic firms under the cover of policies
promoting ‘indigenous innovation’
Shanghai
29 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Potential Partnership Areas – Where do the Opportunities Lie?‘CONNECT’ OPPORTUNITIES: R&D WITH AN AIM TO PROVIDE A GATEWAY TO COMMERCIAL BUSINESS
OPPORTUNITY DESCRIPTION AND REASONING
Spatial Planning
The UK has a well-established land-use and planning system. Recently, the UK’s focus has moved to planning at an urban scale to address a more fundamental agenda. Specific specialisms including: urban and regional development, master planning and urban design, urban regeneration, heritage and conservation, environmental assessment and sustainable development. China’s cities are growing rapidly and could benefit from the UK’s world leading expertise in these areas.
Integrated ‘City Systems’ Approach
UK businesses and cities have a strong appreciation for the complexity of cities and the sheer number of elements that interact with each other. The UK is a leader in using an integrated ‘city systems’ approach to urban challenges which will be valuable to a rapidly urbanising country like China.
Service Design and Citizen Engagement
Smart city development in China is extremely top-down and is led by technology and infrastructure. Social and human dimensions have historically been ignored. The UK has expertise in citizen engagement methods, with many design-led businesses creating innovations to promote public engagement with respect to urban development. The UK could offer knowledge and services around combining social and digital capabilities to deliver services to citizens in a more integrated way.
Smart City Standards
Capabilities in regulatory and standards development has placed the UK at the forefront of developing new standards for green building, smart cities, open data, urban design, public service delivery and community governance. China is only just beginning to develop and adopt standards in these areas, therefore the UK could offer knowledge and services concerning smart city standards, particularly in areas related to urban planning, management and leadership rather than technical standards.
Open Data The UK could offer knowledge and good practices related to open data, such as what and how data could be made available and accessible to researchers and the public, appropriate levels of openness, existing legal and regulatory frameworks for ensuring data security and privacy, licensing, terms and conditions of access, etc.
Sustainability, Green Building and Retrofitting
UK is a leader in sustainability and green building, having pioneered the BREEAM assessment method. China has is the world’s largest consumer of energy and has a need to improve its energy to productivity ratio as well as cut emissions as part of the Paris Agreement.
Intelligent Transport and Mobility
The UK is a leader in innovation around intelligent transport systems, particularly in the areas of real-time monitoring, transferring and analysing, traffic management service, systems integration and the internet of cars. The Transport Systems Catapult is also helping to advance UK innovation in this space. China is home to 18 of the world’s 50 most congested cities therefore is in dire need of solutions in this area.
Pollution and Remediation
The UK has a diverse range of contamination problems and sites, and due to a scarcity of available development land, has needed to clean-up and regenerate contaminated land. This has led to the growth of niche specialist consultancies, technology provides, contractors and equipment suppliers. China has significant pollution and contamination problems that could be improved using UK expertise.
End to end project selection, management and evaluation
While China excels in building large infrastructure projects, studies have found that the costs of these projects often exceed the benefits they generate, meaning that projects destroy economic value instead of generating it. Focus is often placed on construction rather than the ability to manage and operate in an effective manner. The study also found that infrastructure construction costs in China are on average 30.6% higher than estimated. China is in need to expertise around how to select, plan and design projects that will deliver economic value, as well as how to monitor and measure a project from the initial top-level planning, through to execution and final operation. The UK is strong in these areas.
Table 4
The areas below have been identified by
aligning UK commercial and innovation
strengths with challenges faced by Chinese
cities that are currently unmet by the
domestic market.
30 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Hong Kong
31 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
OPPORTUNITY DESCRIPTION AND REASONING
Sustainable funding sources and diversified business models
Like many other countries, the UK and China are both struggling to sustain innovative smart city solutions past initial demonstrator or pilot stages. The two countries together could explore innovative ways to secure sustainable funding and diversified business models for smart cities projects.
Ageing Population
Aging populations in both China and the UK are creating challenges in terms of design of cities and services, and also healthcare challenges. The UK’s smart healthcare sector is predicted to grow rapidly in coming years and the Chinese government’s National Health Service Plan 2015-2020 aims to integrate the internet into the healthcare sectors. Therefore, there are huge opportunities to collaborate on designing and testing solutions in this area.
Resilience of Cities (Flooding)
Over 600 cities in China are ‘prone to flooding’ and the country incurs the highest losses globally. This is leading China to invest heavily in this area. Some regions of the UK are also prone to flooding, therefore as Chinese progress their research and development and create innovative solutions, opportunities may arise for the UK to learn best practice and adapt solutions for the UK market.
Air Quality 7 of the 10 most air polluted cities in the world are in China. The UK is also has strict air quality targets to meet, therefore this is an area where the two countries could work together and share knowledge in order to meet their targets.
Technology and InstrumentationChina is a world leader in the development of information, communication and networking technologies and has plans to become a leader in robotics, railways and electric vehicles. These plans are backed by huge investments. Therefore, the UK could benefit from sharing knowledge in these areas.
Innovation Methodologies
China lags behind leading economies in terms of more complex science-based and engineering-based innovation methods and struggles to convert its R&D innovation investment into impact. Conversely the UK has a considerably smaller R&D expenditure but punches above its weight in terms of impact, excelling in these complex forms of innovation. The UK could share some innovation approaches and techniques with China.
Table 5
‘FUND’ OPPORTUNITIES: R&D TO FACILITATE KNOWLEDGE TRANSFER AND LEARNING
The areas below have been selected by
identifying mutual challenges faced by the UK
and China that are currently not solved
by either domestic market or they are areas
where both countries have complimentary skills
which could be brought together to better solve
a particular urban challenge.
32 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Routes to Market – How can UK SMEs Access these Opportunities? l Partnerships with existing UK organisations
in China: A number of UK companies or multi-
national companies with a strong presence
in the UK are well-established in China.
These companies offer the potential to act as
‘gateways’ to UK SMEs within the realm of R&I.
Using BRE China as a Gateway: UK-based,
world leading building science centre and
the authority on various built environment
aspects, BRE provides research, advice,
training, testing, certification and standards
for both public and private sector organisations
around the world. In 2016, BRE established
its physical presence in China to provide the
base for collaborating on a number of areas
including standards, research and professional
training. BRE is a key example of UK-based,
well-established R&I bodies in China that
could act as gateways for further R&I
collaborations between UK and China.
“BRE China aims to certify over 1,000 buildings
across China to its standards which will generate
£10m income and could create up to £200m of
work for UK supply chain companies.” – UK’s
Department for Business Innovation and
Skills (BIS), May 2014xxxi
l Participating in key Chinese S&T programmes:
The Chinese government encourages Foreign
Invested Enterprises (FIEs)4 to offer their expertise
and establish R&D centres in China, as well
as partner with Chinese research institutions
participating in key S&T programmes, such as the
National High-Tech Research and Development
Programme and National Basic Research
Programme.xxxii European companies have been
participating in China’s R&I initiatives through
licensing agreements with Chinese partners
and R&I investments.
4 FIE is a common method of creating an operation in Asian
countries, especially in China. In China, any one of a number
of legal entities can be considered FIEs including equity joint
ventures (EJV), cooperative joint ventures (CJV), wholly-owned
foreign enterprises (WFOE) and foreign-invested companies
limited by shares (FCLS).
EXAMPLES OF UK COMPANIES IN CHINA
UK Company Sector Key Projects in China
Mott MacDonald Engineering and ConsultingRecently signed collaboration and framework agreements with China Gezhouba International Engineering Corporation.
Holmes Miller Architects Architecture
Recently awarded the Huafa West Headquarters project, having successfully secured the commission through an international competition.
ARUP Engineering and ConsultingArup has completed many projects in China, such as Nokia China Campus, Changxindian, Beijing's first sustainable community.
ATKINS Engineering and ConsultingRegeneration masterplan in Jiangxi, China, High-speed rail development in Shangrao xxx.
Table 6
33 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
FIEs which invest in a joint venture (JV) and share
their technology with a Chinese State-Owned
Enterprises (SOE) are granted privileged access
to the Chinese domestic market and such JV
companies enjoy priorities in receiving loans
from domestic financial institutions and obtain
tax incentives and favourable tariff schemes.
In addition, the government also offers a series
of incentives to foreign-invested R&D centres,
and such incentives include exemptions of
customs duties on imported equipment,
business and income tax deductions.
l Partnering in Private Sector, Global Scale R&I
Initiatives: With a growing number of global
companies establishing their R&D centres in China,
and launching initiatives open to external partners,
there is an opportunity for UK SMEs to use these
initiatives as gateways to the Chinese ecosystem.
For instance, Alibaba Group, the Chinese tech giant,
recently announced its plan to invest more than
$15bn over the next three years into a global R&D
initiative called Alibaba DAMO Academy. One of the
aims of the initiative includes strengthening global
technological collaborations. There is currently strong
collaboration between Alibaba’s researchers with
American university programs such as U.C. Berkeley’s
RISE Lab, which is developing technologies that
enable computers to make secure decisions based
on real-time data.xxxiii
l JVs with Local Chinese Businesses: Despite
China’s slowing economy and recent scrutiny of
foreign companies, forming business partnerships
through JVs remains an attractive way to get
access to Chinese markets as they are less risky,
less costly and sometimes the only alternative.
In a recent survey by PwC, 76% of foreign
respondents and 70% of Chinese respondents
responded that they are planning on entering
into a business partnership in China. xxxiv
Recommendations for SMEs – Better Access to OpportunitiesFACILITATING ROUTES TO MARKET FOR SMEs:
l Tap into existing large or well-established
UK companies: UK SMEs have the
opportunity to tap into existing large or
well-established UK companies in China
to identify potential for R&I collaboration.
Attendance at thematic workshops
or networking events organised either
by IUK or DIT may highlight these
synergies between these companies
and UK SMEs looking to partner in China
l UK bodies active in China: It is also
recommended that SMEs link with UK bodies
active in China such as DIT, British Chambers
of Commerce in China, BRE, and also UK
academia with a strong, collaborative R&I
foothold in China.xxxiv
l The China-Britain Business Council (CBBC),
for instance, works in a strategic partnership
with the British Chamber of Commerce
in China to deliver streamlined services
to its members.
The Council’s SME programme with its
annual SME Forum event aims to enable
SMEs to come together and share practical
advice and support. It also hosts smaller
roundtables addressing practical issues
like registering IP, managing a business
in China and cultural briefings on specific
areas of business. The council also provides
a dedicated SME resource with guides such
as the China Business Handbook 2017/18xxxv
and reports for SMEs on the practicalities
of doing business in China.xxxvi
34 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Make use of common research facilities and
infrastructure: The ‘Evolution of China’s Innovation
Performance’ study by European Commission
indicates that sharing of research facilities
and infrastructure helps to grow contacts with
the Chinese research community, increasing
opportunities for collaboration.
l Establish collaborative R&I partnerships in
China with other overseas ‘experts’: “Recognise
that some companies have far more expertise
in overseas countries than they do and take
advantage of their expertise.” – Survey Respondent, February 2018
For instance, the Germans do very well in China. Latest
figures show they export more than four times the
goods of the British ($86.1bn vs $18.8bn).5 The Germans
have a much larger on the ground presence than UK.
They also have an economy that is heavily aligned to
China’s due to manufacturing focus. UK SMEs could
expand their horizons by forming partnerships with
German enterprises that are already established or
looking to establish partnerships in China.
l Prioritise Sustainable Development Goals (SDGs):
In the case of China, the key goals recommended
to be embedded into bilateral agreements both at a
government and at a private / industry level include:
• Goal 3 – Ensure healthy lives and promote
well-being for all at all ages
• Goal 7 – Ensure access to affordable, reliable,
sustainable and modern energy for all
• Goal 9 – Build resilient infrastructure, promote
inclusive and sustainable industrialization and
foster innovation
5 Data from UN COMTRADE https://comtrade.un.org/
• Goal 11 – Sustainable Cities and Communities:
make cities and human settlements inclusive,
safe, resilient and sustainable
• Goal 13 – Climate Action: take urgent action
to combat climate change and its impacts
l Cities to Focus in China6: Over the last decade,
inland cities have sought to “catch up” with the
coastal cities, supported by government policies
and increased domestic consumption. Whilst the
coastal cities remain important places to invest,
inland cities such as Chongqing, Chengdu and
Wuhan have become increasingly important.
These cities have all seen very high levels
of growth and FDI in recent years and have
demonstrated good initial interest in the UK’s offer.
1.3 INDIA
OverviewDespite rapid urbanisation over the last 50 years,
India remains one of the less urbanised countries
globally with only about 33% of the population
living in urban agglomerations or towns (World
Bank, 2016). However, in terms of sheer size of
its urban population – 438.8 million as of 2016 –
the country stands next only to China. xxxvii
India is also home to five of the world’s 31 megacities
in Delhi, Mumbai, Kolkata, Bangalore and Chennai
which have populations of 26.5 million, 21.4 million,
15 million, 10.5 million and
10 million respectively. xxxviii
6 Not an exhaustive list of recommended cities. This list may vary
from the list derived from City Typologies analysis in Chapter 2
35 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Furthermore, according to the 2011 census,
there were 27 cities in India with populations over
1 million, and the number of urban agglomerations
with populations of 1 million or more increased from
35 to 53 since the 2001 census. In this census, the
most urbanised states were Tamil Nadu (48.45%),
Kerala (47.72%) and Maharashtra (45.23%).
With the population of India expected to exceed
that of China by 2050 and rapid urbanisation
expected to continue, India faces one of the
biggest urbanisation challenges in the world. While
under 30% of the population currently live in cities,
some 300 million people – almost equivalent to
the population of the US – are expected to arrive
in cities by 2050. This equates to more than 60%
of India’s population. This forecasted exponential
increase in urban migration has resulted in the
Indian government calling for 100 new cities to
be built over the period.3
Undoubtedly urbanisation in India has been an
invaluable instrument of economic, social and
political progress, however, the magnitude of
the urban population coupled with the
unplanned growth of urban areas and a lack
of adequate infrastructure has led to serious
socio-economic problems. Public services and
utilities such as housing, sanitation, transport,
water, electricity, health and education are all
buckling under the strain of increasing population
and insufficient investment.
This investment situation is changing. In 2015,
the Prime Minister Modi launched the Smart Cities
Mission, an ambitious multi-year programme
aiming to create 100 smart cities across India,
backed by a central government budget of
INR 48,000 crore (US$ 7.2bn). xxxix Under this
programme, cities are actively encouraged to
seek support from both national and international
private sector organisations.
The UK is well placed to support India in its urban
development journey having already built a strong
bilateral relationship. In 2014, the UK exported
goods worth £6.35bn and services valued at
£2.24bn to India. The UK is also the third largest
investor in India. xl
The Indian smart city market is an attractive
proposition for the UK due to the large number
of cities, widespread appetite for innovation and
change and huge technical workforce. Furthermore,
the needs of India’s cities are well aligned to
areas of UK strengths, particularly in the areas of
planning, sustainability, standardisation, intelligent
transport and pollution remediation.
Public Sector Initiatives Supporting R&I
Suffering several acute urban challenges, India
has launched a number of high-profile initiatives
aiming to tackle urban challenges and catalyse
urban innovation. The most recent and most-widely
publicised of these is the 2015 Smart Cities Mission
launched by the Ministry of Urban Development.
MINISTRY OF HOUSING AND URBAN AFFAIRS (MOHUA)
Smart Cities Mission: Launched in 2015, the
Smart Cities Mission has gathered a vast
amount of national and international attention.
It is an urban renewal and retrofitting programme
targeting 100 cities across India, aiming to
accelerate core infrastructure improvements in
cities, provide a decent quality of life to citizens,
offer a clean and sustainable environment, and
readily apply ‘smart solutions’. The government
has highlighted a number of focus areas for this
programme including mobility, energy, public
safety, water, sanitation and citizen engagement.
36 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
37 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
While things have progressed slowly until now,
there are encouraging signs that India’s Smart City
Mission will generate opportunities for innovative
domestic and foreign SMEs. For further details on
the Mission, please refer to ‘India: Country
Overview and Innovation Ecosystems.’
l Smartnet: Smartnet is an initiative of the Ministry of
Housing and Urban Affairs to create a resource-rich
ecosystem of learning, sharing and disseminating for
city managers and primary stakeholders in the urban
transformation of India. It encourages Government to
Government, Government to Business and Business
to Government linkages for the urban sector in India
enabling transparent and structured interactions
between cities, businesses and institutions.xli
l Atal Mission for Rejuvenation and
Urban Transformation (AMRUT): In
2014, the newly elected government
discontinued the Jawaharlal Nehru
National Urban Renewal Mission
(JnNURM) and launched a new urban
investment programme with a total
investment outlay of INR 50,000 crore
(US$7.5bn). AMRUT has a similar purpose
to the JnNURM mission – to improve the
quality of life and local infrastructure of
its target cities – but is aimed towards a
wider geographic coverage (more than
500 cities) and gives urban local bodies
(ULBs) greater authority over the delivery
of individual projects.
Assam
Delhi
Gujarat
Punjab
Odisha
Maharashtra
Karnataka
Kerala
AndhraPradesh
TamilNadu
MadhyaPradesh
Smart City (rank)
Jaipur
Rajasthan3
Udaipur
16
New DelhiMunicipal Council12
Ludhiana
19
Ahmedabad
6
Indore
11
Pune
2
Surat
4
Solapur
9
Belagavi
15
Davangere
10
Chennai
18
Kochi
5
Bhopal
20
Jabalpur
7
Bhubaneshwar
1
Kalinada
14
Guwahati
17
Visakhapatnam8
Figure 3: India’s First 20 Smart Cities
38 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
INITIATIVES BY THE DEPARTMENT OF ELECTRONICS AND INFORMATION TECHNOLOGY
l Digital India: Digital India is a flagship programme
of the Department of Electronics and Information
Technology that aims to transform India into a
digitally empowered society and knowledge
economy. It has three main objectives:
l Centre of Excellence for IoT: As part of the
Digital India programme, the Government
has launched a Centre of Excellence for IoT
in Bangalore, which aims to enable the rapid
adoption of IoT technology, to foster a new
growth strategy and to empower India to become
a leader in the domain. The centre is a joint
venture by National Association of Software and
Services Companies (NASSCOM), Department
of Electronics & Information Technology and
the Education and Research Network (ERNET).
l National Innovation Foundation (NIF): Set up
in 2000, the National Innovation Foundation
is an autonomous body of the Department
of Science and Technology. The NIF aims to
help India become inventive, creative and a
global leader in sustainable technologies,
without social and economic handicaps
affecting the evolution and diffusion of green
grassroots innovations. To this end, NIF provides
institutional support in scouting, spawning,
sustaining and scaling up green innovations
while also building a network that links various
innovation ecosystem stakeholders and
enables knowledge sharing between them.
The Foundation provides a large number
of funds to enable and accelerate the
development of innovations such as the
Micro-Venture Innovation Fund (MVIF) and
the Grassroots Technological Innovations
Acquisition Fund (GTIAF).
l Startup India: is a flagship initiative of the
Government of India, intended to build a
strong eco-system for nurturing innovation and
start-ups in the country that will drive sustainable
economic growth and generate large scale
employment opportunities. Launched in 2016,
the programme aims to simplify the process for
establishing start-ups, promote bank financing
for start-up ventures, foster industry-academia
partnerships and provide incubation for early-
stage businesses. Key aspects of the programme
include INR 10,000 crore of funding, 80%
reduction in patent registration fees and
freedom from Capital Gain Tax for 3 years.
Supporting Factors for Market Entry for UK SMEs
l Improvement in Doing Business Rankings
and Government Reforms: The recent 30-place
jump made by India in the World Bank’s Ease
of Doing Business (EODB) rankings, from
130 to 100, is an encouraging piece of evidence
on improving conditions for businesses in
India. This, combined with Moody’s raising
of its global rating for India is compelling
evidence of positive changes taking place
within India’s business operating environment.xlii
The current government’s reforms including
greater co-operation between state and central
governments, introduction of Goods & Services
Tax (GST), fast-growing cities and programmes
such as ‘Digital India’ and ‘Make in India’ establish
India as a compelling market and investment
destination. In January 2016, French company
Airbus entered in a JV with Indian firm Mahindra
under Indo-French cooperation agreement to
manufacture helicopters within the Make in India
initiative – signifying the opportunities these
initiatives hold for international businesses. xliii
39 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Co-operative federalism with the centre will be
key in achieving India’s sustainable development
and competition between states is likely to bring
about greater efficiencies.
In 2013-14, 24 of India’s 29 states grew at rates
of more than 5.5%, with the wealthiest one,
Maharashtra (capital Mumbai), recording a growth
rate of 7.3%. Some of India’s states such as Bihar,
Madhya Pradesh, Meghalaya and Tripura recorded
growth rates over 9%. The next round of economic
growth will thus take place in India’s emerging states
and cities, with rapid development in rural areas.
l The urban challenges facing India are well aligned
to areas of UK strength. Within the realm of
urban infrastructure, Indian cities need better
roadways, transport and traffic management,
waste management and capacity building –
areas in which UK businesses enjoy world-l
eading reputation in.
l India is fast becoming ‘data-rich’ while developing
a ‘digital first’ economy. Initiatives such as
MeghRaj, the official Government of India
cloud, the use of Artificial Intelligence (AI) in
national security, and big data for Aadhaar, the
unique identification programme, show India’s
rapid leaps into future. As technology is being
harnessed to develop best-in-class digital
infrastructure and services for businesses and
citizens in India, it is clear that there are major
opportunities for UK (and Indian) companies
to invest in the digital revolution in India.xliv
l The UK already has an established R&D
partnership with India, with activities being driven
through a number of avenues. The Research
Councils UK, together with the Government of
India and third parties have invested over £200m
in co-funded research programmes since 2011.
This impressive portfolio of over 100 high-quality,
high-impact UK-India research projects places the
0
100
200
300
400
500
600
700
Urban Transport
Traffic Support
Infrastructure
Street Lighting
Water S
upply
Sew
erage
Storm W
ater Drains
Solid W
asteM
anagement
Total Investment for
eight major sectors
Other sectors
Renew
al and Redevelop-
ment including S
lums
Total investment in
urban infrastructure
Urban R
oads
Capacity B
uilding
282.5
73.5 16.3 3.3
52.331.0
39.2 8.2 506.350.6
67 16.3
640.2
44%
11% 3% 1%
8%6%
5% 1%8%
10% 3%
$375.6 billion (59%) $130.7 billion (20%)
Source: The Future of Urban Development & Services: Urban Development Recommendations for the Government of India
Figure 4: Urban infrastruture requirement:
40 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Mumbai
41 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
UK at the forefront of collaborative innovative
with India. xlv Further R&D funding has been
provided through the UK government’s
Prosperity and Newton Funds.
The Future Cities Catapult has also played
an integral role in developing relationships
with Indian cities by completing a number of
projects in the urban development domain:
• Prosperity Fund Project (Newtown
Kolkata): Supported New Town, Kolkata
to develop a smart city roadmap in
partnership with the Newtown Kolkata
Development Corporation.
• Prosperity Fund Project (Pune): Developed
an operational manual for a smart cities
hub for India, in partnership with the
MoUD and the National Institute for Urban
Affairs (NIUA).
• Prosperity Fund sponsored trade mission
to UK: Delivered a 1-week trade mission
for a delegation from Pune to London,
Bristol and Glasgow.
l Corporate Innovation Centres: India
ranks among the top 10 global locations for
corporate innovation centres thanks to a
highly skilled workforce coupled with relatively
low labour costs. Between March to October
2016, 9 new corporate innovation centres
were opened across India by large companies
including Apple, Airbus and Visa.xlvi Three
of these innovation centres were opened in
Bangalore, with Hyderabad, Jaipur and Pune
each seeing two centres open.
These corporate innovation centres signify
the growing technology and innovation
prowess of Indian cities.
l City-to-City Partnerships: In recent years,
several UK cities such as Manchester, Sheffield,
and Leicester have sought to build economic
partnerships with Indian cities that have a
sectoral and ecosystem alignment. This is
proving successful, with increased investments,
trade, joint ventures, and academic collaborations
being forged. More such city-to-city partnerships
will entail more opportunities for UK businesses
in Indian cities.
Barriers to Market Entry for UK SMEs
l Legal and Regulatory Challenges: In a series
of annual surveys by UKIBC xlvii, UK businesses
were asked to choose the issues that they
perceived as the major barriers to doing business
in India. ‘Legal and regulatory impediments’ was
identified as the top barrier in all the three years.
However, there was a decline in the %age of
respondents choosing this issue from 2016
(67%) to 2017 (63%).
l Corruption: Corruption continues to be
another major impediment for foreign
businesses looking to operate in India.
However, over the last three years, there has
been a considerable decline in the number of
companies that view ‘Corruption’ as a major
barrier – from 46% in 2016 to 34% in 2017. This
decline is a positive sign as it shows a major
improvement from both the previous years –
indicating that the current government’s efforts
to mitigate corruption appears to be delivering
some tangible and much-desired results.xlviii
Going through an established and transparent
government to government route, such as through
a bilateral agreement or joint fund e.g. Newton
Bhabha Fund, offers strong potential to overcome
challenges arising out of corruption in India.
42 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Local Competition and Preference to Local
Players: India hosts as many as an estimated
13 million Micro, Small and Medium Enterprises
(MSMEs) in India, with a vast number on MSMEs
specializing in advanced, innovative products
and services including healthcare IT and IT-enabled
services, education, logistics, and transport related
services.xlix Being local entities and often able to
offer their solutions at relatively lower costs, they
represent strong competition to SMEs from UK.
The threat from local competition is made further
acute by government’s preference to local players.
Often, decision-makers are unable to grant any
projects to foreign SMEs, if they do not have any
local partners or previous experience working in
India. This means finding local partners, which
ideally have substantial record of delivering
projects in India, is of utmost important to UK
SMEs looking to enter into Indian market.
l Competition from Other Global Leaders: India
and its Smart Cities Mission has garnered massive
attention from countries and businesses across the
globe, keen to enter and expand into Indian market.
In addition, UK faces strong competition from other
countries that can offer more attractive financing
terms for smart city projects. For example, Japan
is able to secure large-scale infrastructure projects
by offering below-market interest rates. This has
generated considerable positive press for high-
profile projects such as the high-speed rail project
between Delhi and Mumbai, proposed by the
Japanese government.
SpainIndia, Spain to sign MoU to develop Delhi into smart city. Spanish agencies will provide technical support
FranceFrance keen to invest in creation of smart cities in Nagpur and Himachal Pradesh in sectors like power and transport
JapanIndia and Japan signed MoU to develop Varanasi into a smart city
SingaporeSingapore building smart city in Andhra Pradesh India. 10 times bigger than itself along with providing training to officials of the state government
USIndia and the US agreed to develop Ajmer, Allahabad and Visakhapatnam as smart cities
GermanyGermany offering its assistance in developing three smart cities (names yet to be decided)
Source: Zinnov Management Consulting, April 2015
Figure 5
43 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Regional Differences in Political, Regulatory
and Economic Systems: In its current state,
the country consists of 29 different states and
7 union territories and business and economic
conditions vary significantly between them.
Power and decision-making are decentralised
in India, with differences at the state level in
political leadership, quality of governance,
regulations, taxation, labour relations and
education levels. For instance, Gujarat has
a relatively positive business climate that
has succeeded in attracting significant foreign
investment. West Bengal on the other hand,
has a much lower level of foreign-owned
business activity, but in response to competitive
pressure from other states, is implementing
state-level reforms to attract more investment.
“The application of “liberalisation” in India is not
uniform as certain measures are not percolating
down the system” – Richard Heald, CEO,
UKIBC, November 2017
l Regional Differences in Political, Regulatory
and Economic Systems: In its current state,
the country consists of 29 different states and
7 union territories and business and economic
conditions vary significantly between them.
Power and decision-making are decentralised
in India, with differences at the state level in
political leadership, quality of governance,
regulations, taxation, labour relations and
education levels. For instance, Gujarat has
a relatively positive business climate that has
succeeded in attracting significant foreign
investment. West Bengal on the other hand,
has a much lower level of foreign-owned
business activity, but in response to competitive
pressure from other states, is implementing
state-level reforms to attract more investment.l
“The application of “liberalisation” in India is
not uniform as certain measures are not
percolating down the system” – Richard
Heald, CEO, UKIBC, November 2017
New Delhi
44 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Source: Zinnov Management Consulting, April 2015
Figure 6: India: Smart City Key Stakeholders
Partnering with government to execute
smart city projects
Integrators: Provides unified and integration of multiple components E.g. IBM, Oracle, Accenture
Network Service Providers: Offers collaborative networks and data analysis. E.g. Cleoo, Verton
Product Vendors: Provides products that operate as main nodes of connectivity. E.g. Honeywell, Schneider Eldorado, Siemens
Managed Service Providers: Provides monitoring, management and consulting. E. g. IBM, Infoeye
Building smart cities in a
defined premise
Government forms bodies such as Special Purpose Vehicle,
local municipal corporations etc. to manage the implementation
of smart city projects
Taking initiatives to build platforms for pilot testing and encouraging inviting
stakeholders to participate
External stakeholders are willing to invest in upcoming
smart cities projects
KEYENTITIES
TechVendors
Real EstateDevelopers
Governmentowned bodies
IndustryAssociations
Foreigncountries
Type of vendors
l Cultural and Language Barriers: Especially
when working in villages and small cities, lack
of proficiency in local languages can be a key
barrier, such as when undertaking citizen-
centred research or trials, or when dealing with
local government and other public bodies.
l Finding Partners and Building
Trust with Various Stakeholders: Finding the
right partner and the appropriate opportunity
can prove difficult in India due to a large
number of stakeholders involved from
public and private sectors alike. This is
made further complicated by less clarity on
the formal and informal methods to form
partnerships and win bids. Going through a
government to government route, such as
through a bilateral agreement or joint fund
e.g. Newton Bhabha Fund, can potentially
help to overcome this challenge.
45 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Potential Partnership Areas – Where do the Opportunities Lie?lii ‘CONNECT’ OPPORTUNITIES: R&D WITH AN AIM TO PROVIDE A GATEWAY TO COMMERCIAL BUSINESS
The areas below have been identified by aligning
UK commercial and innovation strengths with
challenges faced by Indian cities that are
currently being unmet by the domestic market.
Table 7
OPPORTUNITY DESCRIPTION AND REASONING
Spatial Planning
The UK has a well-established land-use and planning system. Recently, the UK’s focus has moved to planning at an urban scale to address a more fundamental agenda. Specific specialisms including: urban and regional development, master planning and urban design, urban regeneration, heritage and conservation, environmental assessment and sustainable development. Due to rapid and continued rates of urbanisation, Indian cities suffer from urban sprawl, overcrowding, poor service availability and low quality of life. The Indian planning system has been inherited from the UK, however, while the UK has evolved and progressed their system, the Indian system has remained the same. There is an opportunity for the UK to support Indian cities improve and evolve their planning and regeneration systems.
Service Design and Citizen Engagement
A core pillar of the Smart Cities Mission is improving citizen engagement through the use of participatory approach when designing and implementing urban solutions. This is currently not being done to a sufficient level in Indian cities. The UK has expertise in citizen engagement methods, with many design-led businesses creating innovative solutions to promote public engagement with respect to urban development. The UK could offer knowledge and services around combining social and digital capabilities to deliver services to citizens in a more integrated way.
Pollution and Remediation
Poor waste management policy implementation and run-down infrastructure has led to severe pollution of India’s bodies of water and land. As many as 302 river stretches on 275 rivers across the country have got polluted due to discharge of both municipal and industrial waste water. The UK’s diversity of contamination problems and site, coupled with scarcity of available development land has led to the growth of niche specialist and multidisciplinary consultancies, technology providers, contractors and equipment suppliers.
Sustainability, Green Building and Retrofitting
UK is a leader in sustainability and green building, having pioneered the BREEAM assessment method. Energy use in India is expected increase rapidly in coming years as India progresses to a fully-industrialised economy. The Indian government has expressed a need to generate more energy from renewable sources while simultaneously improving the energy efficiency of existing assets.
Intelligent Transport and Mobility
The UK is a leader in innovation around intelligent transport systems, particularly in the areas of real-time monitoring, transferring and analysing, traffic management service, systems integration and the internet of cars. The Transport Systems Catapult is also helping to advance UK innovation in this space. India has the second largest road network in the world and cities suffer severe congestion, with delays and additional fuel costing in excess of US$ 21 billion.
Large-Scale Infrastructure Delivery
UK engineering firms are a preferred choice for major urban development projects worldwide, while the UK’s construction sector registers a relatively high number of patents and enjoys technological advantages over other G7 and BRIC countries. Furthermore, the UK has world-class business and professional services capability, providing urban development financing, real estate and project management. UK companies have developed some of the most significant infrastructure and sustainable urban development projects in the world. Eg. Crossrail. India is in dire need of infrastructure improvements, especially in the areas of waste, water and sanitation, and is keen to ‘build for the future’. Huge amounts of investment have been proposed and this presents a good opportunity for UK companies to conduct R&D on large infrastructure projects.
46 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
‘FUND’ OPPORTUNITIES: R&D TO FACILITATE KNOWLEDGE TRANSFER AND LEARNING
The areas below have been selected by
identifying mutual challenges faced by the UK
and Indian cities that are currently not solved by
either domestic market, or they are areas where
both countries have complimentary skills which
could be brought together to better solve a
particular market challenge.
Table 8
OPPORTUNITY DESCRIPTION AND REASONING
Air Quality
Outdoor pollution in cities is estimated to cause 1.1 million premature deaths per year in India and the country is home to 14 of the world’s 30 most polluted cities. The UK has issues with air quality in its large cities and also has strict air quality targets to meet, therefore this is an area where the two countries could work together and share knowledge in order to meet their targets.
SMAC technologies India has a booming start-up scene with many businesses using SMAC technologies to develop innovative propositions. There is an opportunity for the UK to collaborate with the vast numbers of skilled software developers in India to create new business propositions that solve urban challenges.
Frugal InnovationIndia has developed strengths in frugal innovation where products are designed such that non-essential features are removed, and product complexity is reduced. The UK could benefit from learning about this method of innovation to enable it to more effectively compete in certain international markets.
Smart City Standards
The Bureau of Indian Standards along with NASSCOM and the Ministry of Urban Development are working closely to create a sustainable model for smart cities, recently releasing a draft of their “Standards for Smart Cities.” While this is a good start, there is significant scope for improvement in the depth and breadth of guideline development. The UK is a world leader in the creation of smart city standards and could benefit from the sheer scale of smart city development taking place in India to test and validate its standards. There is also a strong appreciation of the benefits of BIM in India, however the country is yet to capitalise on this opportunity and skills remain low. The UK is a world-leader in BIM implementation, therefore could provide services to Indian counterparts.
Sharing Economy
India is especially ripe for a sharing economy boom because of its high urban population and population density, which helps hyper-local sharing services due to the proximity between suppliers and customers, and the huge numbers of millennials who are comfortable with technology and the concept of sharing. The sharing economy concept is also generating momentum in the UK and the two countries could work together to develop and test the concept further.
47 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Smart GovernanceBhopal
Bhopal Municipal Corporation partnered with SAP to automate public service offerings
Smart EnergyGhazlabad
Wave City instated light detectors to trigger street lights automatically
Smart TransportationVisakhapatnam
Setting up surveillance sensor camera at 94 junctions to regulate traffic in the city
Smart HealthChennai
Sankara Nethralaya in collaboration with TCS has kept all electronic medical records
Smart Education Tamil Nadu
4 schools using Windows tablet that can use NCERT application with cloud storage abilities
Smart IT & CommunicationBangalore
Cisco has partnered with ELCIA to establish an IoT innovation hub
Smart EnvironmentMumbai
Palava Smart City to reuse -80% of household and city waste
Smart BuildingGujarat
GIFT smart city will monitor building functions such as lighting, heating, unit failure etc.
Figure 7: Examples of Smart City projects implemented across India
Source: Zinnov Cities
Routes to Market – How can UK SMEs Access these Opportunities? l Newton-Bhabha Fund: The Newton Fund’s
partnership with India is known as the Newton-
Bhabha Fund. The Fund managers develop and
run calls, allocate and manage the money they
receive as part of the Newton Fund. Various
opportunities for SMEs are listed on its funding
page. The Fund has identified a number of
priority areas for India:
• Sustainable cities and urbanisation
• Public health and wellbeing
• Energy-water-food nexus
• Understanding oceans
• High value manufacturing (underpinning
capabilities)
• Big data (underpinning capabilities)
KEY PROGRAMMES
The joint programmes within the Newton-Bhabha
Fund cover a wide range from capacity building
programmes to funding research projects through
to the translation of research into innovation.
Some of these include.liii
l Joint Research Calls and Joint Virtual Centres:
Provide opportunities for Indian and UK experts
to work together on research projects to address
key global challenges. Partnerships exist in areas
48 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Nepal
49 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
including, air pollution and human health, sustainable
cities and urbanization, clean energy, anti-microbial
resistance, and women and child health.
l Research and Innovation Bridges: Facilitate
collaborations between UK and Indian
businesses and research bodies, proposing
innovative, commercial solutions to particular
socio-economic challenges.
l Joint Industrial R&D calls: Support collaborative
industrial R&D projects up to two years in duration,
that aim to address societal challenges with a
route to future commercial success.
l Leaders in Innovation Fellowships: Offers
commercialisation and entrepreneurship training
and coaching for innovative researchers.
l Industry Academia Partnerships Programme:
Aims to forge partnership between higher education
institutions and industry to build technology
links and enhances quality and relevance of
engineering education.
l Connect with UK India Business Council (UKIBC):
The UKIBC is a membership-based, non-profit
organisation founded in 2007 to foster business
relations between the UK and India. The organisation
works with businesses in both countries, as well as
the UK and Indian governments, to promote and
increase bilateral trade. It is currently working with
the UK’s Department for International Development
on the India Urban Gateway Programme, which
provides capacity building and a route to market
for SMEs in the urban development sector.liv
l Smart City Projects: The projects envisioned under
the governments’ infrastructure initiatives and the
Smart City Mission provide opportunities in a wide
range of advanced urban sectors including utilities,
sanitation, public transport, affordable housing,
IT connectivity, e-governance, safety and security,
health, education, and the environment.
In terms of implementation of projects, the state
government, Mayor of the Municipal council and the
district collector are important organizations. The
implementation of the projects at the City level has
been assigned to a Special Purpose Vehicle (SPV)
created for the purpose. The SPV will plan, appraise,
approve, release funds, implement, manage,
operate, monitor and evaluate projects.
Each smart city will have a SPV which will be
headed by a full time CEO and have nominees
of Central Government, State Government
and urban local body (ULB) on its Board.lv
The projects can be carried out through joint
ventures, subsidiaries, public-private partnerships
(PPP) or turnkey contracts, suitably dovetailed
with revenue streams. A number of cities are in
the process of appointing Project Management
Consultants (PMCs) under the Smart Cities Mission.
These PMCs will be responsible for identifying and
tendering for project execution. Often, the best
way for SMEs to approach these projects is to work
through PMCs and profile their technologies or
capabilities with these organisations.lvi
Our research also suggests that it is important to
maintain healthy relationships with local
government in cities as well as with key decision-
makers for smart city projects. In particular, any
smart city project bids by companies get scored
based on the level of internal sponsorship of bids
that the bidder company is able to attain. UK
SMEs should ensure internal sponsorships from
the following internal stakeholders (in order of
priority) in their bids to cities:
• City Mayor / Direct Commissioners
• Nodal Commissioners
• IT Officers
50 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Partnership with Local Champions: A large
number of local innovative firms are likely to
dominate the Indian smart city market, particularly,
where the state or local governments favour local
players. In such instance, strategic collaborations
with local players will allow UK SMEs to tap into
certain markets that would otherwise be a lot more
difficult to penetrate.
Some of the key partnership strategies to break
into the Indian market include lvii:
Strategy 1: l Partner with Indian company in a JV or consortium
to share the pre-qualification for tenders and take
up the project supervision role and the Indian
company undertakes the project execution.
On success, the Indian company pays a
consulting fee.l Investments on part of UK business in proportion
to the percentage of the project component.
Strategy 2:l Partner with Indian company in a JV or consortium
and bid for project jointly, share the financial cost
associated with the bidding process and get
involved in project execution.l Investment required by UK business in proportion
to the percentage of the project component.
l Tapping into Existing UK firms in India: Several UK-
based or multi-national firms with physical presence
in UK are already well-established in Indian cities and
may be well-placed to win bids; UK SMEs have the
opportunity to explore collaboration opportunities
with these players and where possible, make joint
proposals for projects and R&I initiatives. According
to UKIBC, there were around 600 UK businesses
present in India in 2015. Of these, around 60%
operate in two sectors: advanced engineering &
manufacturing; and financial & professional services.
Information technology and communications is also
a major area of UK activity in India. Given
appropriate incentives and motivation (such as
small fee or tax rebate), these well-established firms
can potentially connect SMEs to buyers, suppliers,
financial institutions and a whole gamut of other
important stakeholders.
l Pro bono work with Indian partners: Doing pro-bono
work with Indian partners before being able to win
projects is another route to Indian market that offers
a number of advantages. Firstly, it offers opportunity
to build networks and trust with decision-makers
and potential partners. Secondly, SMEs with little or
no previous experience of working in India are able
to have a softer landing in the country and better
comprehend the cultural, political and business
landscape in the country.
Figure 8: UK Business in India
32%
5%
3%3%
2% 1% 1%
30%
9%
14%
Delhi-NCR Maharashtra Karnataka Other
West BengalUttar Pradesh Gujarat
Telangana
Goa Kerela
Source: UKIBC (2015)
For instance, Red Ninja, a Liverpool-based SME
that specialises in using IoT and open data from
city systems to improve urban planning, transport
systems and security assisted Indian cities for a few
years before it secured a £1m deal in 2016.lviii
51 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Entry through India’s Strong Research
Ecosystem: India is home to numerous universities,
with a strong base of national institutes. The
Indian Institutes of Information Technology (IITs)
in various cities are seen as the hallmark of
esteemed education. The quality of Indian tertiary
education institutions has emerged as an area of
relative strength in the Global Innovation Index,
with India being ranked 20th on the measure.
44 Indian universities featured in the top 250
QS University Rankings of BRICS (Brazil, Russia,
India, China, South Africa) countries 2016.lix
Furthermore, the following Centres of Excellence
have been established under various schemes
of the Government of India lx These Centres of
Excellence and the strong academic research
ecosystem can provide a number of collaborative
R&I opportunities to UK SMEs, before they enter
the commercial Indian market.
Recommendations for SMEs – Better Access to Opportunities
l Ensure collaboration is closely aligned
with the aims and ambitions of the UK-India
Tech Partnership, announced in April 2018
by Prime Ministers Modi and May. This is a joint
commitment to identify and pair businesses,
venture capital and universities to provide
access routes to markets for British and Indian
entrepreneurs and small and medium enterprises.
The UK and India have also committed to expand
their research relationship to work together to
address a number of global challenges, such
as clean energy and urban transformations.
For instance, in city of Pune in Maharashtra,
where Future Cities Catapult has a strong
relationship, there will be a strong focus on
the future of mobility. Additional connections
will also be linked to Bangalore with a focus
on augmented and virtual reality, advanced
materials and AI.
This provides new opportunities for city-level
collaborations as part of a new £3.5m urban
transformations programme to address issues
around rapid urbanisation including issues that
are predicted to arise in developing areas like
urban planning, governance and management.
l Use of Bilateral Funding Mechanism: A
substantial share of successful international
partnerships in the Indian smart city domain
have been built on top of existing bilateral
trade relationships, and often, using funding
available from various international funds
and commitments.
For instance, France committed $1.5bn for
development projects in India in August 2017,
to support three Indian cities – Chandigarh,
Lucknow and Puducherry. Apart from financial
support, France is providing technical support,
including special training workshops under
the programme.lxi
This was followed with Egis, French
engineering group, winning the first
contract to make the city of Bhubaneswar
in India a smart, sustainable and inclusive
city model.
The Newton Bhabha Fund goes some way
in facilitating UK SME collaboration with
Indian partners.
l Prioritise Sustainable Development Goals
(SDG): For India, the key goals recommended
to be embedded into bilateral agreements
both at a government and at a private/
industry level include:
52 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
• Goal 3 – Ensure healthy lives and promote
well-being for all at all ages
• Goal 6 – Clean Water and Sanitation
(even in cities): Ensure availability and
sustainable management of water and
sanitation for all
• Goal 7 – Ensure access to affordable,
reliable, sustainable and modern energy
for all
• Goal 11 – Sustainable Cities and
Communities: make cities and human
settlements inclusive, safe, resilient and
sustainable
• Goal 13 – Climate Action: take urgent
action to combat climate change and
its impacts
l Use UKIBC to Find Local Partners: With
most cities having a preference for
businesses with previous local experience
in some form, it is imperative for UK SMEs
entering the Indian market to form local
partnerships to win projects.
Figure 9
Source: Zinnov Management Consultants
Initiative objective
Conducted the ‘Smart City India World Conference’ to provide a platform for discussion among key stakeholders to brainstorm on strategies and implementation plans of smart city projects.
Under the agreement, the industry led consortia will lead the conceptualization and implementation of pilot projects in smart cities.
Hosted a consultation workshop on smart cities attended by various industry members presenting their perspective on the role of technology in smart cities and MoUD1 sharing the vision of smart cities.
Key organisers Initiative details
Policy Advocacy
Facilitator
Thought leadership
+
+
+ PwCNasscom
Confederation of Indian Industry
CAMI Association of
India
Siemens Hitachi
Smart City India World Conference
UKIBC – UK government’s overseas business
network initiative provider for India supports
finding local partners for UK businesses
in India.
UKIBC also helps UK businesses with market
research, introductions, market visits, product
& service showcase, virtual office, business
setup and recruitment – all of which can be
highly useful to SMEs.
l Engagement with Indian Industry Associations:
Indian industry associations, such as the
National Association of Software and Services
Companies (NASSCOM), Confederation of
Indian Industry (CII), and the Federation of
Indian Chambers of Commerce and Industry
(FICCI) have a strong influence on public sector
policies and business engagement. With a vast
membership network of Indian businesses these
associations can help UK SMEs by offering
partnership platforms and access to knowledge
and network databases.
53 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
1.4 UNITED STATES
Overview America’s cities are the engines of the US economy.
If the 21st century is the century of cities, as some
observers characterize it, urban America begins the
millennium in a strong position. Large cities in the
US —and in particular, the nation’s broad swath of
dynamic middleweights—dominate the economy as
in no other region of the world. They also loom large
in the urban world. Large US cities are expected to
generate more than 10% of global GDP growth in the
next 15 years, a larger contribution than all of the large
cities of other developed countries combined.lxii So
although the burgeoning cities of Asia have seized
the public imagination, US cities will remain an
important part of the global growth story over the
coming decades. While the overall performance of
urban America has been a strong one, the fate of
individual cities has varied widely.
Large US cities, defined here as those with
150,000 or more inhabitants, generated almost
85% of the country’s GDP in 2010, compared with
78% for large cities in China and just under 65%
for those in western Europe during the same
period.lxiii ICT, the proliferation of sensors owing
to the Internet of Things, and converging data
standards are also combining to provide new
possibilities for the physical management and
the socioeconomic development of cities. Local
governments are looking to data and analytics
technologies for insight and are creating pilot
projects to test ways to improve their services.
Technologies influence patterns of behaviour.
Digital and mobile technologies are making the
connections between service providers and
users tighter, faster, more personal, and more
comprehensive. Sharing-economy business
models are emerging that enable more efficient
use of physical assets, such as cars or real
estate, and provide new sources of income to
city residents.
EXAMPLES OF UK COMPANIES IN INDIA
Company Sector Indian HQ
British Telecom Telecom New Delhi
Cairn Energy Energy Gurgaon
ARUP Planning, Technical Consulting Hyderabad, Mumbai
Benoy Architecture Mumbai
BSI (British Standards Institution) Standards Multiple Cities
CDC Investment Works UK’s Development Finance Institution (DFI) Bangalore
JCB Construction, agriculture, waste handling New Delhi
Knight Frank Real Estate Consultancy Multiple Cities
Table 9
54 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Chicago
55 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Large US cities are using technology and data
analytics to solve specific problems in areas such
as health, transportation, sanitation, public safety,
economic development, sustainability, street
maintenance, and resilience—problems that affect
city residents every day.
Because change in a city is costly (in many ways)
and can be especially challenging for early
adopters, it is important that the results of urban
experimentation be shared, helping to foster less
expensive and more easily replicable solutions. US
cities need a platform for collaborating with each
other and all relevant stakeholders, sharing results,
insights, and best practices. The platform should
foster the development of standard, customizable
models (for studying alternatives) and applications.
It must also facilitate innovation from the bottom up,
being neither built nor operated monolithically and,
like the World Wide Web itself, having no central
authority directing innovation
Public Sector Initiatives Supporting R&I
In 2015, several Federal agencies, notably the
Departments of Commerce, Transportation and
Energy, enhanced their efforts to implement
programs of technology-based innovation for cities.
White House Smart City Initiativelxiv: A key
milestone was the September 2015 announcement
of the White House Smart Cities Initiative, which
put a spotlight on the support for urban technology
innovation being provided by a number of
Federal Agencies.
As part of this initiative, the government has
committed approximately $160m over five years
to support smart city initiatives and federal
research. These activities will create more than
25 new technology collaborations to help local
communities tackle key challenges. The key
challenges include reducing traffic congestion,
fighting crime, fostering economic growth,
and managing the effects of changing climate
change and improving the delivery of city
services. These initiatives include:
l More than $35m in new grants and $10m in
proposed investments to build a research
infrastructure for smart city development by
the National Science Foundation and National
Institute of Standards and Technology
l Almost $70m in new spending and more
than $45m in proposed investment to
develop new smart city solutions by
the Department of Homeland Security,
Department of Transportation, Department
of Energy, Department of Commerce and the
Environmental Protection Agency.
While this investment is small compared to
India’s $7.4bn 100 Smart Cities Mission or
Singapore’s Smart Nation Programme’s nearly
$7.5bn in technology investments over the past
3 years, it is a welcome start to American public-
sector investment in the smart city market.
Smart City Challenge, US Department of
Transportation (USDOT): The US DOT recently
announced a $165m investment in smart-city
solutions. This total includes $65m in public
funding and $100m in matching funds geared
toward advanced transportation technologies.
The funds aim at easing traffic congestion
and improving driver and pedestrian safety.
For example, Pittsburgh will get $11m through
the initiative to install smart traffic lights, while
Denver will receive $6m to connect vehicles to
mitigate traffic during rush hour. Further, around
56 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
$8m is now available for local governments for
building out mobility through car- and bike-sharing
services and demand-based dynamic buses.
This initiative should allow more cities in the
US to adopt a key IoT application.
Metro Lab Network: Another part of the White
House’s Smart Cities Initiative was the creation of
the MetroLab Network. Launched in September
2015, the MetroLab Network is a group of more
than 35 city-university partnerships focused
on bringing data, analytics and innovation to
city government. Its members include 38 cities,
4 counties and 51 universities. The Network’s
mission is to pair university researchers with city
policymakers to undertake research, development
and deployment projects that improve our
infrastructure, public services and environmental
sustainability. The university acts at the city’s
R&D department and the city acts as the test-
bed. Faculty and student get access to real-life
laboratories to test advanced approaches aimed
at addressing city priorities and challenges. Cities,
and their residents, benefit from technologies
and policies that leverage digital and information
technology, data analytics, sensing and more.
Individually, the city-university R&D partnerships are
beneficial and help drive innovative approaches
in government. When networked together, the
partnerships present an opportunity to scale
effective solutions, accelerate best practices, and
advance the understanding of urban science.
National Science Foundation (NSF)7 is an
independent federal agency that supports
fundamental research and education in all non-
medical fields of science and engineering. With
an annual budget of $7.5bn (FY 2016), the NSF is
the funding source for approximately 27% of all
7 https://www.nsf.gov/about/glance.jsp
federally supported basic research conducted
by America’s colleges and universities. The NSF
organises its research and education support
through seven directorates, each encompassing
several disciplines. These include: biological
sciences, computer and information science
and engineering, engineering, geosciences,
mathematical and physical sciences, social,
behavioural and economic sciences and education
and human resources. The NSF also supports
research through several offices within the Office
of the Director, including the Office of Cyber
infrastructure and the Office of Integrative Activities.
Smart Cities USA Intel and the City of San Jose
are collaborating on a public-private partnership
(PPP) project, to implement Intel’s IoT Smart
City Demonstration Platform to further the City’s
Green Vision initiative. This will help San Jose
drive economic growth, foster 25,000 Clean
Tech jobs, create environmental sustainability
and enhance the quality of life for its citizens. By
installing a network of Air Quality, Sound & Micro
climate Sensors, Intel and San Jose are creating a
‘sustainability lens’ for the City. The ‘sustainability
lens’ will use IoT technology to measure
characteristics such as particulates in the air, noise
pollution, and traffic flow. City Management will use
this information to drive improvements in air quality,
noise, transportation efficiency, environmental
sustainability, health, and energy efficiency.
The Smart Cities USA PPP, as part of the Smart
America Challenge, will demonstrate how cities
can use IoT to measure and act on critical data
to improve life for its citizens. These initiatives
demonstrate the engagement of the government
in smart city level projects and are forward looking
in terms of the government’s strategy and vision in
this sector and could provide potential collaboration
opportunities to the UK companies.
57 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
UK-US Science and Technology Umbrella Agreement: In
September 2017, the UK and US governments signed the
first UK-US Science and Technology umbrella agreement,
aimed to strengthen research collaboration between
the two countries. The treaty outlines a commitment to
collaborate on world-class science and innovation, building
on existing successful research co-operation in recognition
of the value of open data to further scientific research and
strengthen the economies and foster business growth.
Potential Partnership Areas – Where do the Opportunities Lie?lxv The areas below have been identified by
aligning UK commercial and innovation strengths
with challenges faced by American cities that are
currently being unmet by the domestic market.
Table 10
OPPORTUNITY DESCRIPTION AND REASONING
Spatial Planning
The UK has a well-established land-use and planning system. Recently, the UK’s focus has moved to planning at an urban scale to address a more fundamental agenda. Specific specialisms including: urban and regional development, master planning and urban design, urban regeneration, heritage and conservation, environmental assessment and sustainable development. Due to the rapid expansion of suburbs, American cities suffer from urban sprawl and could benefit from the UK’s world-leading expertise in planning and regeneration.
Service Design and Citizen Engagement
Smart city development in the US has historically been highly private-sector led. While this is changing, there are still huge opportunities to better engage citizens in the design and implementation of smart city technologies. The UK has expertise in citizen engagement methods, with many design-led businesses creating innovations to promote public engagement with respect to urban development. The UK could offer knowledge and services around combining social and digital capabilities to deliver services to citizens in a more integrated way.
Smart City Standards
Capabilities in regulatory and standards development have placed the UK at the forefront of developing new standards for green building smart cities, open data, urban design, public service delivery and community governance. The USA has launched the American National Standards Institute (ANSI) Network on Smart and Sustainable Cities (ANSSC), which provides a forum for information sharing, and coordination on voluntary standards but is not as advanced as the UK in this domain. Markets and Markets have reported that a key inhibiter of American smart city market growth is a lack of standards to enable interoperability of innovative technologies.
Intelligent Transport and Mobility
The UK is a leader in innovation around intelligent transport systems, particularly in the areas of real-time monitoring, transferring and analysing, traffic management service, systems integration and the internet of cars. The Transport Systems Catapult is also helping to advance UK innovation in this space. Metropolitan areas in the US suffer from severe congestion caused by poor urban planning and inadequate public transportation. While the US is a leader in autonomous and electric vehicles, it is yet to tackle issues with public transportation.
Large-Scale Infrastructure Delivery
UK engineering firms are a preferred choice for major urban development projects worldwide, while the UK’s construction sector registers a relatively high number of patents and enjoys technological advantages over other G7 and BRIC countries. Furthermore, the UK has world-class business and professional services capability, providing urban development financing, real estate and project management. UK companies have developed some of the most significant infrastructure and sustainable urban development projects in the world. E.g. Crossrail. The USA is in dire need of infrastructure improvements and is keen to ‘build for the future’, rather than repairing infrastructure to 1950’s standards. Huge amounts of investment have been proposed and this presents a good opportunity for UK companies to conduct R&D on large infrastructure projects.
58 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Boston
59 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
‘FUND’ OPPORTUNITIES: R&D TO FACILITATE KNOWLEDGE TRANSFER AND LEARNING
The areas below have been selected by identifying
mutual challenges faced by the UK and US cities
that are currently not solved by either domestic
Table 11
OPPORTUNITY DESCRIPTION AND REASONING
Autonomous Vehicles
The US is a market leader in the development of autonomous cars and is home to approximately half of the 19 major companies currently developing autonomous vehicle propositions. The UK is also investing heavily in autonomous vehicle technology and test beds, therefore could benefit from conducting R&D with the market leader.
Electric Vehicles The US is also a market leader in electric vehicle technology, with two American companies holding 32.5% of patents in the field. The UK could benefit from conducting collaborative R&D with the market leaders in order to bolster our capabilities.
Open DataBoth the UK and the USA are market leaders in open data, however, the World Wide Web Foundation is clear that there is more to be done in the area. The two countries could work together to progress the systematic opening of data, while also addressing legal, regulatory, security, privacy and licencing concerns.
Sustainable funding sources and diversified business models
Like many other countries, the UK and USA are both struggling to sustain innovative smart city solutions past initial demonstrator or pilot stages.
The two countries together could explore innovative ways to secure sustainable funding and diversified business models for smart cities projects.
Air Quality Half of all American live in counties where they are exposed to unhealthy levels of pollutants. The UK also has strict air quality targets to meet, therefore this is an area where the two countries could work together and share knowledge in order to meet their targets.
IoT Platforms
The USA has been an early adopter of IoT devices and platforms, leading to it becoming the largest single-country market. There is an opportunity for the UK to work with the USA to develop IoT platforms that are not only technologically sound, but also incorporate the needs and desires of citizens to make them useful and beneficial for all city stakeholders.
Sustainability, Green Building and Retrofitting
The USA and the UK can both be considered market leaders with their respective LEED and BREEAM building sustainability programmes. The LEED programme has recently been expanded to include cities and communities and there is likely to be valuable leanings from this expansion.
market, or they are areas where both countries
have complimentary skills, which could be
brought together to better solve a particular
urban challenge. Alternatively, areas may have
been selected as the US has particular strengths
that may be beneficial to the UK.
60 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Supporting Factors for UK SMEs Entry
A number of factors appear conducive to UK SMEs’
expansion and growth in the US markets:
l The UK is one of the largest markets for US goods
exports and one of the largest suppliers of US
imports. In terms of trade relationships and exports
to countries, the US is the single-most country
from which the UK earns the most through trade.
Exports to the US from the UK were worth £100bn
in 2016, more than twice as much as exports to any
other country. Furthermore, US firms have invested
£479m ($600bn) in the UK – nearly a quarter of
total investments in Europe – signifying the strong
bilateral relationship the two countries share.lxvi
l According to the World Wide Web Foundation’s
‘Open Data Barometer’, the US is a leader in
open data, ranking 2nd in the index with only
the UK performing better. Countries at the top
of the ranking are characterised by strong open
data readiness, implementation and impact and
could provide a collaborative environment. Open
data can become an instrument for fostering an
environment of innovation and providing a vibrant
platform to UK SMEs to creates multiple business
opportunities, such as the potential to improve new
products and services and to raise productivity.
l The recently established US-UK SME Dialogue
– under the ambit of the US-UK Trade and
Investment Working Group – aims to promote
closer collaboration and sharing of best practices
on policies and programs to support SMEs in
each country’s market. At the inaugural meeting
in April 2018, the US and UK governments jointly
released the guide ‘Doing business in the US and
UK: resources for small business’ as a key tool for
SMEs seeking to benefit from US-UK trade.
The US also invited the UK government to
join the 10th Americas Competitiveness
Exchange (ACE) on Innovation and
Entrepreneurship in California, to exchange
best practices on innovative approaches
to economic development.lxvii
l Recognising the importance of intellectual
property to their respective economies
and to the bilateral trade relationship, the
UK and the US have identified short-term
cooperative initiatives to support each
country’s world-class intellectual property
framework. Efforts are underway to develop
joint educational tools and resources for
SMEs to support the export of creative
and innovative products and services
between the two countries. There is also
agreement to continue discussions on
enforcement approaches, policy tools, and
voluntary initiatives for addressing online
piracy including the emerging challenge of
illicit streaming devices and services.
l In September 2017, the US and the UK
also entered into a historic Science and
Technology Agreement, which establish
a foundation for enhanced research
partnerships to further world-class science
and technological innovation.
l To reduce the impacts of urban sprawl, US
cities are looking to adopt new planning
approaches, create more diversified and
mixed-use developments and regenerate
urban areas to increase population density.
UK’s SMEs have strengths and sector
expertise that could particularly cater to US
needs and city challenges of urban sprawl,
congestion and climate change.
61 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l To facilitate the rapid improvement of
national infrastructure, the US government
plans to make use of ‘race-to-the-top’
competitions to elicit the most creative,
integrated and cost-effective solutions,
measuring success in terms of outcomes
and rewarding progress towards the
goals such as:
• Building truly affordable housing that
is energy-efficient and transportation-
accessible
• Expanding access to electric vehicle
chargers on Interstate Highways, at
workplaces, multi-family housing and
other key areas
• Creating smart, connected, zero-emission
public transportation systems to provide
convenient access to work and play for
commuters and urban dwellers who don’t
want to own a car or can’t afford to.
These competitions could serve as
a valuable platform for UK SMEs to
showcase their expertise and engage
with the public and private sector to
develop new and creative solutions.
l The US Department of Commerce holds
a yearly summit called SelectUSA which
provides a platform to domestic and global
companies to network with key government
bodies engaged with fostering R&I and also
big private companies that invest heavily in
R&D across the US. The 2017 Summit saw
more than 2,800 participants from over
60 international markets. This included
over 1,200 global business investors and
economic developers from 51 US states
and territories.
Challenges to Market Entry for UK SMEs
l The US is an extremely large market to
do business in, and in many ways, is
not a single national market. The federal
system means that those looking to do
business in America must treat each state
as a separate entity with its own
procedures. Solution providers must also
contend with vast regional differences.
This may cause problems when trying to
develop and replicate solutions across
cities in different states.
l One of the most severe challenges of the
US market comes from domestic
competition. The US boasts a mature and
vibrant private sector, which is capable of
producing market-leading technological
solutions. Furthermore, the US is home
to more of the world’s top 50 universities
than any other country, resulting in the
country possessing considerable research
capabilities. Therefore, problems in the US
market are not likely to arise from lack of
access to the market, but more from local
competition and a saturated consumer base.
l Finally, the arrival of President Trump’s
administration has caused uncertainty in
some smart city market verticals, particularly
those associated with climate change,
sustainability and energy production.
In March 2017, President Trump signed
an executive order targeting climate
change regulations put in place by
the Obama Administration, stating that
they hinder US energy production and
jobs without providing meaningful
environmental benefits. Trump’s order
62 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
directed the Environmental Protection
Agency (EPA) to review the regulation to
decide whether to “suspend, rescind or
revise it”. The outcome of this decision and
future policies are likely to have significant
ramifications for innovation and solution
providers in this space.
l This project feeds into the ambitious
new UK-India Tech Partnership which is
expected to generate significant
investment and support the creation of
thousands of new jobs across the UK.
Earlier this month Prime Minister Modi
and Theresa May announced a joint
commitment to identify and pair businesses,
venture capital and universities to provide
access routes to markets for British and
Indian entrepreneurs and small and
medium enterprises.
Routes to Market – How can UK SMEs Access these Opportunities? l Support from Pre-Established Companies:
Support from existing large UK businesses to
new SMEs could pave a great way for their
entry into local markets. Several UK organisations
are already well-established in US cities and may
be well-placed to win projects; UK SMEs have the
opportunity to explore collaboration opportunities
with these players and where possible, make joint
proposals for projects and R&I initiatives.
Furthermore, leaders from large companies would
be most suitable to provide the best mentorship to
budding SMEs. This mentorship can take the form
of assistance with writing business plans, sharing a
large company’s experience, and supporting more
tactical needs, such as how to get legal advice, as
well as accounting and administrative tasks.
EXAMPLES OF UK COMPANIES BASED IN THE US
Company Sector US HQ
HSBC Holdings Banking and financial services New York
Vodafone Communications technology services New York
ArupProfessional services firm (Design, planning
and engineering)Cambridge, Massachusetts
British Telecom (BT) Communications technology services Irving, Texas
Astra Zeneca Pharmaceuticals Wilmington, Delaware
Table 12
63 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Participate in SME Congress and Industry
Events: International bodies such as
International Council for Small Businesses
(ICSB) are the pioneering organizations
in the US supporting SMEs to develop
a vast knowledge network and facilitate
collaboration with local peers. Developing an
understanding of the local business ecosystem
and collaborating with local academia and
government agencies would be quintessential
for the growth of UK SMEs in the US.
• Events such as the ICSB’s Forum for
Entrepreneurs and MSMEs and the
annual George Washington University
School of Business Entrepreneurship
conference, which focuses on new frontiers
in entrepreneurship and brings together
practitioners, educators, policymakers and
industry CEOs and leaders could be a useful
forum to participate for UK SMEs.
SME SURVEY
“Setting up business missions or facilitating attendance at key conferences so can engage with potential clients and suppliers. Also help in disseminating international conferences and when they occur. Facilitating meetings with regulators/government agencies to start to understand their role (i.e. licensing/permitting) in projects of that country.”
l The continued collaboration with the UK-
US Science and Technology Umbrella
Agreement would benefit both nations and
this agreement will enable the UK to share its
resources and expertise. This collaboration could
be leveraged by UK SMEs (potentially through
IUK) to help build a platform with latest research
trend findings that could be useful for UK SMEs
to enhance their understanding of critical topics
related to tomorrow’s innovative agenda and align
their offerings based on learnings through such
collaboration platforms.
Recommendations for SMEs –Better Access to Opportunities
l Alignment with Mayor of London’s International
Business Programme:
• Mayor’s International Business Programme
help start-ups and small businesses to grow
by promoting access to affordable workspace,
finance and business support. The Programme is
a strong advocate for London’s businesses and
helps foster trade, pursue investment and build
links with other global countries/ cities. Through
its promotional agency, London & Partners,
it promotes London businesses and SMEs to
investors, business and overseas markets.
• The Mayor of London programme funds also
another program called Silicon Valley Comes
To The UK (SVC2UK), which is a not-for-profit,
volunteer-led series of events that brings
together early stage investors, successful serial
entrepreneurs, students and alumni with leading
serial entrepreneurs and investors. It is designed
to improve the ecosystem for entrepreneurship
in the UK and drive sustainable growth by
helping promising CEOs in their scaling journey,
inspire students, and foster relationships with
Silicon Valley and the UK. This program could
serve as a strategic platform for UK SMEs
looking to set up a base in Silicon Valley and
could be a useful Launchpad.
Box 1
64 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
California
65 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Prioritise Sustainable Development Goals
(SDG): In the case of US, the key goals
recommended to be embedded into bilateral
agreements both at a government and
at a private / industry level include:
• Goal 9 – Build resilient infrastructure,
promote inclusive and sustainable
industrialisation
and foster innovation
• Goal 11 – Make cities and human
settlements inclusive, safe, resilient
and sustainable
• Goal 12 – Ensure sustainable consumption
and production patterns
• Goal 13 – Take urgent action to combat
climate change and its impacts
l Enable early stage entry through R&I
partnerships: The US market tends to be
highly competitive and once mature leaves
little space for the entry of UK firms. Hence,
UK SMEs should look to enter the US market
earlier in the life cycle of product and services
development, and ideally, in the later
phases of the R&I process, at a point of
TRL 88 and above.
A way to gain entrance at an earlier stage of
the product and services development
innovation life cycle is potentially through
partnerships with US university spin-offs
and innovation hubs.
8 Technology readiness levels, as defined by the European
Commission. For more information, https://ec.europa.eu/
research/participants/data/ref/h2020/wp/2014_2015/
annexes/h2020-wp1415-annex-g-trl_en.pdf
l Set up a local base in Silicon Valley: Silicon
Valley has been and continues to be one
of the world’s most important centres of
innovation and technology disruption.
The Valley has a unique set of assets—the
presence of technology giants, world-class
universities, abundant venture capital and a
hypercompetitive yet collaborative culture
that celebrates both risk and failure.
The UK is the leading European destination
for Silicon Valley investors, with British
tech companies raising more venture
capital from Bay area VCs than any other
European country. Over the last five
years, London tech firms have also raised
considerably more capital ($2.5bn)lxviii than
their European counterparts
Some existing UK programmes, such as
the SVC2UK which brings together
annually the most relevant founders,
corporates, investors, and policy-makers
from the UK entrepreneurial ecosystem
and Silicon Valley in engaging meetings
and workshops, could serve as an effective
platform to build a presence in Silicon Valley
and help UK SMEs find their way into the
US innovation ecosystem.
66 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
1.5 JAPAN
Overview Around 94.3% of the Japanese population,
amounting to 119 million people, lives in
cities.lxix Japanese cities are dense in terms
of population, buildings and infrastructure
networks. At 335 persons per square kilometre,
Japan’s population density is six times more
than the world average of 51 per square
kilometre (2015).lxx
In the most densely populated cities such
as central Tokyo, the figures go up to 12,022
habitants per km square, while the 6,758 is
the average for the main cities. The model of
political decision-making is generally considered
to be centralised in Japan, as the State remains
a key player in city planning. Local Governments
(LGs) tend to act as executing bodies of the
central policy, despite the two decentralisation
reforms of 2000 and 2006.lxxi
Additionally, the private sector, especially
real estate and construction companies, is a
prominent actor of urban planning in Japan,
where municipalities tend to let them lead
and conduct large scale initiatives such as
smart cities. This results in a situation where
municipalities are not the leaders of projects, but
often mere advisory participants. In some cases,
LGs manage to lead actively the planning and
implementation of projects, instead of following
the roadmap decided by the private sector
Japan’s economy, overall, has steadily eroded
in almost every sector, including its signature
advanced manufacturing industries. Policy
changes can create the right conditions for
reigniting growth, but Japan needs a greater
focus on what individual companies can do
immediately and on their own. In fact, launching
a major private-sector initiative to transform
Japan’s productivity performance can constitute
a “fourth arrow” of economic reform to
complement Abenomics – the set of economic
policies advocated by Prime Minister Shinzō
Abe, since the December 2012 general
election. Abenomics is based upon “three
arrows” of monetary easing, fiscal stimulus
and structural reforms.lxxii
Japan’s economic fundamentals are solid,
as Abenomics has made steady progress.
For instance:
l Real GDP has been growing above its potential
for five consecutive quarters through Q1 2017.
The momentum toward achieving the price
stability target of 2% has been maintained.
l For the past three years, wage increase
has been at the highest level in this century.
This trend is continuing this year as well.
l The labor market remains tight. In April 2017,
the unemployment rate stayed at 2.8 %, and
the job-to-applicant ratios were 1.48, above
one in all prefectures.
Going forward, it is important to ensure
that growth in consumption and investment
continues to strengthen. To achieve such a
virtuous circle, sustained and stable wage
increases will be crucial. Structural reforms
aimed at raising potential growth will also
contribute to achieving such wage increases.
The government plans to continue to
accelerate Abenomics by using all policy
tools – monetary, fiscal and structural, in
cooperation with the Bank of Japan.lxxiii
67 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Tokyo
68 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Public Sector Initiatives Supporting R&I
The Japanese government aims to increase
spending on science and technology by
900bn yen over the next three years, with
a significant chunk going to a new initiative
to promote collaboration between industry
and academia. The boost forms part of Prime
Minister Shinzo Abe’s 2017 strategy for growth,
which was approved by the Cabinet in June
last year.
Japan’s investment in R&D has stalled since
2001, but the government’s growth strategy
underlined the economic importance of
innovation. By 2020, the government aims
to raise the country’s GDP to 600tn yen
(US$5.4tn), up from 537tn yen in 2016, and
increase its investment in R&D to 4.4tn yen
(US$36.1bn), up from 3.5tn yen in 2017.
Key to the strategy is the Public/Private R&D
Investment Strategic Expansion Program
(PRISM), which will support significant industry–
academic partnerships in established research
areas, where policy-makers expect high public
demand, including artificial intelligence,
robotics and quantum optics. PRISM is part
of the government’s recent push toward
establishing Society 5.0, a super-smart society
that seamlessly integrates cyberspace with
the real world.lxxiv
National Strategic Special Zones (NSSZs):
The National Strategic Special Zones (NSSZs)
are an initiative set up by the government to
establish brand-new economic zones with
business-friendly conditions by means of
promoting bold deregulations. This initiative
is one of the key policies of the ‘Japan
Revitalisation Strategy’ aiming at enhancing
the international competitiveness of Japan by
breaking traditional ‘bedrock regulations’.
This initiative led to the appointment of six
specific zones, which includes Tokyo area,
Kansai area, Niigata city, Yabu city, Fukuoka city
and Okinawa prefecture. While the conventional
special zones were mostly initiated by limited
deregulations on private sector’s requests, the
brand-new “NSSZs” are strategically led by the
Prime Minister and implemented through close
discussion with relevant local governments and
the private sectors. This new framework and
implementation process is the key to enable
unprecedented speed and producing bigger
effects than before.lxxv
l Tokyo Area: a plan of essential deregulations
for Tokyo to become a real global business
hub through attracting foreign enterprises and
relaxing existing floor-area-ratio regulations.
l Kansai Area: will promote deregulations
mainly in the medical field
l Niigata city: will promote deregulations mainly
in the Agricultural field
l Yabu City: will promote deregulations mainly
in the Agricultural field
l Fukoko City: Build Employment reforms to
support business foundations
l Okinawa Prefecture: Promoting tourism in
Okinawa to develop it as an international
tourist city.
Science and Technology Basic Plan
(FY2016/2020): Under the 5th Science and
Technology Basic Plan (FY2016/2020), a
comprehensive Strategy on Science, Technology
69 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
and Innovation (STI) has been laid out to make
Japan the most innovation-friendly country in the
world. The various initiatives under this strategy are:
Realizing Society 5.0: As a part of the ‘Growth
Strategy 2017’ and the ‘Basic Policy on Economic
and Fiscal Management and Reform 2017’, the
government announced that it would work for
realization of Society 5.0 –super smart society
where people can live comfortably and abundantly
in all situations – to address various social issues
by incorporating innovations that the 4th Industrial
Revolution has progressed rapidly into every scene
of industry and social life.lxxvi
l Bringing together government, industry and
academic sectors and promoting public engagement
and encouraging ambition in younger researchers
and start-up companies.
l Sharing the concept of Society 5.0 with the world
and building platforms for utilizing big data in
support of a knowledge-based society.
l Thoroughly implementing efforts by relevant ministries
and agencies, all the way from basic research
to practical application (e.g. by reinforcing basic
technologies and promoting initiatives in connected
industries) and promoting SIP (Strategic Innovation
Promotion Program) in step with the direction of
initiatives in the relevant ministries and agencies.
Connected Industries
• Creation of new added values by connecting various things.
• Things that used to be in an independent relationship or adversaries merged and changed
The birth of a new business model
Things x Things
Humans x Machines/Systems
Company x Company
Human x Human(inheritance of knowledge and skills)
Production x Consumption
Japanese workplace skills x DigitalDiversified collaboration
HuntingSociety
FarmingSociety
IndustrialSociety
InformationSociety
Society 5.0Super Smart
Society
1st Industrial RevolutionAcquisition of power(steam engine)
2nd Industrial RevolutionInnovation of power(electricity and motor)
3rd Industrial RevolutionProgress in automation(computer)
4th Industrial RevolutionEnabling of autonomous optimisation. AI thinks on its own based on a large amount of information to take optimal action
Changes in thenature of industry
Developing by eachindividual industry
Social changes
Changes intechnology
Figure 10: Connected Industries leading to Society 5.0
70 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
MAIN THEMES OF SOCIETY 5.0
• Cyber security: Innovation that backs up safe data and communication, considering the qualities of the IoT, for example, the long life cycles from configuration to transfer.
• IoT system architecture technology: technology that empowers the displaying of equipment and programming as segments, and the building and working of expansive scale systems.
• Big data analytics: Innovation associated with getting knowledge and value from a lot of a wide assortment of information, including unstructured information.
• Artificial Intelligence: technology that backs IoT, enormous information examination, and advanced communication.
• Device technology: Innovation that empowers fast, real-time preparation of extensive measures of information with low power utilization.
• Network innovation: technology that appropriates large measures of data at high limit and rapid speed.
• Edge computing: innovation that empowers expanding speed and enhancement of real-time processing at the real system area, which is fundamental for expanding the usefulness of IoT.”
Box 2
Science, Technology and Innovation (STI):
Steady Implementation of the Public & Private
Investment Expansion Initiatives for Science,
Technology and Innovation (STI)
l Budget-Making Process Reform Action:
Establishing a fund for PRISM (Public/Private
R&D Investment Strategic Expansion Program)
that will encourage private investment in R&D
by leveraging government investment in R&D
while stimulating the synergistic effects between
PRISM and Strategic Investment Planning (SIP)
l Systemic Reform Action: Complete
enforcement of reforms to universities and
national research institutes and moving from
stewardship to management
l Evidence-Based Investment Action: Achieving
the “visualization” of government R&D
investments and policy effects and implementing
appropriate resource allocation and evaluation
l New Tokyo. New Tomorrow – The Action plan
for 2020lxxvii: In December 2016, the Tokyo
Metropolitan Government formulated a new
comprehensive 4-year plan called ‘New Tokyo.
New Tomorrow’. The vision of the plan has three
dimensions to it:
l Smart City: Driving the economy as a global
megacity and Japan’s capital and engine and
aim to create a city that can solve the challenges
facing the megalopolis and continue growing to
lead in the international competition among cities.
l Safe City: To protect the lives and assets of the
city residents from all kinds of disasters, and build
a dynamic and bustling Tokyo.
l Diverse City: Creating a city that embraces
diversity and where everyone can lead vibrant
lives and participates in an active in society.
Next-Generation Energy and Social System
Demonstration Areas: Yokohama Smart City
Project / Virtual Power Plant Project: In 2010, the
Ministry of Economy, Trade and Industry (METI) as
one of four “Next-Generation Energy and Social
System Demonstration Areas” selected Yokohama
through its Yokohama Smart City Project (YSCP), the
city works to provide a system optimizing energy
supply and demand at individual homes, commercial
buildings and in urban areas, in cooperation with
34 companies. Those include Japan’s leading
energy company, an electrical manufacturer and
construction companies.
In 2015, a new public-private body, the
Yokohama Smart Business Association (YSBA),
was established to advance the project from
demonstration to implementation. Yokohama’s
aim is to be an energy-recycling city that is
environmentally robust, resistant to disasters,
and economically strong.
71 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Potential Partnership Areas – Where do the Opportunities Lie?lxxviii
‘CONNECT’ OPPORTUNITIES: R&D WITH AN AIM TO PROVIDE A GATEWAY TO COMMERCIAL BUSINESS
The areas below have been identified by aligning
UK commercial and innovation strengths with
challenges faced by Japanese cities that are
currently being unmet by the domestic market.
OPPORTUNITY DESCRIPTION AND REASONING
Citizen Engagement and Service Design
The UK has expertise in citizen engagement methods, with many design-led businesses creating innovative solutions to promote public engagement with respect to urban development. Citizen participation is not a clear priority in Japanese Smart Community projects as it has historically not been encouraged by private sector companies or central government. However, some local governments are realising the need to engage citizens (Eg: Kitakyushu). The UK could offer knowledge and services around combining social and digital capabilities to deliver services to citizens in a more integrated way.
Power Grid Technology and Management
Japan is making extensive changes to its energy infrastructure including market restructuration, power grid upgrades and massive expansion of renewable energy. The UK is advanced in power grid technology and management, as well as long distance transmission networks, therefore the UK could establish partnerships to provide expertise as well as products and services. Japan is progressing with its smart meter rollout with TEPCO expecting to install 27 million smart meters by 2020. The UK has quickly developed into one of the most attractive markets in the world for advanced smart grid technology and applications, thanks to a highly competitive energy sector and recent reforms.
Energy Efficiency of Existing Building Stock (Retrofitting)
Despite good progress in improving the energy efficiency of the economy in general, major gains are yet to be made in building energy efficiency. With the country’s energy mix using a lot of fossil fuels, there is an urgent need to reduce energy consumptions across buildings and infrastructure if emissions targets are to be met. A system of voluntary standards is expected to be replaced by mandatory ones which will go some way in improving the situation, however there is more to be done. While Japan is making inroads in influencing the efficiency of new buildings, it is struggling to retrofit existing buildings. UK companies can bring expertise in insulation and energy efficient building design, backed by the Building Research Establishment’s assessment method for sustainable buildings, BREEAM.
Big Data and Sensing
Big data (centralising large amounts of data from multiple sources and processing it) can help identify patterns, define problems and inform decision-making. For example, traffic can be better regulated thanks to large data gathering about real time congestion level by street and preferred and alternative GPS routes. In case of an earthquake, it can also be useful to map the damage in terms of building and transportation networks, to access information about the evacuation routes and zones, the weather forecast, and the remaining available renewable energy sources. Such a capability could be valuable for a metropolis like Tokyo where structures and infrastructure need to be maintained and people need to be kept moving. Currently, while this technology is being used in specific smart city projects in defined areas of cities, it is not yet being applied at a city scale.
Innovation ‘Coaching’
Japan has only recently started to encourage an entrepreneurial culture and cultivate a national start-up ecosystem; therefore, these areas are fairly immature and underdeveloped. The UK and London are frequently ranked at the top of entrepreneurial and start-up indexes and have developed a huge amount of knowledge about how to create and grow a successful start-up ecosystem. This knowledge could be extremely valuable to Japan, therefore, could form the basis of collaboration between the two countries.
Table 13
72 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
‘FUND’ OPPORTUNITIES: R&D WITH AN AIM TO FACILITATE KNOWLEDGE TRANSFER AND LEARNINGThe areas below have been selected by
identifying mutual challenges faced by the
UK and Japanese cities that are currently not
solved by either domestic market, or they are
areas where both countries have complementary
skills, which could be brought together to better
solve a particular market challenge
OPPORTUNITY DESCRIPTION AND REASONING
Smart Ageing
Both countries have ageing populations, although Japan is further ahead in the process. This demographic shift will require significant changes to the way cities are planned and to the way services are delivered. Healthcare, in particular, will need to be delivered in new ways in order to meet increasing demand. To date, neither country has made major inroads in this area, creating opportunities for the two countries to work together in order to develop ‘smart ageing’ solutions.
Circular Economy Japan has been a diligent advocate of circular economy principles for decades and has an extensive set of policies and progressive targets to drive further progress. As the UK recognises the need to be more conservative in its consumption and recycle more, learnings from Japan could be extremely useful.
Public TransportBoth the UK and Japan have well developed, integrated and heavily-used public transportation systems. There is an opportunity for the two countries to work together to create market-leading next-generation public transportation solutions.
Sustainable funding sources and diversified business models
Like many other countries, the UK and Japan are both struggling to sustain innovative smart city solutions past initial demonstrator or pilot stages, which typically involve public sector subsidies or grants. The two countries together could explore innovative ways to secure sustainable funding and diversified business models for smart cities projects.
Robotics
Japan has long been known as a ‘robotics superpower’ and continues to build on its strengths in the diverse area of robotics production, utilisation, supply of key parts and research and development. While previously an expert in industrial robotics, Japan is now focusing attention on the development of nursing, construction, infrastructure maintenance and management robots and disaster response robots all of which could be of use to the UK. Therefore, collaboration in this area could be extremely beneficial to the UK.
Table 14
73 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Supporting Factors for UK SMEs Entry
An Innovation Hub and changing business
environment: Japan is currently ranked 14th
in the Global Innovation Index (GII) ahead of
New Zealand, France and Australia and just
behind Canada. Japan is very active in R&D
and innovation and has filed a large number
of patents, many of which have high universal
validity. It’s pedigree as an innovator is
undoubted and is trying to rapidly adapt
to the digital age. As a push to revitalize
Japan’s stagnant economy, Prime Minister
Shinzo Abe has implemented a package of
reforms dubbed “Abenomics.” The so-called
third arrow of Abenomics is concerned with
deregulation, and through it, a number of
special economic zones (SEZs) have been
established across the country. Osaka and
the greater Kansai area – including the
nearby cities of Kyoto and Kobe – have
been selected as a SEZ as a part of the SEZ.
Culturally, Japan is experiencing a rapid change
in outlook too. It is opening up more and as a
country, is keen to understand the learnings
from international companies and research
organisations. The merits of an entrepreneurial
and innovative culture are gradually being
recognised, and this has led to a rapid increase
in support for start-up businesses. This cultural
shift is also being seen in Japan’s corporations.
Japan’s shrinking population: Japan is
currently dealing with the challenges of an
ageing urbanised population. In urban areas,
the birth rate has fallen far below replacement
rate. With a falling birth rate, one of the world’s
longest life expectancies, and close to zero net
immigration, Japan is headed for a uniquely
high ratio of seniors. New companies can thrive
in this hyper aging societies by identifying
new customer segments among seniors
and developing novel products (Companies
can profit from hyper ageing is to develop
products that help seniors cope with infirmity)
and services to help them. Hyper ageing
could be an area where companies from the
UK and Japan could potentially collaborate
to develop new products and services for the
Japanese market.
Large urban infrastructure market: Given
Japan’s urban infrastructure sector is very
much dominated by large domestic firms,
there could be clearly niche opportunities
for UK companies to collaborate with
Local companies in areas such as urban
data analytics, AI and citizen engagement.
Japanese green card for highly skilled
foreign professionals: In order to invite
more highly skilled foreign professionals
to Japan, the Japanese Green Card for
Highly-Skilled Foreign Professionals system
was established in April 2017 to greatly
shorten the residence period of five years
necessary for an application for permission
of permanent residence, to make it the
most quickly obtainable green card in the
world. This will allow foreign researchers,
corporate managers, and other workers with
specialized talents to apply for permanent
residence after as little as a single year living
in Japan. This strategy bearing the subtitle
“Toward a Fourth Industrial Revolution”—
calls for ‘strengthening creation of innovation’
and identifies attracting highly skilled
foreign professionals to work in Japan as
an integral component in that process.
Achieving this goal will require creating a
system that lets foreign talent stay in Japan
for an extended time.
74 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
SME SURVEY
“Our target businesses are both global enterprises and start-ups. We will ease the terms and conditions for hiring talent, both local and foreign. Osaka wants people who are internationally-minded using the city as a base.”
Masaaki Yoshikawa, Osaka Innovtion Hub Director
Box 3
Tokyo 2020: Japan remains the third-largest
economy in the world, bigger than the UK and
Germany combined. Japan’s new ‘sports economy’
is likely to boost economic growth further when
Tokyo hosts the Rugby World Cup in 2019, and
the Olympic and Paralympic games in 2020. As
a result of their preparations, urban development
has accelerated as the 2020 Olympics approach.
Environment and sustainability have been a key
focus of the International Olympic Committee and
the Tokyo 2020 Committee in charge of organising
the Games is cooperating with Tokyo Metropolitan
Government to ensure the planning for these
games are as sustainable as possible. This partially
builds on the existing smart city strategy, which
includes the upgrading of energy efficiency in
buildings via installations of Energy Management
Systems, fostering take-up of renewable energy
sources such as solar PV and hydrogen, and a
number of other measures to ensure a stable
energy supply and lower carbon dioxide emissions.
The 2020 Olympic and Paralympic Games will
provide an opportunity to increase awareness
of renewable energy, energy saving and waste
management. The mega-event will also be the
opportunity for the SME and enterprises from EU
and Japan to cooperate further in terms of smart
city development and provide opportunities for
further partnerships in business, research and
city-to-city cooperation. There is a wide range
of sectors, which offer market and cooperation
opportunities, from sustainable construction to
renewable energy production and urban consulting.
Complex business practices and competition could
potentially make market access difficult, however
these opportunities could eventually translate into
long-term business in the smart city sector in Japan.
Establishment of ‘Regulatory Sandbox’ system:
In the ‘Growth Strategy 2017’ (Cabinet Decision
on June 9, 2017), the government announced a
‘regulatory sandbox’ system to the encourage
development of business models through trial and
error to foster new innovative businesses. The
system is expected to be used when companies
start new businesses that are not envisaged by
existing regulations in fields such as IoT, AI, Big
Data, drones and autonomous vehicles, which have
been developing rapidly.
In addition to the establishment of the ‘sandbox’
regulation system for individual projects, the
‘Growth Strategy 2017’ will establish a framework
to ensure prompt and smooth implementation
of demonstration experiments of automated
driving, drones and other near-term technologies
by fundamentally reviewing relevant preliminary
regulations and procedures also in the National
Strategic Special Zones.lxxix
R&D tax system: The Act on Partial Revision, etc.
of the Income Tax Act, etc. that was enacted
recently fundamentally revised the research and
development tax system that is a tax credit system
for experimental research. It’s most important
to note that for the for the points (for this tax
credit system) pertaining to development of new
“services” based on the Fourth Industrial Revolution
utilizing big data, etc. are included in the categories
75 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
to be supported by the R&D tax system in
addition to existing “manufacturing” R&D in
the manufacturing industry. This is a measure
to support the creation of new businesses
through the Fourth Industrial Revolution
leveraging IoT, Big Data, artificial intelligence
and other technologies. The revision of the
definition of costs of experimental research
has made the R&D tax incentive available also
for service development to create value using
data as a key factor in the age of the Fourth
Industrial Revolution.
Five Promises for Attracting Foreign
Businesses to Japan: The Council for
Promotion of Foreign Direct Investment in
Japan adopted “Five Promises for Attracting
Foreign Businesses to Japan” to address issues
frequently suggested by foreign companies as
“obstacles to convenience.” They are:
1. Strengthen advisory and consultation services
to support foreign businesses, in order to
develop an environment for foreign companies
to do business easily and improving the living
environment for foreigners
2. Overcome language barriers at retailers
and restaurants
3. Facilitate better Internet connectivity
4. Accommodate business jets at local airports
5. Enhance educational environment for
expatriate children
New Trend in Inward FDI in Japan: Given that
promotion of inward FDI in Japan will introduce
superior technologies and new know-how and
promote value enhancement of innovation
FIFTH PROMISE: STRENGTHEN ADVISORY AND CONSULTATION SERVICES TO SUPPORT FOREIGN BUSINESSES
Item Progress
Investment Advisor Assignment System
• The “Investment Advisor Assignment System” was established. In this system, State Ministers act as advisors to companies that have made important investments in Japan. Nine companies were selected in March of 2016.
• Operation of the system started in April 2016 and State Ministers interviewed the companies 12 times in total by the end of FY2016
Collaboration with local governments
• Portal site for creation of the global economic cycle for regional economies was built to attract companies to provincial regions and was launched in August 2015.
• The portal site was made multilingual (English, French, Chinese and Korean) in FY2016 to disseminate information of local products registered with the site.
Table 15
76 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
creation and technology accumulation in Japan, the
government positions the promotion of FDI in Japan as
one of the priority issues in its growth strategy. Japan
has an established reputation as “a huge sophisticated
market.” In addition, the existence of Japanese
companies and research institutes with advanced
technologies and infrastructure favourable for R&D
is also appreciated in recent years. Establishment of
R&D centres by foreign capital has become one of
the recent FDI trends in Japan. In this context, foreign
companies are actively working to promote innovation
in Japan by fusing their technologies with Japanese
companies’ technologies in the field of IoT (Internet of
Things) and artificial intelligence (AI) with a background
of rapid progress of the Fourth Industrial Revolution.
In a related development, foreign companies are
increasing their presence with the penetration of
“Open Innovation” that introduces technologies and
ideas from outside to create new values. Some of them
found commercial opportunities in Japan which is also
called a “frontrunner in overcoming global challenges”
and are contributing to solutions of various problems
Corporate Accelerators: New platforms for foreign
companies: Large corporates such as NTT DoCoMo,
Mitsubishi, Hitachi, Denso, Toyota and Keikyu
Railways have switched on to the opportunities of
open innovation and this includes collaboration with
foreign partners by setting up corporate accelerators
as platforms that could enable collaboration with
foreign companies.
Collaboration in Third markets: The British and
Japanese governments are both interested in
leveraging opportunities for British and Japanese
companies in 3rd markets in Asia, Africa and the
Middle East. Japanese companies have a strong
track record in large scale transport and infrastructure
projects, but they tend to go it alone. UK innovations
could improve their competitive advantage while also
providing export and R&I collaboration opportunities
for UK SMEs in the process.
Challenges to Market Entry for UK SMEsJapan, as the third-largest economy and second-
largest capital market in the world, has been
regarded as a difficult market for foreign
companies to penetrate compared with other
advanced economies. Domestically, the
economy’s slow growth has led to calls for
reform of its rigid structure, which often inhibits
the entrepreneurial spirit.
Language and culturelxxx: New entrants in the
market face real challenges in reaching their
business outcomes in Japan due to the Japanese
language and culture. It is a country with distinctive
formal and informal communication rules and
strong expectations on product quality and
corporate integrity which, when upset, may hurt
beyond recovery trust and business prospects.
l Although English language capabilities are
improving, the average proficiency level
among Japanese professionals currently lags
far behind that of other Asian countries such as
Singapore, India or the Philippines. In addition
to difficulties with business communication
in English, companies may also struggle with
Japanese-only official documentation and
information systems and may require the
help of an interpreter.
l Even when language is not a barrier, cultural
differences may hinder effective business
communications. Doing business in Japan
entails engaging internal teams and
collaborating with local third parties whose
basic expectations may differ from that of
international startups and companies. Foreign
companies need to take a strategic approach
to entering the Japanese market, rather than
an opportunistic one.
77 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
l Japan is a country of marked contrast, between
tradition and modernity, but also between
openness and insularity. As a nation, Japan can
also perform remarkable and decisive changes
of direction as it proved when it came out of
more than 200 years of self-imposed seclusion
to the rest of the world through the Sakoku
(“Locked Country”) policy which remained in
effect until 1853 to embrace international trade
and becoming the first Asian nation to adopt a
Western Style Constitution in 1889.
Natural Disasters: Japan is prone to and has
experienced numerous natural disasters such
as Earthquakes, Tsunamis, Typhoons and
Volcanic Eruptions. Such natural phenomena
are a frequent occurrence in Japan and
Japanese people are taught from a young age how
to prepare for them as much as possible. In addition
to human suffering, natural disasters of such
amplitude severely impact an array of business
activities, from supply chain and production to
sales. The potential for damage from natural
disasters cannot be completely mitigated, but
global companies with operations or suppliers in
Japan should prepare as much as possible with a
strong commitment to Safety Regulations, Business
Continuity Planning and Third-Party Management
Exclusive supplier Networks: Exclusive supplier
networks (Cross stock holding and interconnection
of business interests among Japanese companies)
and alliances between domestic business
organisations can restrict competition from
foreign companies.
Information Security: With the surge in high
profile corporate data breaches in 2014,
managing information security challenges has
become a prevailing concern among top decision
makers across the globe. Doing business in
Japan going forward entails adapting to
strengthening regulatory requirements
and addressing stakeholders’ increasing
expectations pertaining to the prevention of
the following three main issues:
• Cybercrime (hacking)
• Privacy Protection
• Third Party Providers
Routes to Market – How can UK SMEs Access these Opportunities? The combined influence of the Abenomics
policies and the prospect of stronger
corporate standards are boosting Japan’s
profile as a target for foreign investment
and contributing to improving conditions for
international business.
l Top-level sales and overseas seminars/
symposia: In FY2016, the Japanese
government held 163 seminars/symposia on
investment in Japan and encouraged foreign
enterprises and government officials to invest
in Japan. At the Invest Japan Seminar held
in Brussels (Belgium, in May 2016) and the
Invest Japan Symposium in New York (US,
in September 2016), Prime Minister Abe
took the platform for top-level sales to
foreign companies. The symposium held
in New York gathered more than 300
participants. Mayors also attended the
seminar and symposium to introduce the
attractiveness of their respective regions
mentioning the particular examples of foreign
companies that expanded into the region
and also publicized their incentive programs
including subsidies and establishment of
industrial parks. In addition to these seminars
and symposia, in September 2017
78 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
In FY2016, JETRO held 163 seminars/symposia
on investment in Japan in major cities in the
world including top-level sales by Prime
Minister Abe.
l Tokyo 2020: Japan has won the opportunity
to host the Rugby World Cup 2019 and the
Olympic and Paralympic Games in 2020.
These events could provide potential
business and partnership opportunities for
British companies – large and small. Whilst
Japan has a strong domestic industry and
previous experience in hosting sports events,
Tokyo 2020 could serve as a great platform
for UK companies to find opportunities to
contribute to these events - almost certainly
in partnership with Japanese firms.
Box 4
CYBER SECURITY
The Cambridge-based company Darktrace, for example, has identified in japan a market ripe for new approaches to cyber security as Tokyo prepares for 2020 Olympics and its largest group, such as Sony, become high profile victims of a new wave of financially motivated cyber attacks.
The Tokyo 2020 Committee has committed to
holding a Green Olympic. An ‘Action & Legacy Plan’
has been established in 2016 and is based on 5
pillars for which specific legacy sub-commissions
will be created in order to monitor the efforts. The
five pillars are sports and health; urban planning
and sustainability; culture and education; economy
Invest JapanSeminar in Brussels
Date: May 4 (Web), 2016Participants: 129 personsCo-organizers: Ministry of Economics, Trade and Industry (METI), Kobe City, Tsukuba CitySupporters: Japanese Embassy in Belgium, Ministry of Foreign Affairs of Belgium, etc.
Invest Japan Symposiumin New York
Date: September 19 (Mon), 2016Participants: 320 personsCo-organizers: Ministry of Economics, Trade and Industry (METI), Hamamatsu CitySupporters: Consulate General of Japan in New York, etc.
Europe
49 Asia
62
NorthAmerica
43
Otherregions
9
Figure 11: In FY2016, JETRO held 163 seminars/symposia on investment in Japan in major cities in the world including top-level sales by Prime Minister Abe.
79 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
and technology; and recovery from the Great
Earthquake, and national benefits and global
communication. The area of urban planning and
sustainability could be an attractive area for the
UK SMEs to collaborate with existing big UK
companies for opportunities.
l Liaise with Organizations/Subject Matter
Experts with Local expertise: JETRO
(Japan External Trade Organization), as
Japan’s central organisation for attracting
inward FDI, has provided support for more
than 16,000 projects aimed at entering the
Japanese market, and helped in the
successful establishment of over 1,600
companies. Experienced staff members
and specialists in Industry, law, accounting
and other fields cooperate to address the
challenges faced by Foreign companies
starting up in Japan, including those related
to language, business practices, rules and
regulations. Doing business in Japan for foreign
firms could be facilitated by organisations like
the British Chambers of Commerce Japan
(BCCJ) which could actively support UK
companies setting up. For example large real
estate owners such as Mouranchi have created
a one-stop-shop which helps facilitate the
creation of new businesses.
SME SURVEY
“It is difficult to enter the Japanese market without sufficient research, contacts (including local partners) and preparation due to its unique insular business culture”SME survey respondent
Box 5
l Support from pre-established Local and
UK companies: Support from pre-existing
large UK businesses (In the purview of R&I)
to new SMEs could pave a great way for
their entry into local markets. Many UK firms
initially opt to operate in Japan through a
distributor of another form of partnership,
although more than 450 British firms have
generated sufficient momentum to set up
their own presence in Japan. These range
from large FTSE 100 multi-nationals to
small companies for whom Japan is a key
market. The majority of these companies are
headquartered in the Tokyo area, with other,
smaller clusters in the Kansai region around
Osaka/Kobe, and in Yokohama. There is a
strong representation from the transport
services sectors, as well pharmaceuticals. The
most recent influx of new companies is in the
life sciences and energy sectors – evidence
of the changing economic landscape. For UK
SMEs that want to access the Japanese
market, Japan’s corporate accelerators are
clearly one of the main routes in. Companies
such as NTT DoCoMo, Hitachi have
already started to look at these models of
collaboration with foreign partners.
Tokyo
80 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
CASE STUDY: APICAL LIMITED
Apical Limited- A British company that pioneered exciting new technology for camera imaging found Japan to be the perfect launch pad for their product.
Overview: Established as recently as 2002, the company is headquartered in Newcastle-upon-Tyne and improves the connectivity of both trains and buses, giving passengers access to more reliable Internet connections, media entertainment and real-time information whilst they are on the move. Nomad’s expertise provides them with improved vehicle safety, increased efficiency and vehicle monitoring and maintenance.
Apical’s technology was introduced into the DSC and DSLR market by Olympus, Sony and Nikon, and was later adopted by smartphone companies pioneering high-quality cameras including Sony-Ericsson and Sharp. Its current business is in the smartphone market, with research into smart sensors for the next generation of products.
Interesting facts: Pioneered new technology for cameras based on how the eye works; Found success in Japan first before expanding globally; In the first four years of operation, 100% of the business came from Japan; Currently more than 1 billion products across the globe contain Apical technology.
“Our story is unique because we started out and built our success in Japan first, before breaking into any other markets. We knew we had technology that other companies wanted, and the idea of our potential is what gave us the confidence to keep coming back to Japan relationships that led to business. You really have to commit to Japan and have the right attitude for long-term business rather than a quick win. We did that with our engineering teams and considering our target customers.”
Michael Tusch, CEO, Apical Limited
Box 6
l Collaborate with Japanese companies to explore
opportunities in 3rd markets: Japan Bank for
International Cooperation (JBIC) and the UK’s
DIT at the British Embassy in Tokyo are actively
exploring opportunities for collaboration in third
markets. JBIC has an MoU with DIT on how UK
and Japanese companies can collaborate on
infrastructure development. The MoU with DIT
includes areas such as offshore wind, nuclear,
high speed rail and regeneration, as well as
collaboration/ cooperation in 3rd countries and
could present the UK SMEs great opportunities
to partner with Japanese companies to explore
business opportunities in 3rd markets.
Recommendations for SMEs – Better Access to Opportunities
ADDRESSING CHALLENGES
A common reason for lacklustre business
performance in the Japanese market by western
companies is the inability of such organisations to
fully grasp the nuances of the Japanese culture
and the inextricably linked social mores. Local
partnerships (which can be structured in many
ways) have been successfully used by many
organisations to ensure their products and services
are respectful of and in line with expectations of the
Japanese culture.
l Collaborate with bodies such as ‘Export to
Japan’ which provides companies with local on-
ground support: The Japanese business culture
attaches a high degree of importance to personal
relationships and these take time to establish and
nurture. A strong network of personal contacts is
vital in the Japanese market. It is also advisable
to understand the network of relationships, which
your partners and competitors work within. It can
be difficult for UK firms to gauge the real thoughts
and intentions behind the politeness of Japanese
people. This is where a local representative who
has experience of doing business in Japan can be
invaluable as they will be able to read between
the lines of the behaviour and language used
by your Japanese counterparts and interpret
81 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
them for you to minimise your chances of
misunderstanding and miscommunication.
The pace of decision-making in Japan
is generally much slower than in the UK.
Patience and repeated follow-up are typically
required to successfully close a deal.
However, once the Japanese have decided
to do business with you, things can then
move very quickly.
l Use Personal Advisors System for
Foreign Companies: SMEs could establish
connections with networks such as JETRO
(Japan External Trade Organization).
JETRO recently introduced an advisor
system in which their staff members serve
as ‘attendants’ to about 1,000 companies
to provide enhanced consultation and
solve individual problems specific to new
companies. Their aim is to realize more
projects by providing customized and highly
reliable services in cooperation with the central
and local governments. It will take measures
such as disseminating English information on
10 focused fields, enhancing consultations for
foreign companies, and resolving individual
issues by persons in charge and teams of
specialists through cooperation with related
ministries and agencies.
Develop disaster management plans: All
organisations seeking to enter or expand in
Japan must actively prepare to deal with the
human and business impact of the natural
disasters which the country frequently faces.
Ensuring that organisations design multi-faceted
disaster recovery plans is crucial, and these need
to be ideally co-developed with the relevant
government organisations, which are best-placed
to ensure the plan suits the Japanese context.
JETRO personnel in charge of attracting investment (Personal Advisors for Foreign Companies) proactively conduct hearings about the needs of JETRO-supported companies and provide detailed support.
Proactively hearing the needs of companies to solve the problems
• Need information on government and local incentives
• Request addressing of regulatory and procedural barriers and obstacles for business
Personal advisors for Foreign Companies
Proposals to the government:
• Recommendations for improvement of regulations and procedures
Cooperation with municipalities:
• Support for inspection mission and interview arrangement
• Providing incentive information
Support for individual projects:
• Providing market information
• Support for constructing business models through strategic proposals
• Consultation by an expert (administrative scrivener, judicial scrivener, tax accountant, accountant, etc.)
• Support for human resources and property search
• Provision of temporary office
1000 foreigncompanies
• Unsure of what kind of regulations or procedures are necessary
• Need information on policies and market trends in English
Local government, etc.Invest Japan HotlineGovernment, Ministries
Figure 12
82 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Examples of government agencies dealing
with disaster management include Asian
Disaster Reduction Center, and National
Nuclear Safety Agency.
IUK should promote academic tie-ups
between Japanese and UK universities
to further develop bilateral relationships
in academics and research: The Fukushima
Prefecture has a longstanding collaboration
with the University College of London (a
Memorandum of Understanding was signed in in
2014) and is facilitating students to join a ten-strong
delegation to visit Fukushima in 2018 to promote
bilateral academic and research relationships.
Academic tie-ups could be an important instrument
to establish long-term research collaboration
and support in areas of interest such as
urban planning, infrastructure, design and
urban resilience. In addition, such tie-ups
would be greatly beneficial for SMEs as the
Japanese academic institutes nurture future
talent in relevant areas.
Establish a Dialogue with DIT Japan
towards Tokyo 2020: DIT Japan will be
leading a programme of activities and events
in the months leading to the Tokyo 2020
Olympics. As this will focus on the exchange
of lessons learnt from London 2012, UK
SMEs could engage in this dialogue in the
coming months.
EXAMPLES OF UK COMPANIES BASED IN JAPAN
Company Sector Japan HQ
GlaxoSmithKline Pharmaceuticals Tokyo
Rolls-Royce Automotive Tokyo
Arup Professional services firm (Design, planning and engineering) Tokyo
British Telecom Communications Tokyo
Astra Zeneca Pharmaceuticals Tokyo
Table 16
83 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
CHAPTER 2
CITY TYPOLOGIES
Source: The Business of Cities
CITY TYPOLOGIES: A STATE OF THE ART
Who Produces City Typologies? What tends to be the Focus? What Methods Do They Use?
Consultancies Sustainability Quantitative and spatial analysis
Energy companies Invest-ability Data from multiple indicators
Sustainability centres Future Economic Readiness Case studies
Research groups and think-tanks Smartness Stylised judgments
Universities City Clusters Statistical Methods
Table 17
This chapter provides a new and unique methodology for classifying the world’s cities. It looks at the world’s cities and categorises them based on rigorous and deep data to create a multi-level typology approach to determining which cities are, or in the future could, provide high potential opportunities across various market types including business-to-business and business-to-government engagements as well as research and innovation opportunities.
Given the growing significance of distinct city dynamics – across different countries and within the same country – it has become essential to adopt a novel lens of city typologies that focuses on cities and their dynamics, against the backdrop of national or regional dynamics.
This ‘hybrid’ approach begins to account for the ever changing political, economic, social and technological dynamics within the landscapes of cities that are playing a bigger role in determining the overall market potential and attractiveness for innovative, urban businesses.The core 2x2 framework categorises cities
according to growth (both per capita and population), and also city size. This creates multiple lists of cities that could, for example, be high growth and size, high growth and medium size or low growth and small size, among others. Users can then select the ‘type’ of cities they want to examine further to determine their capacity for cities with a high-public sector demand (B2G), cities with promising business-to-business (B2B) markets, and cities with strong R&I opportunities, all scored on a spectrum through rigorous data and research.This methodology produces a dynamic mix of cities from the initial filters to reveal emerging and established market opportunities and highlights cities beyond the ‘usual suspects’ for cities primed for partnership, growth and market development.
This chapter illustrates the uniqueness, usefulness and usability of the city typology methodology by highlighting several case studies of cities falling within different categories on the typology including: Tokyo, Varanasi, Nanyang, and San Diego.
84 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
2.1 OVERVIEW
Cities have been the foci of democracy, creativity, and
economic activity. Both productivity and growth are
strongly determined by densities and agglomerations of
people that cities provide. Cities also serve as catalysts
for collective action, decision-making and accountability
(World Bank, 2009).lxxxi For innovative businesses, the
scale of cities and their inherent efficiencies make them
well suited to design, test and pilot new business
models and products.
Increasingly, essential services including water, energy,
clean air and waste are being managed at the city level,
rather than by national authorities. This implies varying
models of urbanisation are adopted across cities.
Furthermore, cities tend to develop differently based
on legacy infrastructure, social and cultural preferences,
geographical location, financial resources, and political
and institutional capacity to plan and manage development.
These differences make it imperative to understand how
cities can be understood both individually and as clusters,
based on their performance across a set of parameters – in
this case, parameters that help determine the attractiveness
and market potential of cities within the innovation
and urban services domain.
To this end, in partnership with cities experts The
Business of Cities, we have designed an innovative
framework to build a typology that categorises global
cities into three types, each with defining characteristics,
as described further in the following sections.
This framework can be used to understand any given
city’s market, strength, and potential. This can ultimately
be extended to assess the replication potential of
innovative solutions offered by UK SMEs within global
cities, and to help identify a larger group of potential
city partners than is possible solely through
a focus on a limited range of national markets.
2.2 Methodology This exercise aimed at creating a city typology
framework that incorporates various relevant
dimensions in innovative ways to assess the R&I
and market potential of cities for urban services and
solutions. The approach is based on using evidence
and demand-led development of frameworks and
constituent indicators.
R&D
B2G
B2B
National Filter based on openness to UK
market and business environment
Identify the basic city types
Apply national market filters
Identify top cities in 3 sets
of key variables
Cities in non-conducive national markets filtered out
CITYTYPE 1
CITYTYPE 2
CITYTYPE 4
CITYTYPE 5
CITYTYPE 7
CITYTYPE 8
CITYTYPE 3
CITYTYPE 6
CITYTYPE 9
Figure 13: Process Map
85 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
2.3 Process MapCORE FRAMEWORK FACTORS
The primary filter framework categorises
cities based on two core factors:
l Rate of growth (GDP per capita and population):
This helps to differentiate cities at various stages
of growth and answer critical questions of:
• How fast is the population growing?
• How fast is per capita economic growth?
• How fast is this growth relative to their
wider region?
The growth stage of a city plays a crucial role in
determining its demand for urban services, mainly
in terms of ‘what or how advanced’ a service is
needed and also in terms of ‘how much’ is needed.
l City population size: This helps to differentiate
between:
• Cities of global scale (>5 million people)
• Competitive ‘middleweight’ cities (2 to 5
million people)
• ‘Goldilocks’ cities – Cities with large
enough markets, integrated leadership,
procurement capability, and civic engagement
(<2 million people)
Figure 14
TARGETGROUP 4
TARGETGROUP 5
TARGETGROUP 6
TARGETGROUP 7
TARGETGROUP 8
TARGETGROUP 9
Small
High
Medium
2 million + 5 million +
Low
500,000+
Medium Large
Rate of Growth/GDP + Population,
Populationsize
High performing ‘Goldilocks’ Cities (Target Group 1)
Rapidly growing competitive
middleweights (Target Group 2)
High growth, high need megacities (Target Group 3)
These core filters yield a list of around 500 cities
across different Target Groups, which can then be
analysed in subsequent filters across three types,
determined by different sets of indicators.
APPLYING NATIONAL FILTERS TO ELIMINATE CITIES IN LESS ATTRACTIVE COUNTRIES
The resulting target groups of the primary filter cities
are further run against a set of national filters to
eliminate cities that are made less attractive owing
to a range of country or bilateral political, cultural
and regulatory dynamics. Specifically, the following
filters have been used for this purpose: intellectual
property protection rules; ease of doing business;
rule of Law; and total recent trade with the UK.
These screen out nations and their respective cities
with business and trade environments that are not
currently conducive to UK SMEs in the advanced
urban services domain.
86 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
IDENTIFYING TOP-PERFORMING CITIES ACROSS IDENTIFIED CITY TYPES
The next phase allows for classifying cities into
three city market types, each characterised by a
unique combination of determining, measurable
indicators. The three types are intended to help
understand the suitability of various cities to focus
UK SMEs’ overseas strategy. These types are:
• B2G – Cities with high public-sector demand
• B2B – Cites with promising business-to-
business markets
• R&I – Cities with strong research and
innovation opportunities
Each of these types entails a set of measurable
indicators against which each city’s performance
is scored.
To illustrate the functioning of the framework, three
target groups of cities were randomly selected
and scored within each target group against the
relevant indicators for a particular city type, as
illustrated in figure 15.
INDICATORS USED FOR THE CITY TYPES
Figure 15
Target Middle-weight R&I Cities
Target LowerGrowth B2B markets
Small
High
Medium
2 million + 5 million +
Low
500,000+
Medium Large
Populationsize
Target High Growth ‘Goldilocks’ Cities for
B2G opportunities
Rate of Growth/GDP + Population,
For each of the city types, multiple
indicators were used to create the most
robust picture of the cities market potential
and strength. For example, when assessing
which cities might present a strong business-
to-government focus, indicators such as
city budget size, future city strategy, density
and government procurement processes
were assessed. For potential strong and
lucrative business-to-business focused
cities, indicators across large company
presence, talent pool, investment attraction
and competition, were employed. Lastly,
where a strong R&I market was of interest
data for R&D spend and growth were
combined with indicators on innovation
ecosystems and collaboration across
academia and industry.
87 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Small
High
Medium
2 million + 5 million +
Low
500,000+
Medium Large
Populationsize
Dublin, Bucharest, Tel Aviv, Haifa, Prague, Budapest Bilbao, Edinburgh, Valladolid, Raleigh, Charlotte, Austin,
Nashville, Orlando, Salt Lake City, Indianapolis, Columbus (OH), Gold
Coast, Newcastle (NSW), Antofagasta, Konya, Antalya, Suqian, Datong, Huainan, Puning,Nanyang, Taian, Yancheng, Nanchong, Batam,
Putian, Zaozhuang, Linyi, Lianyungang, Chifeng, Baoji, Jinzhou,
Zhuzhou, Skopje, Doha, Sharjah, Ranchi, Rajkot, Tiruchirappalli, Asansol, Chandigarh, Tiruppur,
Jodhpur, Varanasi, Raipur, Srinagar
Athens, Manchester, Warsaw, Las Vegas, Denver, Weifang, Shantou, Shijiazhuang, Nanning, Lanzhou,
Zhengzhou, Fuzhou, Huizhou, Changchun, Taiyuan, Changzhou,
Nanchang, Kochi, Coimbatore, Lucknow, Indore, Kanpur, Huai’an,
Haikou, Luoyang, Patna, Visakhapatnam, Vadodara, Bhopal, Agra, Leeds, San Antonio, Portland,
Riverside-San Bernadino, Sacramento, Perth, Brisbane, Adana
Glasgow, Stockholm, Porto, Valencia, Gothenburg, Marseille, Amsterdam, Copenhagen, Lyon, Lille, Calgary,
Edmonton, Richmond (VI), Jacksonville, Memphis, Pittsburgh, Louisville,
Ottawa, Cincinnati, Auckland, Adelaide, Wellington, Gaziantep, Cixi, Xiangyang,
Handan, Yiwu, Qinhuangdao, Xining, Baoding, Hengyang, Taizhou, Qigihaer,
Guilin, Rizhao, Jining, Zhenjiang, Xiangtan, Yingkou, Wuhu, Palembang,
Liuizhou, Mianyang, Taizhou, Quanzhou, Jilin, Abu Dhabi, Guwahati,
Jabalpur, Kollam, Aligarh, Gwalior, Kota, Mysore, Jamshedpur, Ludhiana
Cologne, Zurich, Vienna, Oslo, Basel, Helsinki, Turin, Virginia Beach, Kansas City, QuebeC. Providence, Milwaukee,
Cleveland, Hamilton (NZD), Christchurch, Anyang, Jiangmen,
Yichang, Fushun, Yangzhou, Zhuhai, Yongin, Anshan, Chaozhou, Benxi,
Taichung, Zhanjiang, Macau, Kaohsiung, Gwangju, Daejon,
Suweon, Ulsan, Changwon, Daqing, Medina, Mecca, Bareilly,
Hubli-Dharwad, Guntur, Amritsar, Aurangabad, Moradabad, Meerut,
Madurai, Dhanbad, Allahabad, Salem, Vereeniging, Port Elizabeth
Munich, Frankfurt, Berlin, Hamburg, Rome, Naples, Boston, San Francisco, Montreal, Detroit,
Wenzhou, Guiyang, Taipei, Incheon, Shizuoka-Hamamatsu, Busan,
Changsha, Sapporo, Kuwait City, Calicut, Pune, Santiago, Cape
Town, Durban, Baotou, Shaoxing, Xuzhou, Hiroshima, Sendai, Daegu,
Gujranwala, Nashik, Pretoria, Brussels, St, Louis
Paris, Tianjin, Hangzhou, Wuhan, Dongguan, Beijing, Riyadh,
Chennai, Bangalore, Madrid, Barcelona, Washington D.C.
Ankara, Suzhou, Dalian
London, Chongqing, Nanjing, Chengdu, Ahmedabad, Mumbai,
Delhi, Houston, Atlanta, Dallas-Fort Worth, Haerbin, Xiamen, Xi’an,
Shenyang, Yangon
Lisbon, Birmingham, Phoenix-Mesa, Tampa-St. Petersburg, Seattle, San
Diego, Minneapolis-St. Paul, Vancouver, Melbourne, Izmir,
Tangshan, Zhongshan, Wuxi, Ji’nan, Kunming, Bandung, Ningbo, Hefei,
Wulumqi, Zibo, Dubai, Jeddah, Nagpur, Thrissur, Malappuram, Jaipur,
Surat, Nantong, Yinchuan, Yantai, Thiruvananthapuram, Vijayawada,
Baltimore, Bursa, Sydney*
Milan, Chicago, New York, Los Angeles, Istanbul, Guangzhou,
Kuala Lumpur, Shanghai, Foshan, Shenzhen, Seoul, Hong Kong,
Nagoya, Osaka, Tokyo, Hyderabad, Calcutta, Johannesburg, Toronto,
Miami, Philadelphia, Qingdao, Singapore, Fukuoka
Rate of Growth/GDP + Population,
Figure 16
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2.4 OutcomesThe two phases (the primary lens of growth
and size, alongside the secondary lenses
of B2B, B2G and R&I) allow you to ‘pick’
different target groups to identify top-
performing cities. In this study, three target
groups of cities were selected at random
from Phase 1 and examined against the
three phase 2 types and their respective
data indicators.
The whole process reveals a dynamic mix of
cities from these initial filters and highlights:
l emerging and established market
opportunities
l beyond the ‘usual suspects’, towards
cities primed for partnership, growth
and market development.
However, it is important to note that these
rankings are propositional. They are not
definitive or conclusive and require further
in-depth testing and reviewing.
To provide an example of the outputs,
if you were to run the ‘Goldilocks’ cities
(small size but high growth) through the
secondary filter for Business-to-Government
you would see a selection of cities that
would include Varanasi, India; Edinburgh,
Scotland; and Budapest, Hungary.
Looking at some of the world’s largest
cities that have a lower rate of growth
and assessing them against Business-to-
Business opportunities show some of the
usual suspects in New York and Tokyo, but
perhaps some ‘unusual suspects’ in Osaka,
Japan; and Philadelphia, USA.
Finally, taking the ‘middleweights’, of
middle size and middle growth, and
running them through the filter for
Research and Innovation reveals cities
such as San Diego, USA; Hefei, China;
and Melbourne, Australia.
2.5 City Profile Case StudiesIntended to go in a bit more detail on some
of the top-ranking cities from each of the
three city types, the following city profiles
begin to illustrate the need for a more
detailed review of opportunities at a city
level going forwards.
89 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
CASE STUDY – Target High Growth ‘Goldilocks’ Cities for B2G opportunities: Varanasi (India)OVERVIEW
Table 18
MACRO INDICATORS DATA
GDP (PPP, 2015) $1.9bn
GDP Growth Rate (2015-25) 9.4%
GDP per Capita (2015) $3,790
Population (2015) 1.6 million
Population Density (2011) 14,598 per km2
Table 19 9
B2G POTENTIAL INDICATORS B2G POTENTIAL INDICATORS
RANK9
Plan and Strategy 8
Density 2
Governance 19
LG Procurement 36
Varanasi, also known as Banaras or Kashi, is one of
the oldest cities in the world. Varanasi has shown
a constant increase in population over the years.
Over the last few decades, the population has grown
sevenfold (from 207,650 persons in 1931 t to 1,435,113
persons in 2011). The economy of the city is largely
based on tourism, silk and cotton textiles, handicrafts,
metal and wood arts & artefacts. The city’s flourishing
9 Out of the 52 cities assessed under B2G type
tourism industry saw about 6.3 million tourists visiting
the city in 2013-2014.lxxxii
Varanasi ranked high on the secondary filter for
plan and strategy, governance and local government
procurement methods.
In 2016, Varanasi was chosen as one of the 27 cities
in the third round of the Indian government’s Smart
Cities Mission. Under the Mission, the central government
provides INR 500 crore (c. $75m) for each city over five
years with states making matching contributions. The
rest of the resources are expected to come from loans,
public-private partnerships (PPP), convergence of various
schemes of central and state governments besides own
resources of urban local bodies. So far, the government
has tied up multi-lateral lending from agencies Department
for International Development (DFID) of UK and Japan
International Cooperation Agency (JICA), who have
committed $500m each. Similarly, the Asian Development
Bank (ADB) and World Bank have committed $1bn.lxxxiii
KEY GOVERNMENT PROJECTS AND STRATEGIES“The entire concept of the Varanasi smart city
project will be focused on Varanasi’s socio-economic
growth, cleanliness, and smooth traffic movement.”
– Nitin Bansal, Commissioner, Varanasi Municipal
Corporation and CEO Varanasi Smart City, April 2018
The total estimated cost of the Varanasi Smart City Plan is
INR 2,520 crore ($378m), to be spent on the rejuvenation
of ‘ghats10’ , infrastructure, and e-governance. For area
development, there will be an estimated budget of INR
1,659 crore ($249m) and for pan-city solutions there is a
budget of INR 618 crore ($93m)lxxxiv. As per guidelines,
the duration of the Smart City Mission is five years, from
2015 to 2020. Some of the initiatives under the Plan
include:
l The provision of a single access card for the integrated
online payments for multiple means of transport.
10 Refers to a series of steps leading down to a body of water,
particularly a holy river.
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In addition to this, there is also the provision of the
Varanasi metro. There would also be upgrades made
in the utilities and entry fees to the heritage sites in
the city. All the popular sites of historic importance will
receive digital signage along with interactive panels
and interactive maps. The ambitious Smart City plan
would also involve traffic sensors, public bicycle sharing
systems and even smart street lights with panic buttons
and LED lighting to brighten the overall city.lxxxv
l Some other projects include: single station IT solutions
for managing the city; 2-wheeler only parking based
on local mobility dynamics; decongesting streets by
moving stray cattle to a designated natural setting
with veterinary/shelter facilities outside city; age-old
‘ghats’ restoration; under the flyover placemaking;
beautification of water tanks; housing projects;
consolidation of 4 existing different land uses into
integrated business districts (Town Hall City Centre)
and redevelopment of old police stations
Other than the Smart City Plan, the City Development
Plan 2041 is a key program guiding projects in
Varanasi. The program is a joint Partnership Program
between the (central) Ministry of Urban Development,
Government of India and The World Bank.
Similarly, under the Atal Mission for Rejuvenation and
Urban Transformation (AMRUT), the city is working to
provide drinking water, sewage and drainage networks
and non-motorised transport to citizens.
B2G PARTNERSHIPSThe city of Varanasi is one of the few Indian cities that
appear to be well on their path to implementation
of various city projects. The city has already formed
strategic partnerships with leading companies such as
Philips, IBM, Uber, Schneider Electric, and Ericsson for the
delivery of its vision.
The city regularly invites bids for its projects periodically
on SmartNet, the Indian government’s online platform
for tenders and other opportunities. For instance, in
September 2017, the VSCL invited RFP for Master
System Integrator (MSI) who will be responsible
for the ‘Design, Development, Implementation and
Maintenance of the Varanasi Smart City – ICT Solutions.’
Recently, the city also partnered with the private sector
to use Building Information Modelling (BIM) for project
design to prepare the 7D Detailed Project Report
(DPR) that will provide a standard design for Smart City
modifications in Varanasi. Varanasi will be the only city
in India whose DPR will be prepared in 7D visualisation
under the Smart City project. For this DPR, the project
consultant Rudrabhishek Enterprises Pvt. Ltd (REPL)
has signed an MoU with a Hungarian company called
‘Graphisoft’ that specialises in the virtual visualisation of
projects beyond 3D.lxxxvi
OPPORTUNITIES FOR UK SMEsThe UK government’s DFID has been closely
associated with Varanasi’s Smart City proposal and
has also committed c.$500m to India’s Smart Cities
Mission. There is an opportunity for UK SMEs to
leverage this relationship to explore opportunities
within Varanasi urban projects and initiatives.
Although the city has signed an MoU with Japan11, it is still
ripe with opportunities for UK SMEs arising from projects
under the Smart Cities Plan and other urban development
initiatives in the city. However, as with a number of other
Indian cities, these opportunities often fall under basic
urban services such as infrastructure development, better
waste management, or repurposing of buildings, rather
than advanced urban services.
Indian domestic firms are often well-equipped and
11 In 2014, a Partner City MoU was signed between Kyoto city and
Varanasi to develop Varanasi as a smart heritage city based on
the Kyoto model. The MoU provides for cooperation in heritage
conservation, city modernisation and cooperation in the fields of art,
culture and academics, sMOU between India and Japan
92 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
capable of delivering on these relatively basic urban
services. Furthermore, UK SMEs may not be able to
compete on prices with Indian competitors; hence,
it is imperative to identify opportunities for which UK
SMEs offer unique or more advanced capabilities and
solutions.
KEY EVENTSVaranasi Municipal Corporation and Varanasi
Smart City Limited, along with Businessworld
Media Group, is organizing Smart City Conclave
– a National Summit on Urban Infrastructure, IT &
Transportation on 13th October 2018 in Varanasi.
The Summit will see the participation of government
officials, thought leaders, industry experts and other
eminent stakeholders from across the country. Smart
City Conclave Varanasi will be a platform to the key
stakeholders to interact on important topics around
Smart Cities, Smart & integrated Transportation, IT,
Electronics, Startup & eGovernance, Energy & Power,
Safe & Secure Cities, Skill Development, Smart
Healthcare, and arrive on solutions to enlarge the
Smart City ecosystem.
CASE STUDY – Target Lower Growth B2B markets: Tokyo (Japan)
OVERVIEW
Table 20
MACRO INDICATORS DATA
GDP (PPP, 2015) $1.7 trillion
GDP Growth Rate (2015-25) 1.27%
GDP per Capita (2015) U$45,360
Population (2015) 38.0 million (TMA)
Population Density 6,158 per km2
Table 21 12
B2B POTENTIAL INDICATORS RANK12
Global Firms’ Presence Rank 7
Innovation Rank 6
Talent Pool Rank 1
Foreign Investment Rank 3
Overall Rank 2
According to the United Nations, the Tokyo
Metropolitan Area (TMA) ranks as the largest
urban agglomeration in the world, encompassing
42 million people or approximately one-third of
the Japanese population.lxxxvii
As expected for a city with such a large population,
Tokyo is a major national and global economic hub,
contributing approximately 40% of the national
GDP. In 2015, Tokyo’s GDP (at Purchasing Power
Parity) amounted to $1.7tnlxxxviii, the 15th largest
in the ranking of national GDPs, between Korea
and Saudi Arabia in 2015.lxxxix FDI Intelligence
and AT Kearney rank Tokyo as the world’s fourth
most global city, after New York, London and Paris,
stating that its market size, economic dynamism
and highly qualified human capital make it a major
business hub. Tokyo hosts over 2,000 foreign
affiliated companies and is the headquarters of
36 Fortune Global 500 companies (2017).
Furthermore, the 2020 Summer Olympic and
Paralympic Games, set to be hosted by Tokyo,
have accelerated urban development across Japan
with heavy investment in sustainability initiatives.
Environment and sustainability are increasingly being
promoted by the International Olympic Committee.
12 Out of the 24 cities assessed under B2B type
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94 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Tokyo’s development strategies rely on
improving infrastructure, making energy
efficient initiatives and policies which include
high-efficiency systems, local power storage and
electric vehicles and enhancing overall smart
urban development that can make the city strong
enough to combat the future climate changes
and an ever-increasing population. This presents
numerous opportunities for the UK to support the
city in deploying energy efficiency, management
and renewable energy solutions.
The Tokyo Metropolitan Government (TMG) is
strengthening its efforts to attract ‘fourth industrial
revolution’ companies to the city. Specifically, it
is seeking to invite companies in the areas of
Internet of Things (IoT), big data and artificial
intelligence (AI), and foreign financial corporations,
such as asset management and FinTech to set
up their Asian regional headquarters and R&D
centres in Tokyo.xc
TMG plans to introduce a financial one-stop
support service to help with administrative
procedures as well as comprehensive consulting
services for foreign financial firms that are
considering setting up their bases in Tokyo.
The Tokyo One-Stop Business Establishment
Centre (TOSBEC) will set up a satellite centre in
Shibuya district to provide English-speaking advice
about the protocols that need to be followed when
establishing a business in the city.
KEY PROJECTSAccording to Analysys Mason, Japan’s smart city
projects are guided by two key motives: improving
energy security and efficiency and showcasing
advanced technology. In Tokyo itself, smart-
city projects have introduced energy efficiency
solutions, including high-efficiency systems, electric
vehicles and local power storage.
For instance, Toyota plans to sell more than
30,000 hydrogen-powered vehicles annually by
2020 – ten times its 2017 production target. It
also aims to introduce more than 100 fuel cell
buses in the Tokyo area ahead of the Olympics.
To support this growth and to make the scheme
economical, Toyota estimates that 900 hydrogen
stations will be needed to supply 800,000 vehicles
nationwide by 2030.
In support, Honda is designing hydrogen fuelling
stations that can generate and store gas.
Meanwhile, Iwatani, Japan’s biggest supplier of
hydrogen, has invested up to ¥500m on building
each of its 80 hydrogen fuelling stations and plans
to add another 10 a year until the Olympics. The city
of Tokyo has subsidised the cost of fuelling stations,
however, the roll-outs are still costly. With the logic
that the only way the required infrastructure will
be built is if a variety of automakers are in the
market, Toyota has opened its hydrogen patents
to competitors.xci
SMART COMMUNITY PROJECTS IN TOKYOUnlike subsidies and grants allocated by the
government to eligible targets in a top-down
fashion, smart community projects involve public
and private players from the conception stage. A
consortium of companies and local government
is formed. While the government might provide
subsidies, some coordination between consortium
members is expected in order to achieve a
concerted plan. Some initiatives are also
completely led by enterprises only.
1. HYDROGEN SOCIETY INITIATIVES xciiThe Hydrogen-Powered Olympic Village This
currently includes three main projects, scheduled
to be completed by 2020. One project is the
Olympic Village in Harumi which should be hydrogen
powered – hydrogen should be distributed to
support the activities of some
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17,000 athletes and other guests. Residential facilities,
training centres and buses should be hydrogen powered.
After the 2020 Games, the Olympic Village will be
converted to a high class residential area. A number of
technical issues remain to be solved, such as affordable
pipeline network construction.
Fuel Cell Vehicle deployment The second major project
has broader targets: the deployment of 6,000 fuel cell
vehicles (FCV) and 35 stations by 2020 in a ¥45.2bn plan.
Since January 2015, subsidies from the national and local
governments are available so that the FCV costs ¥4.2m
to the buyer. As the first carmaker to commercialise an
FCV with the launch of its Mirai in December 2014, Toyota
benefits directly from this initiative.
RESIDENTIAL FUEL CELL GENERATED ENERGYThe third initiative is the hydrogen fuel cell production
of electricity in the residential sector. The goal is to equip
150,000 new houses by 2020, to reach a generation
capacity of 100 MW, and to have one million new
apartment blocks provided by hydrogen FC, amounting
to a 700 MW capacity in Tokyo. The use of FC generated
electricity in the commercial and industrial sectors was
expected to be introduced by 2017.
2. SMART COMMUNITY CONSORTIUMS
Some municipalities of Tokyo are members of the
Future City Council, leading the Future City Initiative
(FCI), a continuation of the Eco-model City programme
from 2009, which now includes some smart city
projects. The FCI is supported by the Cabinet Office
since 2011 and promotes green innovation in cities.
In Tokyo, the wards of Arakawa, Chiyoda, Chuo, Itabashi,
Koto, Minato, Toshima, as well as Musashino and Chofu
cities (in Tama area) are members of this network. The
following table lists a few smart city projects in Tokyo.
The table includes projects financed by 2012 and
2013 budget for selection of projects expanding smart
community initiative (marked with a *). The main
industrial group involved is indicated in brackets.
Table 22
MUNICIPALITY (PREFECTURE)
SMART CITY PROJECT
Arakawa ward (Tokyo) Minami Senju: Smart Energy Network (SMAENE) for the optimization of heat and electricity use between buildings and communities based on ICT (Tokyo Gas)72
Itabashi ward (Tokyo) EMS introduction and DR in schools and residence*
Ota (Tokyo) Tokyo Institute of Technology, Okayama campus: minimum power system with advanced social infrastructure initiative
Otemachi, Marunouchi and Yurakucho wards (Tokyo)
OMY smart city: low carbon and Business Continuing District (Mitsubishi Real Estate)
Suginami (Tokyo) Kugayama: emergency energy security (Tokyo Gas) *
Toshima ward (Tokyo)
Ikebukuro Fukutoshin district smart community: local production for local consumption with an emission trading goal for businesses (Tokyo Institute of Technology) *
3. PRIVATE SECTOR INITIATIVES Some real estate developers are contributing
to the development of a smarter Tokyo by
providing energy management systems (EMS).
For instance, Mitsui Fudosan promotes the use
of EMS, gas co-generation and Ene-farm, while
Mori Building has introduced BEMS, thermal
storage, and district EMS. The diverse measures
under the Tokyo Green Building Program
also encourage facility owners to conduct an
assessment of their buildings as they gain market
value with higher levels of energy performance
in green labelling certificates.xciii
97 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
In the area of urban mobility, Toyota and Park24
(a Japan-based parking and mobility company) recently
partnered on a trial car-sharing service
in central Tokyo that utilizes Toyota’s Mobility
Services Platform (MSPF).xciv
Apart from local and central government bodies, real
estate developers (such as Mitsubishi Real Estate,
Mitsui Fudosan, Sumitomo Realty & Development,
and Mori Building) and railway companies (such as JR,
Tokyo Metro and the Tokyo Group) are also influential
in land development as they are key landowners and/
or leading negotiating players in land redevelopment
planning.
In the healthcare domain, Saison Information Systems
has partnered with Kashiwa City located in Chiba,
a prefecture bordering Tokyo to provide HULFT,
middleware for managed file transfer (MFT) for
implanting a point card system to enhance civic
health services as part of their “Kashiwa-no-ha
Smart City” initiatives.xcv
MEDICA Cloud Inc., Tokyo-based firm, which develops and
provides IT solutions for hospitals and clinics, is supporting
Kashiwa City’s healthcare initiatives by providing the
signage stations that track the physical activity of citizens
such as how far they walked each day.xcvi
Based on this data, citizens can earn points
which can be exchanged for shopping
certificates. MEDICA Cloud has set up signage
stations in the city’s major shopping centre.
These provide residents with health support
services. Residents can get information on
their health points and obtain shopping
certificates without needing to use their
own smartphones or PCs.
Opportunity AreasA fast-growing segment of the smart city
market in Japan is the smart house service
sector. Initially, smart house service providers
such as Mitsui Fudosan and Fujitsu focused
on offering solutions that contribute to global
warming mitigation and low carbon society
realisation. However, since March 2011, there
has been a shift in market demand and
companies now offer smart services that help
to achieve energy self-sufficient houses in the
face of blackouts in Tokyo. The HEMS market
is growing rapidly, boosted by local demand,
TEPCO’s ambitions, and subsidies from the
national and Tokyo governments. Besides
the expanding HEMS market in Tokyo, the
solar and hydrogen-based energy generation
SUB-SECTOR OPPORTUNITIES IN TOKYO
Industry Solutions Retail businesses/ Homes Transportation Public Services
Energy management systems Energy management systems & devices
Electric vehicles Public safety
Energy saving devices Lighting Recharging infrastructure City data exchange
Back-up Batteries Home Appliances Connected Car Train-as-Service
System controllers Back-up Batteries Predictive maintenance
System controllers Fleet management
Table 23
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99 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
sectors are also growing thanks
to the subsidies of the TMG
KEY CHALLENGES FOR UK SMESl Intense competition between large
enterprises and start-ups
Table 24
COMPANY URBAN SERVICE PRODUCTS AND SERVICES
Sumitomo Electrics Contributes to the development of social infrastructure through its innovative R&D activities and extensive business operations in five fields: automotive; information & communications; electronics; electric wire & cable and energy; and industrial materials.
Azbil Corporation Energy management systems (BEMS, FEMS, etc.)
Hewlett-Packard Japan IT solutions for the interconnected operation of energy generation/conservation/storage devices and green vehicles.
Honda EV and alternative fuel cars
Kaneka Corporation Provides products for energy conservation and higher quality of life, such as thin-film photovoltaic modules, organic EL lighting panels, highly heat-insulating materials and construction methods.
Kawasaki Heavy Industries Diverse lineup of eco-friendly products and technologies, including rail cars for transportation infrastructure and in-demand energy equipment like gas turbines and gas engines. Kawasaki is also contributing to the development of low-carbon cities and disaster prevention centers.
Kokusai Kogyo Group By using geographic information systems (GIS), it provides comprehensive consulting services for environment, energy, disaster prevention and mitigation and asset management.
LG CNS Offers total IT solutions encompassing planning, development, and operation services to all the industries, including the public, manufacturing and financial sectors.
Mitsui Fudosan Mitsui Fudosan strives to develop towns that continue to thrive and maintain their appeal even as time passes and values change, and actively promotes the development of living spaces and facilities, as well as the formulation of communities.
Mitsui Home Mitsui Home is a leading pioneer in the two-by-four method of constructing homes, which are exceptional in terms of earthquake protection, thermal insulation, and other key features.
NEC Corporation Supports social information infrastructures by utilizing ICT in various fields such as energy, transportation and healthcare.
Nikken Sekkei Nikken Sekkei offers environmental urban planning across the globe. In addition to taking full advantage of our know-how, we also use energy simulation tools to forecast the reduction of environmental loads.
NTT Communications Offers comprehensive SaaS (Software as a Service) to deliver only necessary software functions to each user, as well as superior networks with high cost-performance and high reliability and security
Panasonic Partnered with Toyota to develop batteries for electric vehicles and other green cars
Saison Information Systems Engages in the system development and operation, and software package businesses in Japan. The company offers HULFT, a suite of enterprise middleware that enables secure data transfer, conversion, and integration
l Difficult to partner in any games-related projects
as most projects are already well underway
KEY JAPANESE PRIVATE URBAN SERVICES COMPANIES IN TOKYOxcviii (SELECT)
Table continued on page 100
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SAP AG A total of more than 2,200 electricity, gas and water companies in 70 countries are using SAP applications. SAP has also participated in smart grid-related projects across the globe. Based on such a wealth of expertise, SAP provides cutting-edge solutions including AMI, customer care & billing, energy management, in-memory computing (HANA), and mobile solutions, and contributes to the global promotion of the Japan-based Smart City solutions.
Sekisui House A leading housing company looking to provide conomical and eco-conscious smart houses (the eco-friendly “Green First” house) by introducing solar power generation and fuel cells to high-quality houses with high safety/insulation/air-tightness.
Shimizu Corporation Based on the concept of ecoBCP®, Shimizu globally implements projects to construct high-quality and high value-added facilities and infrastructures that harmonize with environments. We offer green and clean technologies to reduce CO2 emissions from facilities, such as Micro Grid technology, Smart BEMS to coordinate energy supply and demand,
Tokyo Gas Co. Tokyo Gas is fostering the development of a Smart Energy Network, which uses ICT to network buildings and areas for their optimal shared use of heat and electricity generated by natural gas cogeneration systems and renewable energy supply facilities
Tokyo Electric Power Company (TEPCO) Has deployed more than 10 million advanced meters and sensors with Landis+Gyr's IPv6 IoT utility network across Japan[i]
Toshiba Corporation Toshiba is fostering the creation of a Smart Community where individuals can lead comfortable lives in an environmentally sustainable manner, by integrating a range of solutions and technologies it has developed mainly in the area of social infrastructure building
Toyota Alternative fuel vehicles such as EVs, hybrids and hydrogen fuel cell vehicles
COMPANY URBAN SERVICE PRODUCTS AND SERVICES
Table continued from page 99.
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CASE STUDY – Target Middleweights with Strong R&I Potential: San Diego (US)
OVERVIEWSan Diego lies on the coast of south-eastern US
and along the border with Mexico. With more
than 1.3 million people, it is the 8th largest city
in the US and 2nd largest in California. As the
3rd largest urban area in the US, the population
of San Diego has grown steadily over the years.
Its urban area has now extended beyond the
administrative city limits. As one of the fastest
growing US cities, San Diego is the economic
centre of both San Diego County and the San
Diego-Tijuana metropolitan area, which includes
San Diego, California and Tijuana, Mexico.
Of all the urban issues, housing is the biggest
challenge for San Diego. The Mayor of San Diego
has recently announced action plans to tackle
the homelessness and housing affordability crisis
in the city. In addition, there are also continuing
plans to improve San Diego’s public safety and
neighbourhood quality of life, such as cleanliness.
102 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
R&I LANDSCAPESan Diego has the most concentrated scientific
R&D market in the U.S., and it acts as a
global leader in innovation by providing
sufficient resources for company creation and
commercialization. The city makes available a wide
range of assets for commercialization and strategic
partnerships, which includes 16 incubators and
accelerators, world-class talent and facilities, and
abundant lab and R&D space.xcix As a result, the
city is home to as many advanced technology
start-ups as its counterpart in Silicon Valley.
As a global leader in the development and
deployment of smart city technology, San Diego
has set up ‘Smart City San Diego’, a broad public-
private collaboration to improve the region’s
energy independence, empower consumers to
use electric vehicles, reduce greenhouse gas
emissions, and to encourage economic growth.
The collaboration combines the resources of
the City of San Diego, San Diego Gas & Electric,
General Electric, the University of California San
Diego, and Cleantech San Diego – a non-profit
association with a mission to advance these
technologies. Led by these visionary organizations,
Smart Cities San Diego brings together expertise
and ideas from government, business, universities,
and the non-profit community in a public-private
partnership that rivals the advances of any of
its global counterparts.
KEY R&I BODIES IN SAN DIEGO
R&I ORGANIZATIONS ROLE
Cleantech San Diego Cleantech San Diego is a non-profit trade organisation set up to foster collaborations across the private-public-academic landscape, lead advocacy efforts to promote cleantech priorities, and encourage investment in the San Diego region.
Energy management systems (BEMS, FEMS, etc.)
San Diego Gas & Electric (SDG&E)
SDG&E is a regulated public utility company that provides energy service in Southwestern California. As part of ‘Smart City San Diego’, SDE&G is actively supporting San Diego’s smart city development, e.g. smart grid and electric vehicle.
General Electric (GE) GE is an American multinational digital industrial company that provides software-defined machines and solutions to transform industry. As a key partner of ‘Smart City San Diego’, GE is supporting San Diego in deploying the world's largest smart city IoT platform.
Provides products for energy conservation and higher quality of life, such as thin-film photovoltaic modules, organic EL lighting panels, highly heat-insulating materials and construction methods.
UC San Diego UC San Diego is world-leading public research university in San Diego. As a billion-dollar research enterprise, UC San Diego oversees a wide range of innovative and multidisciplinary research units and plays an active role in promoting research collaborations and speeding discoveries to the marketplace.
San Diego Innovation Council
The Council is set up to convene the region’s premier research institutions to promote a shared vision for growth through innovation, entrepreneurial activities, and education.
Table 25
103 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Partnerships
San Diego is one of the 10 US cities that have been
selected to join Envision America – a programme
in which cities could leverage technology
collaborators and businesses to tackle climate
change challenges and improve urban services.
The City of San Diego and UC San Diego are
involved in the MetroLab Network – a group of
city-university partnerships focused on bringing
data, analytics, and innovation to city government.
With members from 44 cities, 5 counties, and 59
universities, the network aims to bring together
university researchers with city policy-makers to
conduct research, development, and deployment
projects that could improve city infrastructure,
public services, and environmental sustainability.
In 2017, it was announced that San Diego will
join the ‘2030 District Network’ and become an
urban area where the private sector and local
building industry leaders commit to sustainability
and economic growth. The objective is to reach a
50% reduction in energy, water and transportation
emissions in participating buildings by 2030.
In 2017, San Diego announced an investment
of $30m to deploy its smart city programme
in partnership with technology companies GE,
AT&T and Intel. The programme will include the
replacement of the city’s streetlights to reduce the
city’s energy costs and carbon emissions, as well
as transform them into a connected digital network
that could optimize parking and traffic, enhance
public safety and track air quality.
104 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
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108 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
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109 GLOBAL CITIES AND FUTURE OPPORTUNITIES OVERSEAS MARKETS FOR UK SMEs
Report authors
Rimaljit Kaur Likhari (Lead), Future Cities Catapult
Dr. Amy Hochadel, Future Cities Catapult
Dr. Daniela Melandri, Future Cities Catapult
Karuko Kuga, Future Cities Catapult
Priyanka Raj, Independent Consultant
AcknowledgementsAdditional contributions from the wider project
team, specially, Alexandra Lockhart, Anja Maerz,
Bin Guan, Darren Pangbourne, Darren Balcombe,
Ivor Wells, Natalie Collymore, Peter Young, Reza
Akhavan and Terje Svinning from the Future Cities
Catapult; Ewa Bloch from Innovate UK; and Tim
Moonen and Jake Nunley from The Business of
Cities, are gratefully acknowledged. The project
team also expresses its gratitude to the SMEs and
stakeholders from cities who participated in the
stakeholder survey and interviews and offered their
insights on current issues and expert advice on
existing barriers and future opportunities.
Future Cities Catapult accelerates urban ideas
to market, to grow the British economy and
make cities better. It brings together businesses,
universities and city leaders so that they can work
with each other to solve the problems that cities
face, now and in the future.
https://futurecities.catapult.org.uk/
Funded by Innovate UK, the UK’s innovation
agency. Innovate UK works with people,
companies and partner organisations to find
and drive the science and technology innovations
that will grow the UK economy – delivering
productivity, new jobs and exports. Our aim
at Innovate UK is to keep the UK globally
competitive in the race for future prosperity.
www.gov.uk/government/organisations/
innovate-uk
The Business of Cities is an urban intelligence
firm based in London that reports and advises on
global trends in cities, leadership, and development.
It works internationally with public and private
sector leadership in more than 100 global cities,
global firms and inter-governmental organisations.
http://thebusinessofcities.com/
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all parties through info@futurecities.catapult.org.uk.
Disclaimer
The content of this publication does not reflect the official opinion
of Innovate UK. Responsibility for the information and views
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