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Smart cities are popping up left and right. China and the EU are taking different approaches when it comes to funding: Who is actually building these smart cities? A guest comment by Nikolaos Kontinakis.
In China whole new smart city districts seem to pop up almost overnight, and existing cities are installing smart infrastructure at breakneck speed. Europe, meanwhile, is pouring billions into making its cities smarter and more liveable for people. In both regions this development is done hand in hand with private industry, but the relationship between public and private in Europe and China is very different, and both models come with their pros and cons.
In China, around 80% of the country’s 500 major cities have smart city projects all going ahead with the involvement of the private sector. The major private players are familiar names even in Europe. Our colleagues in the Chinese Academy of Sciences have been looking into a couple of extensive collaborations. In Shenzhen, Huawei, familiar to westerners for its line of mobile phones and backbone network equipment, is collaborating with the local administration to deliver an enormous range of smart city services. Huawei’s smart city systems, which the company describes collectively as an ‘urban nervous system,’ range from facial recognition in security checks, to real-time big-data traffic management, to automated approval processes for local administrative procedures.
Similar projects are underway with Tencent, the media corporation that runs WeChat, in Chengdu, and Alibaba, China’s answer to Amazon, which is working with the local government in Hangzhou on an enormous smart city project branded, ‘city brain’. Both are using big data, cloud computing and the internet of things to improve everyday life and local industry. Tencent is using its experience in media to boost Chengdu’s cultural and creative sectors, while Alibaba, with its focus on logistics, is helping Hangzhou to streamline and limit the emissions from city traffic.
In response to the coronavirus crisis, Tencent has also recently been working with Chengdu to use data from people’s phones for contact-tracing, finding out who has been in close proximity with confirmed cases – an effective technique, but one that is highly controversial in Europe.
In Europe, too, cities are partnering with the private sector to deliver smarter cities. Vienna, for example, has been in a long-running partnership with Siemens to deliver a smart district in Aspern. The company is working with the city on the development of energy efficient buildings and management of utilities such as water and electricity through the instillation of a smart electricity grid, smart meters and sensors as well as ICT and big data analysis. Siemens works with different government agencies and incentivises citizen participation by offering those that consent to sharing their data via a mobile app that they can use to remotely control things like ventilation and individual power sockets. Hoping for smoother operations than Alibaba’s city brain, Siemens has called its flagship operating system ‘mind sphere’.
IBM partners with cities like Dublin, Stockholm and Madrid to deliver everything from traffic monitoring and streamlining, to the aggregation of municipal data on energy, land use and even arts and culture. The company also helps cities to open this data up to citizens and other businesses with web portals that sort and visualise the data to encourage innovation.
However, it would be mistaken to say that there is a unified approach to public private collaboration throughout the EU. A key difference is that in cities like Vienna and in Scandinavian cities, it is usually the municipality that drives the partnership. The city comes up with the vision and works with companies to see how they can help to implement it. Places like UK cities, on the other hand, tend to be more business driven, relying more on companies to develop, test and present innovative approaches developing smart cities.
Nevertheless, this internal variation is nothing when compared with the difference between Chinese and European public private collaboration. Chinese companies are far closer to their government counterparts than European ones. They have very long-term collaborations that often involve the cultivation of close personal relationships between businesspeople and municipal officials. The public and the private side often structure their initial ambitions together, meaning that the corporate mission and city vision are aligned from the beginning. This is especially true of Chinese companies and their ‘home cities’, the cities where they were developed and in which they have their main HQs. All of the public private collaborations in China mentioned above are between the given company and their home city.
This system results in enormous gains in efficiency. Things that can hold up smart city projects in Europe, like companies being unwilling to release data to the local government that contracts them, or gaps that can emerge between what companies promise and what they really intend to deliver, are much less likely to emerge in collaborations as close as these. The flip side of these gains is that these relationships tend to raise questions for transparency and for accountability. This can mean, for example, greater barriers for small and medium enterprises trying to enter the market. It also means when failures happen, like China’s famous (if somewhat over-hyped) ghost cities, they do so at an enormous scale.
The sheer size of China’s cities makes them very attractive partners for the marketplace. In Europe, conversely, many cities have difficulty attracting private partners. Some larger businesses see European cities as insufficiently nimble and are frustrated by the budgetary constraints that make our cities less likely to invest in smart infrastructure at scale. However, the EU is taking steps to improve this situation and the ‘lighthouse’ programme that it has adopted under the Horizon2020 funding scheme is a recipe that could also serve as a model for Chinese cities.
In lighthouse projects like Sharing Cities, cities across Europe team up with each other and with large and small business partners to pilot smart city solutions like shared electric vehicle schemes and to scale up business cases. The two major advantages of this approach are that it allows cities and private industry to build mutual trust, and that, by creating and documenting adaptable solutions it makes avenues for cities to combine their buying power through joint procurement or shared standards. If a company knows that more than seventy cities are interested in a similar model of smart lamppost, those cities become a very attractive partner, and if a city has seen other cities create savings by collaborating with local and global private partners, then it is far more confident about doing so.
... is Acting Projects Director of EUROCITIES. EUROCITIES is the political platform for major European cities. The company networks the local governments of over 140 of Europe’s largest cities and more than 40 partner cities that between them govern some 130 million citizens across 39 countries.
In China, such a model could be harnessed to give more market access to small and medium sized companies, and to close the ‘planning implementation gap’, the not inconsiderable void between the smart cities that are planned and what ends up appearing on the ground. The Austrian Institute of Technology, one of our partners in our EU-funded international project Trans-Urban-EU-China, took a similar approach when developing the Sino-Austrian Eco-Park, a collaboration between Vienna and Nantong, where the park is based.
The park was designed to help private industry marry economic competitiveness with high environmental standards among cities and private industry. Though this collaboration is still working well, my Viennese colleague Dr Hans-Martin Neumann has seen plenty of challenges emerging, most of them to do with differing sets of expectations. Such differences often hinge on the assumption on both the European and Chinese sides that each other’s companies will lead to local investment, a fruit that needs very particular conditions to flourish.
There is also a change in the air when it comes to international European and Chinese partnerships. Chinese companies have now reached the stage at which they are quite capable of competing with their European counterparts at an international scale, and thus have less need of European partnership and expertise. When it comes to building smart districts at scale and speed, there is now much that the Europeans could learn from China. Unfortunately, we still suffer from something of a European hubris that may prevent our smart city industries from understanding this in good time.
However, China is also shifting gears at the moment from massive urban expansion to upgrading quality of life and improving existing urban areas. This is an area in which, through our experience with co-design approaches and citizen engagement in smart cities, China still has much to learn from Europe. Having private partners work with people to understand and value existing cultural heritage and social structures in neighbourhoods is something that European cities are managing fairly well compared to their Chinese counterparts.
There are huge opportunities for Chinese and European cities to develop new collaborations with each other and with private industry. Through the Chinese-led Belt and Road initiative, and the European Connecting EU and Asia strategy, both sides have expressed their aspirations and put some high-level funds in place. But this will only be possible if both regions can develop a better understanding of the peculiarities of public private partnerships in the East and the West.
Author: Nikolaos Kontinakis, www.eurocities.eu
Opinions expressed by Forbes Contributors are their own.