In India, where, on the one hand, digitalization is rapidly growing, IoT devices are being used in everything from smart homes to critical infrastructure.
Industries are integrating industrial equipment with IoT to become technically robust so that real-time monitoring of equipment can be done and they can be controlled as per the requirements.
Somewhere, this simple, powerful, and efficient technology has made systems in many sectors highly efficient.
However, the major concerns faced these days have drawn the attention of businesses and governments to security agencies. These concerns include the presence of Chinese IoT vendors in the Indian market.
Counterpoint Research shows that Chinese vendors cover over 80% of the IoT module market. Among them, the major Chinese companies are Quectel, Neoway and Simcom.
While these vendors are luring businesses with their cost-effective IoT solutions, they are also posing a threat to other cybersecurity risks and foreign surveillance.
In this blog, we will discuss why Chinese IoT vendors are on India’s security radar, the key concerns that need attention, and India’s push towards native IoT solutions.
How is the Dominance of Chinese IoT Vendors Increasing in the Indian Market?
There was a time when Chinese smartphones covered the Indian market, and today, IoT devices are moving on the same path. The biggest reason for this is their market penetration strategy. They reach their target audience with devices at a very low price, which are much more affordable for the audience. Apart from this, there are some other reasons too, let’s check them out.
The Cost Effectiveness
As we just discussed, Chinese vendors always work on cost-efficiency. Be it smartphones or IoT devices. Chinese companies work on two factors: one is mass production, and the second is operational efficiency. This makes it very beneficial for them to manufacture IoT devices. Their manufacturing cost is extremely low compared to their Western counterparts, making selling them at lower prices easier. This includes:
Affordable Product Pricing: IoT devices that China makes, such as sensors, cameras, and modules are 30 to 40% cheaper than those made by American and European vendors. And these are the most sold because of their low prices.
Easy Access for SMEs: Small and Medium-sized enterprises (SMEs) in India always try to get technology at low prices. In such a case, Chinese IoT vendors are their first choice. Indian SMEs get access to technology cheaply, making it easier to sell their products at low rates in the highly competitive market.
Competitive Advantage: India has some price sensitive sectors such as agriculture, healthcare and manufacturing. These sectors are attracted to Chinese IoT solutions due to their lower prices. Chinese IoT devices are quite cheap in terms of their pocket and budget, which reduces their overall cost.
For example, if we talk about Chinese vendors like Hikvision and Dahua Technology, they make very affordable surveillance systems. Be it Indian enterprises or the Indian Government, both use them a lot due to their low cost.
Scalability and Mass Production
Chinese companies have a very big advantage, and that is the high-scale production of IoT devices. Large-scale production of IoT devices attracts companies that have large-scale projects and need IoT solutions at a large level.
Economies of Scale: Chinese vendors have access to large, well-established manufacturing facilities with economies of scale. This enables them to quickly manufacture millions of IoT devices at a very low cost. As the Smart City Mission is going on in India, which is a very large project. Such a large-scale project requires IoT-based surveillance systems. Here, Chinese IoT vendors specialize in providing large quantities at low rates and in a short time.
Wide Product Range: The product range of Chinese companies is very long. They offer a complete range of IoT solutions. Be it hardware like sensors, CCTV cameras and tracking devices or software for data collection, analytics and visualization. These Chinese vendors are capable of easily fulfilling the hardware and software requirements.
On the other hand, if we talk about Indian companies, they are still in the developing phase. They are working hard to increase their production capacities. However, they still face challenges in matching the scale and efficiency of their Chinese competitors.
Innovation and Technological Leadership
Chinese IoT vendors are not only cost-effective but also perform very well in technological innovation. The reason behind this is deep R&D. Chinese companies such as Huawei, Xiaomi, and ZTE spend a lot of money in R&D parks to produce advanced IoT solutions.
Strong R&D Investments: Leading Chinese IoT vendors continuously invest in R&D to bring innovation into their process, especially in technologies like 5G connectivity, AI-powered IoT solutions, and edge computing.
Advanced Solutions: Chinese vendors offer advanced devices with features such as real-time data collection, predictive analytics, and AI-enabled automation. For example, Chinese vendors provide smart cameras with facial recognition technology, which is widely used in India for security purposes.
Integration with Emerging Technologies: Chinese IoT developers are always using updated technologies such as heavy computing, machine learning, and big data analytics to make IoT platform more advanced. They offer end-to-end solutions that help businesses to optimize their whole operations.
Market Penetration Strategies
Chinese companies use very strong marketing strategies to make their reach to Indian users easy. It includes:
Strategic partnerships: Chinese vendors strategically enter the Indian market by partnering with Indian distributors and government agencies. By collaborating with local businesses, they ensure the adoption of their products across different sectors and industries.
High Customization: Chinese vendors deeply research the Indian market, identify problems and prepare customized products for each user. For example, IoT systems for smart agriculture and healthcare are specifically designed to address unique challenges like resource constraints and infrastructure limitations.
After-Sales Support: Many Chinese vendors provide complete support services to attract customers. This includes after sales services ranging from installation to training and maintenance. This appeals to some customers, satisfies them and encourages long-term adoption.
Aggressive Pricing Strategies: Besides low base prices, Chinese companies offer bulk discounts, financing options, and flexible payment terms to attract businesses of all sizes.
Due to these market penetration strategies, Chinese IoT vendors act as a dominant force in the Indian IoT ecosystem. Apart from private organizations, they are also used in government infrastructure projects.
Wide Product Portfolio
Another major way for Chinese IoT vendors to gain dominance in the Indian market is through diverse portfolio offerings. They offer IoT devices and solutions that are targeted to multiple industries. Their portfolio includes:
Smart Surveillance Systems: Everyone is aware of Hikvision. They lead the market with their IoT-enabled CCTV cameras and video management systems. Their products are used in large numbers in the market, both in urban and rural areas.
IoT Modules and Sensors: Huawei and Xiaomi supply IoT modules, connectivity solutions, and sensors. These technologies can be used in smart homes, industrial automation, and environmental monitoring.
Telecom Infrastructure: A Chinese company named ZTE provides IoT-enabled telecom solutions. It includes 4G/5G infrastructure, routers, and smart network management systems.
Consumer IoT Devices: Who doesn’t know about Xiaomi today? The smartphone market has expanded to include smart home products such as smart TVs, smart speakers, lighting solutions, and wearables. They are dominating the consumer IoT segment with their smart solutions.
The Security Concerns with Chinese IoT Vendors
On the one hand, Chinese companies have established dominance in the complete Indian market due to affordability, innovation, and large-scale production capabilities, but on the other hand, the widespread adoption of these Chinese IoT devices comes with various security concerns. Let’s check them out.
Data Privacy Risks
The biggest risk with Chinese IoT vendors is that of data privacy. IoT devices collect a wide range of information, mainly personal information, industrial processes, and government operations.
Data Transmission to Foreign Servers: By default, many Chinese IoT devices transmit collected data to servers located in China. And this can be a huge risk for India or any other country. This raises concerns about where the data is stored, how it will be used, and who will have access to it.
For example, if we talk about Chinese IoT surveillance systems in Indian smart cities, they can send Indian data to Chinese servers, which increases the chances of exposing critical information manifold.
China’s Data Laws: Chinese Laws, such as the Cybersecurity Law (2017) and Data Security Law (2021), have made it mandatory for companies operating in the chain to make their data available to the Chinese government when required. This raises fears that Chinese IoT vendors could be compelled to share sensitive data collected in India, compromising national security and privacy.
Lack of Transparency: Chinese IoT manufacturers do not give clear answers regarding their data handling practices. They often lack transparency. Thus, no one knows when Indian organizations’ data gets diverted to the wrong hands and who misuses it.
Cybersecurity Vulnerabilities and Backdoors
Another major concern that puts Chinese IoT vendors on India’s radar is the presence of cybersecurity vulnerabilities. Also, backdoors in Chinese IoT devices. Backdoors are a type of hidden access point present in hardware and software. Their presence allows unauthorized entities to gain control over data and the entire system easily.
Hidden backdoors in Chinese devices: Security audits and research show that some Chinese IoT devices contain backdoors and poorly secured firmware that are very easy to exploit. These backdoors can allow hackers or malicious actors to access to sensitive systems.
Lack of strong encryption: Many times, low-cost IoT devices do not use strong encryption to secure the data they collect. This makes IoT devices vulnerable to interception and unauthorized data access.
Remote access threats: Many IoT systems are used in critical infrastructure such as energy grids, transportation networks, and healthcare systems. Even a slight glitch has the potential to hack these systems and control them remotely or even disable them. This may cause huge losses.
National Security Risks
Chinese IoT vendors could pose a major risk to India’s national security as IoT devices are often integrated into sensitive and critical infrastructure.
Integration into critical infrastructure: IoT devices are used in India in many sectors such as smart cities, telecommunications, defense, energy grids, and healthcare. Any lapse in the security of the system can prove to be very harmful to the entire economy.
Espionage risks: Chinese IoT vendors are often accused of uploading data obtained from IoT devices to the Chinese government. Due to this, many countries like the US, Australia, and the UK have banned Chinese technology.
Surveillance concerns: IoT surveillance devices such as cameras, and surveillance systems are capable of collecting a lot of sensitive data. There is always a fear that these devices may collect data on government activities, military bases and industrial facilities and reach the wrong hands. This can be a huge threat to India’s security.
What is the opinion of Indian Government officials on this?
The Indian government is fully prepared to scrutinize Chinese vendors. Apart from this, planning is underway to connect with trusted sources so that there is no compromise with security.
Ministry of Electronics and IT (MeitY) secretary S Krishnan has said that, “We have just started working on bringing in similar regulations. We have recently issued orders on CCTVs.”
Apart from this, he said that the security element is paramount for India, and the government is fully concerned with it.
MU Nair, the National Cyber Security coordinator, said during an interview that “While this is now applicable only for telecom network, its applicability in other critical sectors as well as reaching out to the devices and IoT ecosystem, is being explored.”
From all this information, we can see that the Indian government is also very serious about cyber security. It is possible that we will see major shifts in IoT infrastructure in the coming days.
Conclusion
Chinese companies certainly dominate the global IoT market with their cost-effective and innovative solutions. Still, their nexus with the Chinese government and opaque operational activities have raised suspicions of data misuse, espionage and sabotage.
In India, the use of IoT systems is increasing daily in its developing economy. IoT is used everywhere: smart cities, critical infrastructure, telecom networks, energy grids or defense systems.
In such a situation, India should adopt a multi-faceted approach. On the one hand, strict regulations should be imposed on foreign vendors, while on the other hand, indigenous IoT development should be promoted, regular audits should be conducted and a better security framework should be adopted.
