How does Zhongke Shuguang achieve the layout of smart cities and business models?

Up to now, Zhongke Shuguang has established 22 urban cloud computing centers nationwide, facilitating the exchange and sharing of over 30PB of data. Their service system is capable of reaching 50,000 units, with more than 1,000 currently in active use. This impressive infrastructure reflects a growing commitment to digital transformation across China. When it comes to big data, the first names that come to mind are usually tech giants like BAT, Amazon, and others. These companies have successfully monetized their business data through integration, analysis, and development. However, while these companies focus on consumer data, Zhongke Shuguang has taken a different approach by targeting government data and exploring opportunities in both vertical industry data and horizontal urban management data. Wuxi, often considered the top smart city in China, serves as a strong example of this strategy. Over five years, Wuxi has transformed into a model of urban innovation, leveraging technology to improve governance and public services. The city’s success highlights the potential of integrating government data with smart city initiatives. In 2009, Zhongke Shuguang introduced an innovative model where enterprises would build cloud computing centers and the government would purchase services. By 2011, Wuxi was recognized as one of the first five "cloud computing innovation service pilot cities" by the National Development and Reform Commission. It also earned the title of China's first smart city for three consecutive years, jointly awarded by the Chinese Academy of Social Sciences and Guomai Internet. The core of Wuxi's Smart City Data lies in government data. Every operation, from administrative decisions to economic indicators, is aggregated into a comprehensive big data system. This includes nearly one billion operational and economic factors stored within Zhongke Shuguang’s cloud computing infrastructure. To streamline processes, Wuxi implemented a system developed by Zhongke Shuguang. Government departments can apply online for information needs, such as setting up civil affairs systems or requesting resources. Once submitted, the Wuxi Information Administration reviews and approves the request, then forwards it to the cloud computing center. The infrastructure is ready in just 10–20 minutes, compared to the previous time frame of at least one to two months. Zhang Keping, Director of the Wuxi Information Technology and Radio Authority, emphasized the value of combining internal government data with external internet and industry data. “Once this data becomes truly useful, we can achieve greater accuracy in specific areas,” he said. While early efforts in computer networking and application engineering, such as the Golden Tax and Golden Shield projects, helped advance national informationization, they left behind fragmented “data islands.” For urban managers, these silos were insufficient for meaningful data mining. In large cities, data fusion is far more complex, while smaller cities lack the capacity to collect and utilize data effectively. Medium-sized cities thus become ideal starting points, offering a balance between scale and manageability. With local governments building cloud computing centers, operations are transferred to the cloud for unified management. Zhongke Shuguang charges based on the volume of business, keeping initial investments under 10 million yuan. As the number of services grows, the company expands flexibly, ensuring long-term scalability. Zhang Lin, a cloud service manager at Zhongke Shuguang, described the transition as painful but necessary. Initially, the company took over existing government equipment, which eventually reached its physical lifespan. This led to challenges in data convergence, but the effort paid off in the end. Nie Hua, President of Zhongke Shuguang Cloud Computing, stated the company’s goal: “To capture regional informationization opportunities, seize the commanding heights of the government’s big data industry, and build smart cities.” Currently, Wuxi’s smart city initiative is undergoing official inspection. Non-confidential data from various departments is being merged. For instance, the Public Security Bureau’s floating population system now integrates data with the big data center, enabling streamlined registration, housing address verification, and residence permit appointments. Looking ahead, the next step is to develop more smart applications that enhance public services and urban governance. Regarding the business model, Zhongke Shuguang has deployed 22 cloud centers, managing over 30PB of data. While the efficiency is impressive, the question remains: is this a sustainable and profitable business? Urban data centers tend to be localized, making it challenging to attract other governments to adopt the Wuxi model. However, the cloud model offers significant benefits, especially for small and medium-sized enterprises (SMEs). The cloud mall provides websites, email, and office systems, all available on a per-use basis. For example, an innovative startup might struggle to promote its app or software without proper channels. By placing it in the cloud mall, they can leverage Zhongke Shuguang’s distribution network. “If you’re selling a bracelet, you can put the core technology in the ring. Another entrepreneur may not be selling a bracelet, but they could be related to upstream or downstream businesses, and through the cloud mall, they can connect,” explained Zhang Lin. Currently, there are over 2,000 SMEs in the cloud mall, with 70–80% located outside Wuxi. This demonstrates the platform’s broad appeal and effectiveness. Nie Hua highlighted the importance of developing new investment models. “Business data requires people to sift through sand for gold, but government big data is more structured. Once it breaks through, it will bring about a fundamental shift in the business model.” Potential partners include IT regional agents, integrators, software developers, traditional enterprises seeking transformation, and venture capitalists who see promise in urban cloud projects. The goal is to support partners in becoming regional cloud computing and big data service providers, creating a new ecosystem. Dawning City Cloud Investment Operation uses a three-tier support structure: local teams, headquarters, and external experts. The operation center is a local legal entity, built around a cash-based technical structure and service system. There are two main modes: holding and authorization. In the holding mode, Zhongke Shuguang is the primary investor with a controlling stake. The franchisee or government shareholder must have strong operational resources and a mature team. In the authorization model, the franchisee is the main investor, with Zhongke Shuguang providing brand and intellectual property support. This requires the franchisee to have financial strength and independent management capabilities. Nie Hua acknowledges that city cloud franchising is imminent. Two key reasons: time pressure and operational challenges. Within 3–5 years, it’s a strategic window for big data. The company aims to expand its “100 Cities and 100 Lines” strategy during this period. In his view, the essence of the cloud computing center is not just construction, but creating a platform for collaboration. “We aim to build social governance applications around people’s data, urban management applications around object data, and economic applications around industrial data. This will enhance a city’s economic competitiveness and drive its development.”

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