IoT is one among many buzzwords bearing witness to digitization in our daily lives. This is not only true in the West, but also in China where IoT plays an ever more important role. In 2018, IoT related sales grew by more than 73 per cent. So what´s the big deal with IoT? Why does it play such an outstanding role in China and what are its risks?

Internet of Things:

IoT means connecting devices via the internet. In most cases, IoT does not apply to smartphones and PCs, but to everyday objects like watches, fridges and shutters.

IoT is here to stay. Something inconceivable a few years ago, it all started with products like Apple Watch and smart fitness devices. Before long, smart home applications became the latest trend. While fitness watches have a rather tight consumer base, smart home shows how IoT innovations are gaining traction among the broader public.


Smart watches are tracking the heartbeat and the position (GPS) of its user. As most devices are permanently connected to the internet, IoT is a paradise for hackers and other cyber criminals. When many IoT devices are connected, updating each device´s firmware becomes more difficult. Especially low-grade products can be prone to vulnerabilities. The newer, the better does not necessarily ring true: More complexity in hardware and software combined with more functionalities may increase penetration points in the firmware code.

It is to be expected that some smart home producers will deliberately delay updates in order to boost the sales of newer models. Vulnerabilities are, therefore, likely to increase in time. Home appliances are much longer operational than PC hardware and software. Compare a fridge (10 years) to the support guarantees for operating systems (max. 5 years). And anyways, who in his right mind would want to spend his free time running an update for his fridge?

Low-grade risks

Retail and wholesale clients risk running into trouble when ordering from China. Especially as a wholesaler, you should be aware of how to enforce your rights as a client.

How can cyber criminals profit from your data? By permanently tracking your position, a criminal can identify your home, your office or even your favorite bar. It takes no degree in rocket science to know when you are not home. This is the ideal moment to break into a home while the owner is tanning away on the beach consulting his fitness watch.

Not only criminals are interested in your data. Companies, politicians, and governments are all craving for your personal information as well. This ranges from tailor-made ads to insurances adjusting your monthly fees – for better or for worse. The Snowden affair shows that governments like listening in on your private matters. Everyone should be aware of these negative consequences. Cars that snitch on speeding drivers or smart watches posting ballot papers – this might be the brave new world of tomorrow.


A thorough discussion of the risks associated with IoT is the right thing to do. Only then can you harness the potential of IoT without going under in the digital sea.

Chance Made in China:

China used to be known for its cheap products and copy-cat culture. Today, China´s metropolitan regions abound with engineers and experts that graduated from the top US and European universities. Finding them can be a hassle. If you want to produce in China, you need an expert in recruiting!

ECOVIS Beijing advises international clients on business start-ups and investments in China. We support internationally active SMEs with services in the areas of legal advice, tax advice, accounting, and auditing.

Richard Hoffmann

Richard Hoffmann is a partner at Ecovis Beijing. He obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining Ecovis. In addition to being a member of the board of Ecovis International, he is Supervisor for the China business of several respected German companies. Richard shares his extensive knowledge to students by teaching commercial law in China at SRH Hochschule Heidelberg. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact:

ECOVIS Beijing

ECOVIS Beijing is the trusted tax and legal advisor to several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up for our Newsletter, give us a call +86 10-65616609 or contact us directly via