Artificial Intelligence (AI) is a broad multidisciplinary field with the core goal of creating machines that can perform intellectual tasks in a manner analogous to human thinking. In the increasingly digitalized, data-driven world, AI is an irrefutable force that will transform the world in a way similar to the previous industrial revolutions.
Broadly defined, AI is still in its early developmental stage. However, some common functions enabled by it are permeating in everyday life. This ubiquitous technology is significantly improving productivity and transforming industries across the world.
It is generally recognized that the United States, Europe and China are three major forces in the global competition around AI. Currently, China is still lagging behind in terms of fundamental research. However, with a population of almost 1.4 billion, China has a natural advantage of massive data collection and numerous use cases, the essential elements to the application of AI. As a result, there is a good chance for China to catch up with or even leapfrog the other two ‘global tech hubs’ through broad applications.
In contrast to circumstances in the US and Europe, the current situation of AI application and commercialization in China remains unclear to overseas observers, because of the language and information barriers. In addition, due to China-specific economic development, government focus, capital market performance, industry maturity and consumer behavior, Chinese companies have particular focuses and approaches in AI monetization. These experiences will provide valuable references to other emerging markets.
Therefore, this report is designed to shed light on China’s AI context and explore the expectations and entrepreneurship for interested parties overseas.
Artificial Intelligence and Related Technologies
Centered on intelligence, AI is a system of technologies that can reproduce human capabilities of perceiving, reasoning and performing – the 'inward' information processing and interaction with the outside world. The scope and depth are still growing as the research exploration maintains good momentum and the applicability is being proven.
Economic Value of Artificial Intelligence
The underlying economic benefit makes the technology viable and valuable. In addition to directly causing production increases in the tech sector, AI contributes to economic development by elevating the output of companies through lower input costs and improved productivity. Besides, it revolutionizes the traditional industries by changing the supply-demand interaction and industry mechanisms, so as to unleash unlimited business opportunities.
Artificial Intelligence in China
AI could be a solution to China’s slowing economy. The country has incorporated AI into its national strategy since 2015. And it is continuously publishing policies on this subject. On a macro level, AI serves as one pillar of China’s technological, economic and societal development. It is also considered key to defense, economic activities, social efficiency and public security. To deepen the integration of AI and the real economy and stimulate innovation, leading companies are providing open platforms for specialized industries. The past year has seen that resources becoming depleted as the AI hype begins to fade, requiring companies to devise monetization strategies as soon as possible.
Sectoral Monetization Analysis
The uneven AI commercialization across industries is attributed to the China-specific socio-economic development, such as government focuses, and capital market performance, industry maturity and consumer behavior. We will discuss the most representative sectors in China in the following sections and include both mature companies and emerging startups in our analysis.
Digital culture, public security, and finance are the most representative fields in China that have achieved steady revenues. These industries stand out for the large market size, high level of digitalization, abundant existing data with ready-to-use quality. Companies in areas such as healthcare, autonomous driving and hardly generate revenue from AI-core products because of high risks associated with these industries, their low tolerance of erroneous practices, the difficulty in integrating data from different systems, complex and time-consuming procedures of testing, and law and ethical issues behind. AI centered consumer products are in its early development stage that seeks to solve consumer pain points. Last, AI remains a buzzword to other industries in China, such as education and retail, where Internet adoption and digitalization are more important, are excluded from this report.
Going forward, we expect China's AI companies to go through the process of elimination, global expansion and closer cooperation.
In conclusion, AI no longer hyped as a magic panacea. New business models are spreading in China and some of them starting to yield results. The underlying AI economics, government policy and capital trend, as well as sectoral development all point to a picture for investors and innovators bet on having a share of China's growing AI pie.