The AI Boom and the Global Expansion Trend: Embracing Calmness Over Anxiety

AI, or Artificial Intelligence, refers to the intelligent behavior exhibited by systems created by humans. It is a branch of computer science that focuses on how to build intelligent agents capable of perceiving their environment and taking actions based on those perceptions to achieve specific goals.

China has seen rapid development in the field of large AI models. In just eight months, 238 large models have emerged in China, demonstrating the country's impressive growth in this area. From the central to local levels, the Chinese government has actively introduced relevant policies to accelerate the development of the large model industry. For instance, the National Data Bureau's "Data Elements Three-Year Action Plan (2024-2026)" proposes supporting the training of general artificial intelligence models and vertical domain AI models.

China's AI large model field includes numerous companies, ranging from tech giants like Alibaba, Huawei, Tencent, JD.com, ByteDance, 360, SenseTime, and iFlytek to various startups. Some of the representative domestic models include Baidu's ERNIE Bot, Douyin's Lark large model, Zhipu AI's GLM model, the Chinese Academy of Sciences' Ziya Taichu model, Baichuan Intelligence's Baichuan model, SenseTime's Ririxin model, MiniMax's ABAB model, Shanghai AI Lab's Bookworm General Model, iFlytek's Spark model, as well as large model products from Huawei and Tencent.

Globally, the United States also holds a leading position in the field of large AI models, forming a stark contrast with China. While China has demonstrated remarkable speed in developing a large number of models within a short period, the U.S. maintains an edge in technical depth and specific applications. The U.S. has a strong foundation in AI model innovation and application, such as OpenAI's GPT series, which excels in natural language processing. Additionally, U.S. models like Google's BERT are widely used in various sectors, including search engines and natural language processing. The U.S. AI large model ecosystem is relatively mature, backed by robust research and industry support. Meanwhile, China is rapidly catching up, developing a unique AI ecosystem and experiencing a prolonged AI boom.

The Promising Empowerment and Applications of AI

The empowerment and application of AI, leveraging technologies such as machine learning, deep learning, natural language processing, computer vision, and expert systems to simulate, extend, and expand human intelligence, have also gained momentum. In China, AI is demonstrating a diversified and rapidly developing landscape. Not only is the technology itself advancing, but its applications across various industries are also becoming increasingly widespread and in-depth. Currently, AI technology is widely used in sectors like healthcare, education, finance, and manufacturing, serving as a key driver for industrial upgrades and technological innovation. For instance, according to iResearch, the size of China's AI industry reached 213.7 billion yuan in 2023 and is expected to grow to 811 billion yuan by 2028, with over 4,500 AI companies in China.

The goal of AI applications is to mimic human cognitive processes, enabling machines to complete tasks more quickly and accurately, or to handle complex problems that are challenging for humans to address directly. As technology continues to advance, the scope and impact of AI applications are expanding, gradually transforming the way we work and live. As Xu Hongji, co-founder of Lohas Yuan Technology, told EqualOcean, their AI health watch integrates a large AI model to create a generative AI health assistant. This assistant helps users by providing solutions that range from knowledge analysis to final symptom diagnosis, making the entire process more streamlined for users through AI.

The application of AI across industries is showing a trend of diversification. According to the "2024 China Top 10 AI Industry Applications" list released by Heima, AI technology is being applied in a wide range of fields in China, including office operations, consumer markets, education, healthcare, culture and tourism, media, finance, automotive, and manufacturing. Companies featured on the list, such as Huawei Cloud, 360 Group, Dark Moon, Mengniu Group, and TAL Education Group, demonstrate innovative uses of AI technology in their respective sectors.

At the same time, the future of AI technology lies in its commercial growth opportunities. According to a McKinsey survey, the global AI adoption rate among enterprises reached 50% in 2022, with China’s usage rate at 41%. Although China’s AI adoption rate currently lags behind the global average, industries such as automotive, transportation, manufacturing, and healthcare are expected to see significant growth opportunities through AI technology.

While the development and application of AI technology in China is experiencing rapid growth, it also faces challenges in commercialization and further market expansion. Although AI technology is widely applied in China, key pain points remain unresolved. For instance, AI has yet to help most Chinese companies achieve large-scale revenue growth and profit contribution. In other words, Chinese companies still need to explore viable commercial paths and profit models for AI technology.

The Widespread Anxiety Triggered by the AI Boom

In the midst of the rapid development of artificial intelligence, whether in product iteration or global expansion, many companies tend to incorporate AI elements into their strategic plans. This trend reflects the enthusiasm for new technologies and the desire to stay competitive. However, accompanying this technological revolution is an increasing sense of anxiety. Many companies fear that if they don’t quickly integrate AI into their products and business processes, they will fall behind in the competition or be perceived as not keeping pace with the latest technological advancements. Mike, CEO of Hackl Technologies, which focuses on AI technology consulting, shared with EqualOcean that in recent years, many of their clients have felt anxious due to the AI craze, mostly because they don't understand AI or are worried about how to integrate AI into their companies.

EqualOcean’s analysis indicates that while the commercialization of AI holds great potential, simply adding AI elements to products does not guarantee success. In fact, blindly following the AI trend could backfire and become a burden for companies. The key is to carefully evaluate whether AI can truly solve user pain points and enhance product value.

When asked if they also experienced similar "AI anxiety," Li Hongkun, CTO of Qianyi Technology, a leader in the AI+3D industrial vision industry, told EqualOcean, “I’m not anxious. The core of our product is solving user needs. We won’t force AI into our products to boost its ‘added value’ if there’s no need for it in user scenarios, nor do we need to use AI just to impress and unnecessarily increase the user’s ‘cost of use.’”

EqualOcean believes that companies need to thoroughly understand the needs of their target markets and carefully analyze what tangible benefits AI can bring to users. AI application only makes sense when it can genuinely improve user experience, increase efficiency, or create new value. Otherwise, it may only add to development costs, complicate product operation, and even stray from the product’s core value proposition.

Zheng Shaolin from Nextbillion.ai also suggested that while AI technology is widely applied, companies must start from real needs. He once discussed collaboration with a North American AI company that developed a universal vision model capable of recognizing traffic signs, speed limits, and other signals. In the past, each time they entered a new country, they had to develop a new model specifically for that country. The company claimed that with their new model, they would only need to develop it once for global use. However, they discovered the problem wasn’t with the model itself but with the need for sufficient data collection from vehicles on the roads to ensure model accuracy. Many companies focus only on showcasing flashy technology, overlooking the practical application scenarios and the necessity of data support.

Although AI technology appears advanced, if it cannot be applied to real business scenarios, it cannot generate true value. Investors have become more cautious, and many companies fail to find suitable application scenarios, resulting in high costs with limited returns. For example, in mapping applications, while large models can help correct user input errors, the cost is much higher than traditional map applications. The limitations of the business model make it difficult for these technologies to be widely adopted.

The AI boom has also prompted many companies to undergo transformation, but without core technology or a research background, these transformations are often difficult. Many companies find their original business unsustainable, and at the same time, struggle to break into AI-related fields, putting them in an awkward position.

Xu Hongji also mentioned that some AI applications may have low user retention rates because they overemphasize technological innovation while neglecting actual user needs. The key lies in addressing real user pain points, that is, meeting users' actual needs, rather than focusing solely on what the designers consider important.

Therefore, EqualOcean advises companies to maintain rational and strategic thinking when considering AI adoption. AI should not be viewed as a cure-all solution, but rather as one of the tools in the toolbox. The key to success is accurately identifying market needs, selecting the appropriate technological path, and ensuring that AI applications align seamlessly with the overall goals of the product and the needs of users.

Only through this cautious and targeted approach can companies truly unlock the potential of AI, stand out in the highly competitive market, and achieve sustainable growth outcomes.

"The Domestic Competition is Too Intense; I Want to Go Global"

Under the wave of the AI boom, Chinese AI companies are currently in the international entrepreneurial stage driven by both technological and market factors. In 2023, financing in the AI sector showed a strong performance in emerging tech and internet markets abroad, with major players like iFlytek, ByteDance, and Baidu actively pushing AI-based products into international markets. EqualOcean believes that in this era, facing broader markets, such enterprises taking a bold step to go global in search of new growth opportunities is a wise move.

At present, several Chinese tech companies have shown outstanding performance in deploying AI technology and capabilities internationally. For example, Huawei has launched its Galaxy AI network products and solutions in Africa, while iFlytek's products have reached markets in Saudi Arabia, Singapore, and Malaysia. Kunlun Wanwei is vigorously developing a diversified AI business matrix abroad, including large AI models, AI search, and AI games, and is promoting AI technology applications in various fields through partnerships with numerous domestic and international companies.

EqualOcean asserts that the intense competition in the domestic market makes going global a prudent strategy for AI and related tech companies. Expanding internationally can help companies access larger markets, increase their user base, and enhance brand influence. Additionally, overseas markets offer abundant data, talent, and technological resources, allowing companies to integrate global resources and enhance their R&D and innovation capabilities. International expansion also helps to mitigate risks associated with market fluctuations in any single region and strengthens a company's resilience.

Xu Hongji mentioned that while their company's products are initially focused on the domestic market, they also have plans for international expansion. He shared with EqualOcean his thoughts on the prospects of Chinese AI companies going global, stating, "The most intuitive advantage of going global with AI products is higher net profits abroad, and secondly, overseas consumers have a relatively higher acceptance of health and AI-related products." Xu Hongji sees international expansion as a significant opportunity for their products, offering a broader market.

NextBillion.ai is a successful case in point. As a globally oriented mapping service company, NextBillion.ai focuses on the geospatial SaaS platform sector and has achieved remarkable success in the European and American markets. The company also completed a $21 million Series B funding round in 2022. By leveraging AI technology, NextBillion.ai helps clients build AI-driven hyper-local applications, avoiding substantial investments in infrastructure.

EqualOcean believes that facing different market demands and challenges can inspire companies to innovate more in technology and business models. In today’s climate, going global helps companies better understand and adapt to international rules, enhancing their global competitiveness. Zheng Shaolin, founder of NextBillion.ai, also encourages asset-light companies to pursue global expansion. He stated, "There are many opportunities in the global market. While the Chinese market is large enough, a global mindset remains crucial. American companies, regardless of the market size, are expanding globally. Chinese companies should also adopt a global perspective rather than being confined to the domestic market. For asset-heavy companies, going global presents more challenges, such as compliance issues. Many countries require data and computing to be hosted in specific regions or on specific cloud services. Thus, NextBillion.ai designed a loosely-coupled, cloud-native infrastructure from the outset, supporting multiple cloud service providers and multi-region deployments."

EqualOcean suggests that when Chinese tech companies plan to take AI technology and related applications abroad, they should conduct comprehensive strategic planning and market research to ensure they choose markets that best align with their development needs and long-term strategy.

For example, markets in developed countries like the US, Europe, and Japan, though highly competitive, have high technical standards and mature market demands, making them suitable for companies aiming for high-end markets. Zheng Shaolin shared that North America has a high tolerance for small companies. North American clients are less likely to avoid services due to a company’s small size, whereas, in China, many clients may hesitate to sign contracts with smaller companies, especially during the bidding process, where company age and size often become barriers. In North America, clients place more emphasis on technology and service capabilities rather than company size.

Emerging markets like India, Brazil, and Russia present more challenges but also offer significant potential and relatively less intense competition. Companies might focus on industry hotspots, targeting countries or regions where certain AI applications are particularly popular, such as autonomous driving in the US and fintech in the UK. Additionally, establishing regional hubs in specific areas, like setting up a base in the Middle East to serve the Middle East and North Africa, could be considered.

Going global is inevitable, but choosing the destination and the approach are crucial considerations for Chinese tech companies. EqualOcean believes that amid the AI and international expansion trends, seizing opportunities with a focus on "user pain points" is essential for success.