Along with the gradual maturation of China’s artificial intelligence (AI) technology observed in recent years, many industry giants progressively increased their investment in this new market. The burgeoning applications related to AI technology have also expanded the scope of this technology from niche research fields to broader commercial areas. In fact, today, AI has broad market prospects, particularly in China. Besides being among the leading nations—in terms of AI research output, China is also ideally placed for the rapid development of AI technology. With its population of 1.4 billion and some of the world’s foremost research centers in the field like Tsinghua University, Shanghai Jiaotong University and the Chinese Academy of Sciences, China disposes of enough data and brainpower to make significant breakthroughs in AI technology.
The main sectors covered by AI in China
Delving into the AI market in China, we see that this technology already covers a wide range of segments. Some of the most dynamic areas include what Daxue Consulting defines as the basic layer—the basic parts and algorithms of AI products; the technology layer—technology which support AI products—and applications, which are the AI products in the different industries. In the graph below, we have clustered Chinese companies which make use of AI technology into four groups, depending on which specific segment the companies focus on: Applications, Technology, Basic, and Comprehensive, which refers to those companies that are working in all three areas.
China’s Artificial Intelligence companies
Market size of AI technology in China
China’s artificial intelligence industry is becoming one of the most important markets in the nation. However, the market of AI in China is not mature yet, there is still a large space for development. In 2018, the size of China’s artificial intelligence market reached 33.9 billion RMB and the compound annual growth rate (CAGR) was more than 44% between 2015 and 2018. By 2020, the market size is expected to reach 71 billion RMB.
China’s Artificial intelligence by market size
Distribution of AI companies by industries
The AI-related companies established in 2018 mainly belong to the security, speech interaction and healthcare industries. These areas have strong market demand and mature technology applications. A large portion of China’s AI market share is from speech, computer vision and natural language processing technology.
Distribution of AI startups by region
AI companies in China are mainly concentrated in the economically developed first and second-tier cities and coastal areas. Inland provinces are trying to grasp the development boom as well. In addition, Beijing, Shanghai, Shenzhen and Hangzhou are ranked among the Top20 in the world for the quantity and industrial output of AI companies. As a result of its large and talented workforce, industrial resources and capital, which were superior to other regions and cities, Beijing recorded the highest number of AI companies in China.
Investments in AI technology in China
In 2018, the investment value in China’s AI industry reached 131.1 billion RMB, which is an increase of about 67.7 billion RMB compared to 2017. The scale of this investments granted China the first position in the world ranking. Although the growth of AI financing events slowed down in 2018, the total investment value still increased significantly. Large financing events occurred frequently, and capital was more concentrated in leading companies.
The value of China’s AI industry
Why AI technology is developing so fast in China?
In order to promote AI’s development, the Chinese government launched a series of AI industrial parks in the eastern and southern parts of the country. In 2018, China had more than 60 AI tech parks. Industrial parks usually have preferential policies to attract AI companies, such as rental subsidies and tax concessions.
Chinese perceptions of AI
An important element in the development of AI technology is the potential perception that consumers have of AI based products. More often than not, the cocktail of information that has been surrounding AI research and its applications has created confusion among lay readers. In fact, catastrophist Hollywood movies like Terminator, or the nefarious predictions of famous entrepreneurs like Elon Musk come to the mind of many people, whenever they hear or read about artificial intelligence.
In order to get an idea of what Chinese netizens think of AI, the statistical Daxue Consulting conducted a sentiment analysis on the platform Zhihu. Zhihu is the first Q&A website in China and has transitioned to a social media sharing platform, gathering more than 100 million answers on various topics. The platform is especially relevant for inquiries regarding higher- and well-educated social classes.
Netizen’s perception of AI
In addition to the sentiment analysis conducted on Zhihu, the statistical department of Daxue consulting has conducted online analyses of other popular online platforms like WeChat and Weibo. In particular, we focused our research on the reasons netizens give for perceiving AI as having a positive or negative impact on their lives and the society in general.
Positive perception of AI
According to internet users, AI can play a very important role in facilitating the daily life of citizens. Some of the reasons that are most frequently cited on Weibo and Wechat for embracing the introduction of AI technology in the society are the following:
- AI can help to improve traffic conditions and reduce the occurrence of road accidents
- AI can improve the diagnosis and treatment efficiency in the healthcare industry
- AI can promote the innovation of teaching methods
WeChat is the first instant messaging platform in China by number of users and an absolute must-have for any company seriously interested in market entry promotion. As of 2019, it accounts for over 1 billion active users and as more and more non-Chinese users adopt WeChat as a medium of communication this figure is poised to grow in the future.[Source: Daxue Consulting, Wechat inquiry on AI technology]
Sina Weibo, or simply referred to as Weibo, is the name of the largest microblogging platform in China. The website was launched on the 14th of August, 2009 by Sina Corporation, which among others manages the internet portal Sina.com. The term Weibo is the literal translation of the Chinese word 微博 (Wēibó), which means microblog.
In 2014, before its listing on the NASDAQ stock market, the company changed the name of the platform from the original “Sina Weibo” to “Weibo”. This decision was taken as a way for Sina Corporation to differentiate its product from competitors like Tencent Weibo, which is best known as QQ. The Functionalities available on Weibo persuaded many to define it as the Chinese equivalent of Twitter.
Fears of AI on Weibo & WeChat
Despite the many positive opinions on AI that internet users share, some reservations regarding the more nefarious side of AI have emerged all social groups. The following are some of the more common that we have come across:
- AI could cause social problems, such as mass unemployment in some industries.
- AI brings challenges to personal information protection.
- Autonomous driving technology cannot deal with emergencies with the same urgency as humans.
The future of China’s artificial intelligence
China’s artificial intelligence developed exponentially in the last years as a result of an ideal technological, institutional and economic environment. Firstly, the expansion AI technology was made possible strong cooperation between research institutes, the local and the central governments as well as companies interested in investing in China’s AI industry. Secondly, the rapid expansion of China’s AI market is functioning as a catalyst for the many start-ups eager to develop AI products in other enter the lucrative club of AI companies.
At the same time, our research suggests that there is great awareness among netizens about the potential threats of AI technology. For this reason, many internet users believe that China’s AI industries as well as China’s AI market should undergo regular scrutiny to avoid AI companies becoming tempted to use their technology in questionable ways.
Author: Abebe Gasparini
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