In the past decade, China has actually built a solid structure to support its AI economy and made substantial contributions to AI worldwide. Stanford University's AI Index, which assesses AI developments around the world across different metrics in research study, advancement, and economy, ranks China among the top three nations for international AI vibrancy.1"Global AI Vibrancy Tool: Who's leading the international AI race?" Expert System Index, Stanford Institute for Human-Centered Artificial Intelligence (HAI), Stanford University, 2021 ranking. On research study, for instance, China produced about one-third of both AI journal papers and AI citations worldwide in 2021. In economic investment, China represented almost one-fifth of international private investment financing in 2021, drawing in $17 billion for AI start-ups.2 Daniel Zhang et al., Artificial Intelligence Index report 2022, Stanford Institute for Human-Centered Artificial Intelligence (HAI), Stanford University, March 2022, Figure 4.2.6, "Private investment in AI by geographic area, 2013-21."
Five kinds of AI companies in China
In China, we find that AI companies normally fall into one of five main classifications:
Hyperscalers develop end-to-end AI innovation ability and collaborate within the environment to serve both business-to-business and business-to-consumer business.
Traditional market companies serve clients straight by developing and adopting AI in internal improvement, new-product launch, and customer care.
Vertical-specific AI companies establish software and options for particular domain use cases.
AI core tech providers supply access to computer vision, natural-language processing, voice recognition, and artificial intelligence capabilities to develop AI systems.
Hardware companies provide the hardware facilities to support AI demand in computing power and storage.
Today, AI adoption is high in China in finance, retail, and high tech, which together represent more than one-third of the nation's AI market (see sidebar "5 types of AI business in China").3 iResearch, iResearch serial marketing research on China's AI market III, December 2020. In tech, for example, leaders Alibaba and ByteDance, both household names in China, have become known for their extremely tailored AI-driven consumer apps. In reality, the majority of the AI applications that have been extensively adopted in China to date have remained in consumer-facing industries, propelled by the world's biggest web customer base and the ability to engage with consumers in brand-new methods to increase customer commitment, revenue, and market appraisals.
So what's next for AI in China?
About the research
This research is based on field interviews with more than 50 experts within McKinsey and throughout industries, along with comprehensive analysis of McKinsey market assessments in Europe, the United States, Asia, and China specifically in between October and November 2021. In performing our analysis, we looked beyond commercial sectors, such as financing and retail, where there are already fully grown AI usage cases and clear adoption. In emerging sectors with the highest value-creation potential, we concentrated on the domains where AI applications are presently in market-entry phases and might have a disproportionate effect by 2030. Applications in these sectors that either remain in the early-exploration stage or have mature market adoption, such as manufacturing-operations optimization, were not the focus for the purpose of the research study.
In the coming decade, our research suggests that there is tremendous opportunity for AI growth in brand-new sectors in China, including some where development and R&D costs have generally lagged worldwide counterparts: automobile, transport, and logistics
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The next Frontier for aI in China might Add $600 billion to Its Economy
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