Commercialization key for China’s AI strength
Published: Oct 28, 2018 07:13 PM

Illustration: Xia Qing/GT

China's passionate pursuit of technology- and innovation-driven development has the country on the lookout for emerging tech trends. In a remarkable sign, artificial intelligence (AI) has over the past few years transformed from a refreshing novelty into a familiar refrain in the Chinese economy. Whether China has already surpassed the US in AI, or when the country will do so, are among the most frequent questions for industry watchers in both countries.

A recent account of China's scientific and research strength in AI exemplifies the perception of the country's strength in the field. China already holds a leading position in AI, both in terms of scientific and research capabilities and AI entrepreneurship, Wayne Shiong, partner at China Growth Capital and a member of the Youth Council of Future Forum, a non-profit platform committed to promoting science and scientists in China, said during a forum in Beijing earlier in October.

Nevertheless, despite all the hype about AI transforming Chinese industries and businesses, sobriety ought to be maintained about the fact that the country's AI sector, which has given birth to a host of unicorns, has yet to become sufficiently strong in the commercialization of AI technology.

Global spending on AI technology is expected to hit $2.19 billion in 2018, mostly in the government, retail, financial and manufacturing sectors, and the figure will likely top $7.5 billion by 2022, Lu Yanxia, a senior research manager at IDC China, revealed earlier this month at the 2018 IDC Digital Transformation Summit in Beijing.

The figures, pointing to a stellar outlook for global AI development, in which China plays a vital role, seem to have been easily overwhelmed by the numbers measuring Chinese AI startups' fundraising capabilities. In 2017, total funds raised by Chinese AI startups went north of 50 billion yuan ($7.2 billion), according to data from Beijing-based market consultancy EO Intelligence. The top 100 Chinese AI startups clocked in combined revenue of less than 10 billion yuan, however, with more than 90 percent of AI businesses reporting a loss, the consultancy said.

That apparently indicates challenges facing China's fledgling AI sector when it comes to commercializing AI technologies. The soaring use of facial recognition technology across the country, which ostensibly is evidence of AI's ubiquitous permeation of the everyday lives of Chinese people, isn't tantamount to the country's strength in terms of AI commercialization.

In an interview on the sidelines of the World Artificial Intelligence Conference 2018 in Shanghai in September, Wu Shuang, research scientist at YITU Technology, a major Chinese AI startup, said China's AI sector is developing at a super-fast pace from a scientific research point of view, but the US still takes the lead for the time being. The US also leads in commercializing AI technology, according to Wu. It is true that China has a very vibrant internet industry and a wide variety of attempts are under way to commercialize AI technology, but the US is still running at a faster pace in this regard.

Admittedly, China's unparalleled tech savviness, as gauged by its internet population, makes big data in various internet-related applications a natural competitive advantage for Chinese businesses to develop AI-based user case solutions. By the end of June, China's internet population had reached 802 million, 57.7 percent of the entire population, and most amazingly, a whopping 98.3 percent of Chinese internet users are mobile users, as shown by data from the China Internet Network Information Center (CNNIC).

But it seems that the huge user base is mostly being counted on as one of the key qualities to appeal to investors intent on making a fortune out of China's AI fever. It actually takes much more energy and expertise to devise working plans to effectively commercialize AI technology to fit into China's market reality.

Without plausible commercialization scenarios for there to be stable cash flow, as well as provide guidance for future R&D efforts, it could well be the case that AI might just turn out to be another bubble for most of those in China spending heftily on it.

The author is a reporter with the Global Times.