In the past years, China has developed a solid structure to support its AI economy and made significant contributions to AI worldwide. Stanford University's AI Index, which assesses AI improvements around the world throughout numerous metrics in research study, advancement, and economy, ranks China amongst the leading 3 nations for global AI vibrancy.1"Global AI Vibrancy Tool: Who's leading the global AI race?" Artificial Intelligence Index, Stanford Institute for Human-Centered Artificial Intelligence (HAI), Stanford University, 2021 ranking. On research, for instance, China produced about one-third of both AI journal papers and AI citations worldwide in 2021. In economic investment, China accounted for nearly one-fifth of international private financial investment funding in 2021, attracting $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 types of AI business in China
In China, we find that AI companies usually fall into one of 5 main classifications:
Hyperscalers develop end-to-end AI innovation capability and collaborate within the ecosystem to serve both business-to-business and business-to-consumer business.
Traditional industry companies serve customers straight by developing and embracing AI in internal transformation, new-product launch, and client services.
Vertical-specific AI companies develop software application and services for particular domain usage cases.
AI core tech companies provide access to computer system vision, natural-language processing, voice recognition, and artificial intelligence abilities to establish AI systems.
Hardware business supply the hardware infrastructure 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 industry III, December 2020. In tech, for example, leaders Alibaba and ByteDance, both family names in China, have become understood for their extremely tailored AI-driven consumer apps. In fact, the majority of the AI applications that have actually been extensively adopted in China to date have remained in consumer-facing industries, propelled by the world's biggest internet consumer base and the capability to engage with consumers in brand-new ways to increase consumer commitment, earnings, 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, together with comprehensive analysis of McKinsey market assessments in Europe, the United States, Asia, and China particularly between October and November 2021. In performing our analysis, we looked outside of industrial sectors, such as financing and retail, where there are already mature AI usage cases and clear adoption. In emerging sectors with the highest value-creation capacity, we focused on the domains where AI applications are currently 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 industry adoption, such as manufacturing-operations optimization, were not the focus for the function of the research study.
In the coming years, our research indicates that there is tremendous opportunity for AI growth in new sectors in China, including some where development and R&D spending have generally lagged international counterparts: automobile, transportation, and logistics
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The next Frontier for aI in China might Add $600 billion to Its Economy
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