In the previous decade, China has actually constructed a solid foundation to support its AI economy and made considerable contributions to AI globally. Stanford University's AI Index, which assesses AI developments worldwide throughout various metrics in research study, development, and economy, ranks China among the top three countries for worldwide 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 global personal financial investment financing in 2021, bring 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 types of AI companies in China
In China, we find that AI companies generally fall under one of five main categories:
Hyperscalers establish end-to-end AI and team up within the community to serve both business-to-business and business-to-consumer business.
Traditional industry business serve customers straight by developing and adopting AI in internal transformation, new-product launch, and client service.
Vertical-specific AI companies develop software application and services for particular domain usage cases.
AI core tech service providers offer access to computer system vision, natural-language processing, voice recognition, and artificial intelligence capabilities to develop AI systems.
Hardware business supply 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 account for more than one-third of the nation's AI market (see sidebar "5 kinds of AI companies in China").3 iResearch, iResearch serial market research study on China's AI industry III, December 2020. In tech, for instance, leaders Alibaba and ByteDance, both household names in China, have become known for their extremely tailored AI-driven consumer apps. In fact, the majority of the AI applications that have been extensively adopted in China to date have actually remained in consumer-facing markets, propelled by the world's largest web customer base and the capability to engage with consumers in new ways to increase client 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 professionals within McKinsey and throughout industries, in addition to 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 business sectors, such as financing and retail, where there are already mature AI use cases and clear adoption. In emerging sectors with the greatest value-creation capacity, we focused on the domains where AI applications are currently in market-entry stages and might have an out of proportion impact by 2030. Applications in these sectors that either remain in the early-exploration phase or have mature market adoption, such as manufacturing-operations optimization, were not the focus for the function of the research study.
In the coming decade, our research study suggests that there is remarkable opportunity for AI development in new sectors in China, including some where innovation and R&D costs have generally lagged worldwide counterparts: automotive, 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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