China and AI: Activity but Cash Friction

March 18, 2020

Despite being a communist country, China loves money. One way that China loves making money is through new technology startups, especially with AI startups. The South China Morning Post examines the current market of Chinese AI startups in the article, “China’s AI Start-Ups Are Closing More Funding Deals, Yet They’re Still Attracting Less Money Than The US.”

According to the article, Chinese AI startups have attracted more funding deals than their US counterparts, but they are not bringing in as much money as the past. The trade war with the US is a big determiner. The US continues to dominate in the AI market, but that has steadily been dropping from 71% in 2014 to 39% in 2019. The US also has more AI fundraisers than China. The US has a 64% of AI startup fundraising, up four points since the last year, while China only had 11%. Overall AI generated 2019 $26.6 billion across the globe in 2019.

China only had $2.9 billion from that total.

The big problem is that China lacks creativity in their AI startups:

“‘Investors are much more cautious now, especially after the second half of 2018 as we sensed a bubble – most AI projects haven’t produced strong performance,’ Chris Lai, a partner at Beijing-based Shunwei Capital, said. ‘We haven’t seen many AI applications that are beyond imagination, most are used in surveillance cameras.’”

There are some startups that add some spice to the Chinese AI market and bolster the hope that the country will be an AI world leader by 2030. Some of these startups include Horizon Robotics and facial recognition startup Face+++. The market is predicted to shift to vision and hearing applications with smart home appliances.

China might be moving towards more smart home appliances, but it is China for goodness sake! China has an authoritarian government, so it wants more AI security technology to track its citizens.

Whitney Grace, March 18, 2020

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