The next Frontier for aI in China might Add $600 billion to Its Economy - cemu

1 The next Frontier for aI in China might Add $600 billion to Its Economy

In the previous decade, China has developed a strong foundation to support its AI economy and made significant contributions to AI globally. Stanford University's AI Index, which evaluates AI improvements worldwide throughout numerous metrics in research, development, and economy, ranks China among the leading 3 nations for global AI vibrancy.1"Global AI Vibrancy Tool: Who's leading the worldwide AI race?" Expert System 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 financial investment, China represented almost one-fifth of worldwide personal financial 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, wiki.lafabriquedelalogistique.fr 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 business normally fall into among 5 main categories:

Hyperscalers develop end-to-end AI innovation capability and team up within the community to serve both business-to-business and business-to-consumer companies. Traditional industry business serve consumers straight by developing and embracing AI in internal change, new-product launch, and customer care. Vertical-specific AI business develop software application and services for specific domain usage cases. AI core tech companies offer access to computer vision, natural-language processing, voice acknowledgment, and artificial intelligence capabilities to develop AI systems. Hardware companies provide the hardware facilities to support AI need in calculating 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 country's AI market (see sidebar "5 types of AI companies 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 actually ended up being understood for their highly tailored AI-driven consumer apps. In fact, many of the AI applications that have actually been extensively embraced in China to date have remained in consumer-facing industries, propelled by the world's biggest internet consumer base and the ability to engage with consumers in new ways to increase consumer loyalty, earnings, and market appraisals.

So what's next for AI in China?

About the research

This research is based upon field interviews with more than 50 experts within McKinsey and throughout industries, along with comprehensive analysis of McKinsey market evaluations in Europe, the United States, Asia, and China particularly in between October and November 2021. In performing our analysis, we looked beyond business sectors, such as financing and retail, where there are currently fully grown AI use cases and clear adoption. In emerging sectors with the highest value-creation capacity, we focused on the domains where AI applications are presently in market-entry stages and could have a disproportionate 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 purpose of the study.

In the coming years, our research study shows that there is significant opportunity for AI growth in new sectors in China, including some where innovation and R&D costs have actually typically lagged international equivalents: automotive, transportation, and logistics