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China Chases the AI Dream

By Rebecca A. Fannin

Feb. 22, 2018
Flowing light waves from profile of woman representing the AI technology
By 2030, China aims to become a world leader in artificial intelligence. (Photo credit): Gettyimages.com/John Lund

Technology is being rocked by a new era of artificial intelligence, and nowhere is this more prominent than in China.

Artificial intelligence is advancing quickly into many types of practical, everyday uses in China, such as mobile communications, driving, shopping, information searching and deliveries. It’s moving faster in China than in the West in part because there are fewer legacy systems from outdated technology practices to jump over.

This trend is part of China’s journey over the past 10 years from first copying technologies from the West, to then improving upon the underlying business models—and sometimes innovating, too. Today, it’s becoming common for ideas from commerce, communications, finance and transportation to be copied from China to the West. AI is one field where this progress is most noticeable, since it crosses so many types of uses for both business and consumer markets.

It helps that the Chinese government has put its stamp on making China an AI technology contender, and in super-speed, by 2020. By 2030, China will be a world-leading innovation center for AI, if Chinese government predictions and declarations hold true. China is vying for leadership in a marketplace where there are already 2,000 AI companies that have sprung up across 70 countries, with a total of $22 billion in funding—$6 billion of that alone in the first seven months of 2017, according to VentureScanner research.

US-China AI duopoly has arrived

Venture capitalist Kai-Fu Lee, founder and CEO of Beijing-based technology investment firm Sinovation Ventures and a former top executive at Microsoft and Google, is a strong believer that China will be a leader in the future of AI—alongside the United States.

“In the age of AI, a U.S.-China duopoly is not just inevitable, it has already arrived,” Lee said at a recent technology summit held by his firm in Silicon Valley. He even ventured to predict that it is a 50-50 split about which country will get ahead the most quickly in two of the most practical uses of AI: autonomous driving and robotics. Lee also predicts that China is becoming more technologically advanced in another area—retail automation, largely because of quicker adoption of facial recognition of consumers for instant purchases without staff. This had led to so-called autonomous stores in China, which is catching on quickly.

Why is China getting ahead in artificial intelligence? One reason is because there is more data in China to power AI technologies and algorithms to achieve more precise results, says Sanjit Singh Dang, a Silicon Valley venture capitalist with Intel Capital. The data points come from China’s large, digitally savvy population that has taken to relying on smartphones to book rides, pay for goods, exchange communications and get deliveries.

Companies both large and small are chasing the AI dream. From east to west, tech titans are competing. Baidu from China and Google from the U.S. are both racing ahead in AI, just as they did more than a decade ago in Internet search technologies. Baidu, one of the first Chinese companies to set up operations in Silicon Valley, Calif., is preparing to open its second research and development facility in the Bay Area to work on machine learning. This new center will add to its 200 engineers that have been developing speech recognition and autonomous driving technologies in Sunnyvale, Calif., since 2014. Meanwhile, while Google is taking a world lead in machine learning, this tech giant can’t fully capitalize on the enormous China market while its online services remain blocked in the mainland.

AI startup scene booming

Startups in AI from both China and the U.S. are multiplying at a fast pace, as entrepreneurs get in on the action. In Silicon Valley, Leap.ai, an AI startup formed by two ex-Googlers, leverages machine learning to help job seekers and employers connect more efficiently, says CEO and co-founder Richard Liu. To date, Leap.ai has raised $2.4 million in funding from Bob Xu from ZhenFund and other notable investors.

A second startup in northern California, AISense, is recording voice information and making it trackable and accessible by using artificial intelligence, much like how Google makes data available online. AISense recently raised $10 million in funding from Li Ka-shing’s investment firm Horizons Ventures and Tim Draper’s Draper Associates and Draper Dragon venture shop. Founder Sam Liang shares that Draper “loves our app so much that he is using it for founder pitch meetings.”

From Hong Kong, SenseTime Group has rocketed into the AI space. SenseTime entered the unicorn-financing sphere when it raised $410 million in mid-July 2017 at a valuation of $1.5 billion, scoring the largest AI investment globally—that is, until another Chinese AI startup, known as Face++, pulled in $460 million at the end of October. Then, SenseTime topped off that achievement by attracting a strategic investment from U.S. mobile chip giant Qualcomm. Now Alibaba is reportedly eyeing it with an investment of $227 million.

SenseTime founder Xu Li ticked off some of his startup’s milestones, among them filing for 500 patent applications, doing business with major Chinese corporations including Xiaomi, China UnionPay and Huawei, and counting 120 professionals on staff with PhD degrees.

Not about to be left out of this startup action, Kai-Fu Lee’s Sinovation Ventures is making a big bet on AI’s future. The firm’s recently raised $675 million in capital is focused on deep technologies, such as artificial intelligence and robotics. Lee, who is widely known for his pioneering work in speech recognition and artificial intelligence, recently set up an AI Institute in Beijing with teams working together on the next generation of technologies. Fintech is one focal point where AI can be applied to assess credit risks for customer loans or to help pick stocks.

China’s progress in developing AI technologies and ambitions to become a world leader in this key field represents another significant leap for this country’s rapid acceleration over the past two decades into the digital era of tomorrow.

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