The next Frontier for aI in China could Add $600 billion to Its Economy - dcmt

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

In the previous years, China has developed a solid foundation to support its AI economy and made considerable contributions to AI globally. Stanford University's AI Index, which assesses AI advancements around the world throughout different metrics in research, advancement, and economy, ranks China among the leading three countries for global AI vibrancy.1"Global AI Vibrancy Tool: Who's leading the international AI race?" Artificial Intelligence Index, Stanford Institute for Human-Centered Artificial Intelligence (HAI), Stanford University, 2021 ranking. On research, for example, China produced about one-third of both AI journal documents and AI citations worldwide in 2021. In economic financial investment, China accounted for almost one-fifth of global private financial investment funding 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 geographical area, 2013-21."

Five types of AI companies in China

In China, we discover that AI business generally fall into among five main categories:

Hyperscalers develop end-to-end AI technology capability and collaborate within the ecosystem to serve both business-to-business and business-to-consumer business. Traditional industry business serve consumers straight by developing and embracing AI in internal improvement, new-product launch, and customer care. Vertical-specific AI business develop software application and options for particular domain use cases. AI core tech companies provide access to computer vision, natural-language processing, voice acknowledgment, and artificial intelligence capabilities to develop AI systems. Hardware business provide the hardware facilities to support AI demand in computing power and storage. Today, AI adoption is high in China in financing, retail, and high tech, which together account for more than one-third of the country's AI market (see sidebar "5 kinds of AI business in China").3 iResearch, iResearch serial market 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 reality, the majority of the AI applications that have been extensively adopted in China to date have remained in consumer-facing industries, propelled by the world's largest internet customer base and the ability to engage with consumers in brand-new ways to increase client 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 professionals within McKinsey and throughout industries, along with extensive analysis of McKinsey market assessments in Europe, the United States, Asia, and wiki.myamens.com China specifically in between October and November 2021. In performing our analysis, we looked outside of commercial sectors, such as finance and retail, where there are currently fully grown AI use cases and clear adoption. In emerging sectors with the highest value-creation potential, we concentrated on the domains where AI applications are presently in market-entry stages and could have an out of proportion impact by 2030. Applications in these sectors that either remain in the early-exploration phase or have mature industry adoption, such as manufacturing-operations optimization, were not the focus for the function of the study.

In the coming decade, our research suggests that there is incredible chance for AI growth in brand-new sectors in China, including some where development and R&D costs have actually typically lagged global counterparts: automotive, transportation, and logistics