The exploration of AI New World in full swing in China: who is likely to come out on top?

Until recently, most companies have been reluctant to invest large sums of money in large-scale language modeling due to uncertainty about its efficacy.

Following Christopher Columbus' discovery of the New World on behalf of Spain, other European nations such as Britain, France, and Portugal, were motivated to embark on their own expeditions and establish colonies in the resource-abundant lands of the American continent. This marked the beginning of a new era in global history.

A similar story is currently unfolding in China's tech industry. Following the impressive performance of GPT3.5-powered ChatGPT, Chinese tech firms are racing into the generative artificial intelligence (AI) sector, vowing to create their own competitive large language models.

Developed by OpenAI, a prominent AI research lab in the US, GPT3.5 is a state-of-the-art AI model that has showcased remarkable advancements in understanding and generating human-like text.

Embracing the belief that new strides in AI technology will change almost everything, many companies in the tech industry, from small start-ups to tech giants, are now developing or launching products similar to ChatGPT in the hopes of capitalizing on its success.

The current enthusiasm in the sector starkly contrasts with previous sentiments.

In the past, many companies were hesitant to invest large sums of money in large-scale language modeling due to concerns about its effectiveness. However, with the impressive performance of GPT-3.5 demonstrating potential returns on investment, more and more companies are now pouring both financial and human resources into the field.

"Right now, making a ChatGPT-like product in China is like visiting the New World in the footsteps of Columbus," said Wang Jianshuo, founder of Baixing, an online classifieds website, in a recent podcast. "This means that the task ahead remains challenging, but it also shows that the costs and effort involved are measurable and definable."

Before founding Baixing.com, Wang worked at Microsoft and eBay as a software engineer. He is also known for his blog, "Wangjianshuo's Blog," where he has shared his insights on technology, entrepreneurship, and life in China. Over the years, he has become an influential figure in the Chinese tech and startup ecosystem. 

According to him, although Chinese companies may only be able to achieve half or even one-third of ChatGPT's capacity initially, it will still be a significant improvement compared to their previous capabilities. 

“Such progress is already sufficient to develop numerous applications that were previously unimaginable, and the gap will steadily narrow as the technology on the Chinese side continues to improve," he said.

In the current landscape, an "arms race" on generative AI is underway, involving not only the rivalry between China and the US but also intense competition among Chinese tech companies themselves. As these firms pour substantial resources into research and development, seeking to outdo each other, the emergence of a functional large language model from this highly competitive environment seems inevitable. 

Evidently, not all participants can expect to achieve the highest possible return on investment. 

"When considering which entity can get the highest business value, the market it operates in and the ecosystem it has built need to be taken into account," said Wang Guanchun, founder and CEO of AI-powered work automation startup Laiye.

For this reason, the founder believes it is critical for cloud service providers like Alibaba Cloud to engage in this effort, as generative AI-related services hold the potential to boost cloud usage among developers and clients, driving growth and revenue.

Cloud providers are poised to be the winners. According to estimates from the venture capital firm Andreessen Horowitz, about 10% to 20% of the revenue brought in by generative AI goes to cloud providers. The reason behind this is that almost everything in generative AI goes through a cloud-hosted GPU (or TPU) at some point.

According to Chinese news outlet LatePost, the introduction of OpenAI's generative artificial intelligence service to Microsoft Azure in recent months has attracted greater interest from Chinese companies in signing up for the cloud platform. Previously, Azure had few Chinese customers and mainly served multinational companies with operations in China.

Microsoft and Google have both integrated their generative AI services with their cloud platforms. On April 13, Amazon, the largest cloud provider, entered the fray with the launch of a cloud service called Bedrock that gives developers access to Titan, Amazon's in-house language model, as well as language models from startups AI21 and Google-backed Anthropic.

Beyond cloud providers, the founder also believes that companies like Huawei and ByteDance can take a more proactive approach to developing generative AI technology, as it can positively impact their global business and increase their revenue.

In order to paint a clearer picture, here is a list of Chinese tech giants who have recently unveiled their work on generative AI:

On April 11, Alibaba officially showcased its AI large language model, Tongyi Qianwen, announcing plans to integrate it into all of its apps in the near future.

Telecom giant Huawei recently introduced the Pangu series of AI models, which have applications spanning drug development to computer vision.

Baidu unveiled its highly anticipated AI-powered chatbot, Ernie Bot, on March 16. The company intends to leverage Ernie Bot to revolutionize its dominant search engine in China as well as improve efficiency across its cloud, smart car, and household appliance divisions.

In February, Tencent formed a development team for a ChatGPT-like chatbot named "HunyuanAide."

On February 10, JD.com, a major e-commerce company in China, announced its plan to launch a product called ChatJD, which is similar to ChatGPT and designed to serve other businesses.

Meanwhile, several prominent entrepreneurs have assembled their own teams with high-profile, expecting to capitalize on the burgeoning AI wave:

In March, Wang Huiwen, co-founder and former senior vice president of China's largest food-delivery platform, Meituan, revealed his plans to create a Chinese version of OpenAI, investing $50 million for a 25% stake in the company. Now named Guangnianzhiwai, the company has initiated its second round of financing and is reportedly valued at $1 billion.

Kai-fu Lee, chairman and CEO of Sinovation Ventures, a leading venture capital firm, also announced in March his intention to establish an AI company, Project AI 2.0, to compete with OpenAI.

Most recently, Wang Xiaochuan, the founder of China's second-largest search engine, Sogou, has founded Baichuan Intelligence with a $50 million startup capital to venture into the development of large language models. The company is expected to launch its models by the end of this year.

Writer: Rebbeca Ren

Editor: Boyuan Wang