29sixservices

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

In the past decade, China has built a solid structure to support its AI economy and made considerable contributions to AI globally. Stanford University's AI Index, which assesses AI advancements worldwide throughout various metrics in research study, development, 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 papers and AI citations worldwide in 2021. In financial investment, China accounted for almost one-fifth of global 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, March 2022, Figure 4.2.6, "Private investment in AI by geographic area, 2013-21."

Five types of AI companies in China

In China, we find that AI business typically fall under among five main classifications:

Hyperscalers establish end-to-end AI technology ability and collaborate within the community to serve both business-to-business and business-to-consumer business. Traditional industry companies serve consumers straight by developing and embracing AI in internal improvement, new-product launch, and client services. Vertical-specific AI companies develop software application and solutions for specific domain usage cases. AI core tech providers provide access to computer vision, natural-language processing, voice acknowledgment, and artificial intelligence abilities to develop AI systems. Hardware companies offer the hardware infrastructure to support AI need in computing power and storage. Today, AI adoption is high in China in finance, retail, and high tech, which together represent more than one-third of the nation's AI market (see sidebar "5 kinds of AI companies in China").3 iResearch, iResearch serial market research on China's AI market III, December 2020. In tech, for example, leaders Alibaba and ByteDance, both family names in China, have become known for their highly tailored AI-driven customer apps. In truth, many of the AI applications that have actually been extensively adopted in China to date have remained in consumer-facing markets, moved by the world's biggest internet consumer base and the ability to engage with customers in new ways to increase client loyalty, earnings, and market appraisals.

So what's next for AI in China?

About the research study

This research study is based on field interviews with more than 50 professionals within McKinsey and throughout industries, together with substantial analysis of McKinsey market assessments in Europe, the United States, Asia, and China specifically between October and November 2021. In performing our analysis, we looked beyond commercial sectors, such as financing and retail, where there are already mature AI usage cases and clear adoption. In emerging sectors with the greatest value-creation potential, we concentrated on the domains where AI applications are presently in market-entry phases and could have an out of proportion impact by 2030. Applications in these sectors that either remain in the early-exploration phase or have fully grown market adoption, such as manufacturing-operations optimization, were not the focus for the function of the study.

In the coming decade, our research shows that there is tremendous chance for AI growth in new sectors in China, including some where innovation and R&D costs have generally lagged worldwide counterparts: automobile, transportation, and logistics