The Chinese generative artificial intelligence sector received more funding this year, but at the same time recorded a decrease in the number of deals.
The downward dynamic of deals, in this case, is because investors have become more picky amid a kind of oversaturation of the machine intelligence market. In China, the artificial intelligence industry is characterized by a huge scale. Many AI-based products have been developed in the Asian country. There are also many players in the Chinese artificial intelligence industry. At the same time, there is a feature in this case, which is the actual absence of significant diversity. Artificial intelligence systems developed in China and apps powered by AI differ little from each other in principle. In this case, there are arguments to claim that scaling the machine intelligence product line means actually copying or cloning a small number of technological solutions. This does not mean that the Chinese artificial intelligence industry offers the same version of AI in formally different configurations. China has made progress in the development of machine intelligence, but so far it cannot provide significant diversity. In this case, the quantitative indicator prevails over the qualitative one. Perhaps the corresponding situation will change over time, but so far China offers consumers many products based on artificial intelligence, but much fewer fundamentally different ones. Also, do not forget that quantity tends to transform into quality over time.
Since the beginning of the current year and as of December 18, the Chinese generative artificial intelligence industry has struck 113 deals. This indicator is about 20% lower than the figure from a year ago. The relevant information was compiled by Itjuzi.com, a startup database service.
The total amount of funding received by the Chinese generative artificial intelligence industry since the beginning of the current year is 35 billion yuan ($4.8 billion). Last year, the corresponding figure was fixed at 20.5 billion yuan.
Currently, investors not only in China but also around the world, no longer perceive the artificial intelligence industry as a kind of area for unconditional financial injections. The AI sector continues to receive large amounts of funding, but investment interest has become more cautious. Artificial intelligence is a technology that has impressive potential, some of which has already been realized in the framework of practical application. AI does an excellent job with tasks related to processing huge amounts of information and generating original content. Artificial intelligence also has the potential to become a new independent form of consciousness, capable of surpassing the human mind in terms of cognitive abilities within the framework of technological evolution. Investors are interested in such prospects. But at the same time, there is still no definitive understanding of the timing of the monetization of artificial intelligence products. For investors, this circumstance is a kind of deterrent in the context of making decisions about making financial injections. At the same time, despite the uncertainty about the prospects for monetization, the artificial intelligence industry does not face a lack of funding. AI is obviously the most advanced technology of the current historical moment, so its further development and scaling is due to what can be called the fundamental logic of technological progress.
In the current year in the Asian country, four leading startups in the area of artificial intelligence, also known as the Chinese AI Tigers, raised a total of about $2.1 billion. This information is contained in the official statements of the mentioned players of China’s machine intelligence industry and messages published by the media. Chinese AI Tigers includes three startups from Beijing, such as Zhipu AI, Moonshot AI, Baichuan, and Shanghai startup MiniMax. These brands raised almost half of the total funding received in 2024 by the generative artificial intelligence industry of the Asian country.
This week, Zhipu AI announced the fourth round of financing since the beginning of the current year, replenishing its corporate budget by $412 million. The startup is expanding its activities while improving competitiveness in the Chinese artificial intelligence market, where rivalry is gradually increasing.
The government of the Asian country has approved a total of 252 generative AI services. In this case, there are many scenarios for using advanced technology. The list of the mentioned services includes, among others, chatbots powered by artificial intelligence and bespoke industrial solutions based on AI.
At the same time, the number of new services fueled by generative machine intelligence is decreasing in China. This tendency is associated with the declining number of deals in the corresponding segment of the technology sector of the Asian country.
The Cyberspace Administration of China, the national internet watchdog, gave the green light to 64 new generative artificial intelligence services as part of its latest regulatory approvals in November. This is the smallest of the three batches approved this year. According to media reports, the corresponding downward tendency is evidence of the saturation of the Chinese generative artificial intelligence market.
According to Itjuzi, the broader AI market in the Asian country, which includes advanced technology infrastructure, startups developing semiconductors or software to train digital intelligence systems, and companies that build industrial solutions, has seen cooling off investments this year.
In the overall Chinese artificial intelligence market, 457 deals were concluded in 2024. This figure is about 23% lower than the result recorded in 2023. It is possible that the downward tendency will continue next year, but the probability that the Chinese artificial intelligence market will face a funding shortage is minimal and in fact near zero, since in this case the already realized opportunities and prospects are very significant.
As we have reported earlier, Hong Kong Picks Several Banks and Tech Firms to Test GenAI in Financial Sector.
