Chinese tech veterans rush to launch AI start-ups

China’s experienced technology entrepreneurs are rushing into artificial intelligence (AI) start-ups to ride the wave of ChatGPT, hoping to become a major force in the country’s quest to match US leadership on generative AI.

As China’s Big Tech firms – from search engine Baidu to e-commerce giant and Post-owner Alibaba Group Holding – go public with their ambitions to provide services similar to ChatGPT from OpenAI, entrepreneurs including co-founders of Meituan and Sogou are also jumping on the bandwagon.

Wang Huiwei, who “retired” from Meituan in 2020, was among the first Chinese tech veterans to jump in with a February announcement that he was launching AI start-up Guangnian Zhiwai to rival OpenAI. The Chinese start-up is currently valued at US$1 billion.

Wang Xiaochun, founder and ex-CEO of Sogou, a local search engine that once rivalled Baidu, launched a venture in generative AI technologies, taking advantage of his experience in deep learning.

Lee Kai-Fu, the former head of Google China who later co-founded Sinovation Ventures, one of the earliest venture capital funds in China with a heavy emphasis on AI, is the latest high-profile tech veteran to take part in the Chinese ChatGPT frenzy. Lee, 61, said in a private WeChat post in mid-March that he was “personally helping prep for the launch of Project AI 2.0, a global company that aims to produce AI-first productivity tools,” according to local media Yicai.

ChatGPT is not available in China, and Beijing is unlikely to allow access to uncensored online information, so hopes are high that the country’s 1 billion internet users will be enough to support generative AI players, including Big Tech and start-ups.

However, the AI start-ups face many challenges in developing generative AI services when compared to Big Tech, said Liu Xinliang, founder at Beijing-based market consultancy DCCI. Limited access to funding, technology, and talent can cripple a start-up’s ambitions, according to Liu.

Big Tech has access to abundant capital, talent and research and development resources, as well as a data trove necessary for training the large language models (LLMs) that underpin the AI chatbots. They also have wider product and service offerings that can be tailored for LLM applications.

San Francisco-based OpenAI launched ChatGPT last November. The conversational bot was trained by the GPT language model and is able to respond to complex questions with humanlike text. Google and Microsoft, which has funded OpenAI, are leading the efforts in the US, while in China, Baidu and Alibaba have both unveiled ChatGPT challengers in recent months.

Chinese AI start-ups will “need time, talent, funding and patience” to catch up with OpenAI or top-tier local AI companies, which have for years allocated sizeable resources to the field, said Lu Yanxia, a research director with IT consultancy IDC.

For start-ups, “monetisation might not come to fruition in the near term”, said Lu, who added that companies should not fixate on LLMs, but instead look at applications of the technology in industrial-use scenarios. South China Morning Post