Chinese AI Initiatives Are Falling Behind in Global Competition

Chinese AI application development ventures are experiencing a significant lag compared to their U.S. rivals in terms of global recurring revenue. This situation is making the international expansion of local firms a necessary strategy. According to a new report, as of August, only four of the world's top 100 AI applications belong to Chinese companies.

According to the report published by Unique Research and Tech Buzz China, these four Chinese firms - Glority, Plaud, ByteDance, and Zuoyebang - have generated a total of approximately 447 million USD in revenue. This number constitutes only 1.23% of the total 36.4 billion USD revenue of the top 100 applications. The report also does not include applications from publicly traded tech giants like Alibaba Group Holding and Tencent Holdings.

According to assessments, the reason for this gap lies in the structural problems within China's second-largest economy and the tendency of ventures to focus on short-term revenue sources. Rui Ma, founder of Tech Buzz China, states that "targeting global consumers and businesses requires significantly more capital." He also emphasized that Chinese startups are not able to secure funding as easily as their U.S. counterparts.

The firms defined as Chinese ventures in the report are those based in the mainland, but those registered in the U.S., like Plaud, are also included. The highest-ranked Chinese AI application is Glority, headquartered in Hangzhou, which ranks 20th with its popular plant identification application PictureThis, boasting an estimated annual recurring revenue (ARR) of 173 million USD.

The standout names in the report are fundamental model developers from the U.S. such as OpenAI and Anthropic, which rank first with approximately 17 billion and 7 billion USD in ARR, respectively. Delta Wu, a manager at Unique Research, explained that ARR estimates were made by tracking the traffic redirected from each AI product's official website to third-party payment platforms.

Additionally, 19% of the highest-grossing Chinese AI applications derive a large part of their revenue from abroad. This situation signals growth potential in international markets. In recent years, high-profile Chinese AI ventures such as HeyGen and Manus have been observed relocating abroad due to increasing U.S. scrutiny.

The domestic market provides a vital area for AI ventures to initially build a user base, while international markets offer significant growth opportunities, especially in the business software segment. Rui Ma remarked, "Clearly, many investors in China are no longer considering investing in AI software ventures," highlighting the rise of investment areas related to AI, such as robotic technology.