AI in China: The Struggle for Transformative Use

The World AI Conference in Shanghai brought together industry executives to discuss the development of large language models (LLMs) and the challenges they face. Despite the growing demand for sector-specific software, Chinese AI models are struggling to bring about transformative change.

Executives at the World AI Conference in Shanghai

According to Xu Li, CEO of SenseTime Group Inc., current AI models in China mainly function as data memory devices and struggle to support vertical applications. These applications are designed for specific sectors like banking or healthcare, and the existing limitations impede sector-wide transformative changes.

“Current AI models in China mainly function as data memory devices and struggle to support vertical applications.” - Xu Li, CEO of SenseTime Group Inc.

Chinese tech companies are engaging in a price war for AI models to attract cloud business users. Baidu and ByteDance have already initiated significant price cuts, extending a fierce price war in an effort not to lead the industry but to gain more users for their cloud businesses.

A price war among Chinese tech firms

Yan Junjie, CEO of Chinese AI startup MiniMax, highlighted that homegrown large language models (LLMs) have an average error rate exceeding 60%, nearly double that of OpenAI’s ChatGPT-4. Yan emphasized the need to reduce this error rate to around 3% to meet user expectations for more accurate AI-generated content.

He Zhengyu, Chief Technology Officer of Ant Group Co. Ltd., suggested embedding large language models (LLMs) with knowledge graphs to address LLM hallucinations. This approach grounds the models by allowing them to reference accurate data, which is especially crucial for complex industrial applications like finance and healthcare.

Tencent Holdings Ltd.’s head of intelligence, Wu Yunsheng, stated that the company’s multimodal AI models have rapidly improved by continually adding diverse data and computing resources during research. This highlights Tencent’s commitment to advancing its AI capabilities.

Tencent’s multimodal AI models

The ongoing price war in the AI sector is expected to continue for at least another year, targeting firms with strong cloud infrastructure and a large user base. As the competition intensifies, it remains to be seen which companies will emerge as leaders in the Chinese AI market.

The competitive Chinese AI market