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China’s AI industry expected to encounter reshuffle in 2019

(People's Daily Online)    15:42, February 20, 2019

Visitors interact with AI robots at an exhibition. (Photo/Chinanews.com)

Artificial intelligence (AI) has grown into a hotspot industry in recent years, and it has witnessed an increasing number of startup projects and expanding financing. However, the prospering trend in the sector may hit a wall in 2019.

According to a white paper regarding the AI industry released last July by the Beijing Municipal Bureau of Economy and Information Technology, China is home to 4,040 AI enterprises at present. However, 70 percent of the firms have failed to receive venture capital.

In this regard, it’s fair enough to say that this year might bring about a cold winter for the industry, at least for those selling “fake” AI technologies.

“It’s becoming hard for AI technologies to be commercialized, and 90 percent of the startups in this industry may fail if proper fields of application are not found,” said Ai Yu, Managing Director of China Everbright Limited, a Hong Kong-based financial services company.

Experts said that AI will see a larger application in people’s work and life this year, and core sectors such as AI chips will become more and more professional, raising the bar for entry into this industry.

Large numbers of AI startups have been popping up in China, and some of them are leading the world in facial recognition, autopilot and natural language interaction, said Liu Jiong, chairman of the board of Lanting Capital, a cross-border, pharmaceutical focused strategic consulting and investment firm.

However, there still are many AI firms that haven’t found proper methods of monetization, which is an issue that the Chinese AI industry must face in the future.

“Given the current capital shortage in the capital market, a large number of companies will be gradually eliminated because of their relatively weak technical strength,” said Liu Wanqing, venture partner of DayWin Asset Management. According to him, those backed by robust technologies are expected to embrace sound development.

Insiders noted that more and more enterprises were calling themselves AI firms with the inflow of colossal capital into the AI industry, but it still couldn’t conceal the fact that many of them were knocked off. Blindness and aimless investment would only hinder the healthy development of the industry, and the only way for sustained development is to smash the “bubbles” first. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Hongyu, Bianji)

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