China’s start-up developers of artificial intelligence applications significantly lag behind their US counterparts in global recurring revenue, making overseas expansion the default strategy for these mainland firms, according to a new report.
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As of August, only four of the world’s top 100 AI apps from private companies by annual recurring revenue (ARR) were Chinese, according to a report jointly released last week by domestic research firm Unique Research and San Francisco-based consultancy Tech Buzz China.
The four Chinese players – Glority, Plaud, ByteDance and Zuoyebang – generated an estimated US$447 million in total ARR from their AI apps, which accounted for 1.23 per cent of the top 100 list’s US$36.4 billion total. This group excluded apps from publicly listed tech giants such as Alibaba Group Holding and Tencent Holdings. Alibaba owns the Post.
The disparity between Chinese and US app developers had to do with structural factors in the world’s second-largest economy, where start-ups prioritised short-term sources of revenue such as public-sector projects, according to Rui Ma, founder of Tech Buzz China.
“It’s much more capital intensive to go after these global consumers and enterprises,” she said, adding that it was more difficult for Chinese start-ups to raise funds at home than those in the US.
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While the report defined Chinese start-ups as those based on the mainland, note-taking AI app developer Plaud was categorised as Chinese even though it was registered in the US.
