Artificial intelligence

Chinese firms are aggressive investors in AI and show a ‘thirst for talent’, says MIT-BCG report

Study finds that Chinese AI pioneers invest more aggressively and put greater focus on business model transformation than international peers

PUBLISHED : Tuesday, 18 September, 2018, 7:01am
UPDATED : Tuesday, 25 September, 2018, 2:35pm

Chinese companies are “aggressively investing” in artificial intelligence (AI) applications and show more thirst for talent, a joint study by Massachusetts Institute of Technology (MIT) and Boston Consulting Group (BCG) shows, at a time when the race for AI superiority is in the spotlight around the world.

The conclusion – based on a survey of over 3,000 participants in 126 countries and 300 executives from China – shines a light on China’s ambitions in AI, which is seen as a major driver of the new economy, and the perceived competitive threat the country poses to other big economies.

“China's rapid rise in AI has been a wake-up call for nations, industries and corporate executives globally,” says the report, which was released on Tuesday and titled Artificial Intelligence in Business Gets Real. “Indeed, many recent national programmes to advance the development of AI refer to China as a competitive threat.”

Betting big on the core technology behind an array of cutting-edge applications from autonomous driving to facial recognition, China’s State Council last July laid out a three-step road map to AI supremacy. It included the goals of building a domestic AI industry worth about US$150 billion and to make the country an “innovation centre for AI” by 2030. China’s AI ambitions have captured the attention of US President Donald Trump in his escalating trade spat with the country.

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The study found that Chinese AI pioneers invest more aggressively, put greater focus on business model transformation, and are particularly good at “centralising the housing and governance of data for their AI engines”, compared to European and US peers.

About 83 per cent of the country’s leading AI companies manage corporate data centrally, compared to 39 per cent in Europe and 40 per cent in the US, says the study. Nearly eight in 10 Chinese companies maintain “centralised data lakes”, which is roughly twice as many compared with other countries.

The focus on AI has also led to a “thirst for talent” in the space, as almost six in 10 Chinese executives surveyed said their firms lack the appropriate technology talent, holding them back – a number far higher than in the US and Europe – according to the report.

The AI investment boom has been boosted by the Chinese government's “call for businesses to achieve leadership in AI”, the report noted. The country has even appointed four of its biggest technology companies – Baidu, Alibaba Group Holding, Tencent Holdings and voice recognition specialist iFlytek – as “national champions” to lead the development of AI innovation platforms in self-driving cars, smart cities, medical diagnosis and voice intelligence, respectively.

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Globally, executives are increasingly looking to AI to create new sources of business value, noted MIT and BCG in the report. About 28 per cent of respondents say AI solutions have already led to business model change in their organisations, while nine out of 10 believe AI will create new value for their business in the next five years.

Still, the results among the 300 executives from Chinese companies – which include facial-recognition start-up Yitu Technology and Horizon Robotics – showed a bigger emphasis on using AI to achieve cost reductions versus revenue enhancements, and there are greater expectations for job losses as a result of the implementation of AI technologies.

More than two-thirds of Chinese AI pioneers say AI deployments are likely to reduce the size of their workforce, compared to only 32 per cent in Europe and 50 per cent in the US, the report showed. The report also cited unclear business cases and a shortage of technical capability as potential headwinds for Chinese companies.