Chinese Big Tech is in the driving seat to dominate China's AI market
Alibaba, Tencent, ByteDance and Baidu dominate the investment and adoption of domestic AI tech
Welcome back,
There’s a lot to get into this week, including a look at how China’s big tech firms are dominating the local AI market, why Indian startups are rushing to redomicile, Temu and Shein’s new focus on Europe and a round-up of earnings from Asia’s public companies.
Elsewhere, India’s election is throwing up some major tech talking points. Hundreds of millions of Indian voters are receiving legitimate deepfakes from election candidates, and the pre-election fake news prevention tools aren’t working.
All this and more this week—see you next week for another recap,
Jon
PS: Follow the Asia Tech Review LinkedIn page for updates on posts published here and interesting things that come our way. If you’re a news junkie, the ATR Telegram news feed has you covered with news as-it-happens.
News in focus
Big Tech is in China’s AI driving seat
OpenAI may have stolen a march on US big tech firms like Google and Microsoft when it kicked off the AI race with the launch of ChatGPT 18 months ago, but it is familiar names who lead the chasing pack in China. Alibaba, Tencent and Baidu are best positioned to take advantage of generative AI in China, in terms of both developing the tech and, crucially, aligning with up-and-coming startups through investment.
SCMP reports on the investment dominance:
Alibaba has backed all of the country’s four new “AI Tigers”, including Beijing-based Baichuan and Zhipu AI, Shanghai-based MiniMax, as well as Moonshot AI, according to start-up data service ITJuzi.com, making it one of the most prolific backers of the country’s future AI champions.
That enthusiasm is also shared by Shenzhen-based Tencent, which has so far invested in three of the AI tigers, save for Moonshot.
Like Microsoft, Alibaba is leaning on its cloud business—which is close to $15B in annual revenue—to win deals. A combination of capital, cloud credits and support have helped it win deals. Two of those startups, in particular, are making major moves.
Moonshot took a $1B investment that was led by Alibaba at a $1.5B valuation as recently as February, and now it is raising a new round at $3B which could also include participation from Tencent. It is said to operate China’s second most popular chatbot, Kimi, behind only Baidu’s Ernie, and Alibaba owns 36% of the business.
01.AI, meanwhile, is a Beijing-based startup that was founded by former Microsoft and Google executive Kai-Fu Lee. It is set to introduce its first AI application for consumers through a free productivity assistant called Wanzhi, that’s comparable to Microsoft Copilot and it will help the firm accelerate its data training.
But, don’t discount ByteDance. The TikTok parent’s chatbot, Doubao, has overtaken Baidu’s Ernie in terms of both downloads and active users on iOS in China, according to data from analytics firm Sensor Tower. Ernie was a first-mover but ByteDance can lean on its popular consumer apps for adoption. Speaking of reaching mainstream users, China has introduced an AI chatbot that was “trained on the thoughts” of President Xi—that’s reminiscent of the Communist Party app that launched back in 2019.
On the product side, ByteDance believes that pushing generative AI can help grow its ad business on TikTok. Its new TikTok Symphony product suite will help marketers write scripts, produce videos and enhance current assets:
The tool can generate TikTok-ready videos with just a few inputs from an advertiser, the company claims. The studio also offers brands ready-to-use videos for ad campaigns based on their TikTok Ads Manager assets or product information.
Language differences mean that Chinese firms really are in the hot seat for developing domestic AI products. OpenAi’s most recent version of ChatGPT, GPT-4o, has real issues in China. MIT Technology Review reported that its Chinese token-training data is polluted by spam and porn websites. That’s likely due to inadequate data cleaning, and it could lead to hallucinations, poor performance, and misuse. Meanwhile, politics is the reason Microsoft is asking its China-based AI workers to move overseas from the Mainland.
There’s a lot more to say about how China’s AI system is developing—for example, Huawei’s role in facilitating and the new pricing war for LLM usage—and we will endeavour to cover this in more detail soon. For now, though, it is clear that the existing big names aren’t about to be caught out on AI as arguably happened in the US.
Indian startups ‘come home’ for IPO dreams
Singapore was once the place to be for Indian companies that wanted to raise capital from international investors away from the complications of domestic capital controls. However, the winds of change over the last decade have turned with India’s technology, startup and VC sectors booming.
It seemed unlikely, but there’s an increased appetite for technology stocks in India—thanks to listings like Zomato and Policybazaar—and that has led a number of firms to bring their governance and registration back to India. Count them up:
Flipkart is “in active discussions” to redomicile with a view to an IPO in India, joining other giants like PhonePe
Pine Labs, which has been linked with an IPO since after Covid, just secured court approval in Singapore to shift base to India
Quick commerce firm Zepto is moving back from Singapore with a view to an IPO in the next two years
Razorpay has restructured its Indian operations to redomicile from the US. The cost? An estimated tax outgo of $200M
Stockbroker Groww has completed the move itself, as its CEO revealed on X
Asia earnings: PDD now most valued Chinese stock in US
PDD, which owns Temu, more than doubled revenue and smashed analyst forecasts after deepening inroads into countries including the US—it grew to become the most valued Chinese company listed in the US
Tencent beat analyst expectations thanks to its ads and business services, but its gaming business—which is half of revenue—didn’t shine
Tencent Music beat Q1 revenue estimates thanks to growing paid subscriptions
Alibaba is still going through a turnaround—it beat forecasts and showed improved growth but net income sunk by nearly 90% due to losses from investments in publicly traded companies
The firm also sold $4.5B worth of convertible bonds in one of the largest such offerings in recent years
Baidu saw modest quarterly revenue growth as it continues to develop local AI products and battle increased competition link
JD.com posted better-than-expected sales in the first quarter thanks to price cuts link
Xiaomi posted better-than-expected quarterly sales thanks to growing smartphone shipments, as its EV target remains on track
E-commerce was the story as Shopee-owner Sea beat quarterly revenue estimates on e-commerce strength
Grab increased its full-year earnings estimate by 25%
GoJek booked its first ‘profit’ (EBITDA—which is now apparently a thing) as, like Grab, it continued to focus on slimming costs down
Shein and Temu focus on Europe
Shein is said to be stepping up its plans to list in London after its US IPO plan ran into regulatory hurdles and political pushback. That’s happening at the same time that the company and its rival Temu are refocusing in European markets for growth.
Temu is said to be cooling on the expensive US market—where it has spent billions of dollars and attracted political scrutiny—with Europe now a new priority.
As a result, it now expects less than a third of its sales to come from the U.S. this year, compared with 60% last year, the people said, a prediction earlier reported by the business publication The Information.
That said, Temu has been accused of breaching EU’s DSA in a bundle of consumer complaints.
China
Chinese regulators in recent months have told tech firms, including TikTok parent ByteDance, Tencent, Alibaba and Baidu, to cut back on their purchase of foreign-made artificial intelligence chips in favour of buying more domestically made chips link
Sensing the tide, Nvidia is said to have cut its China prices as it takes the fight to local giant Huawei link
ByteDance acquired Chinese earphone maker Oladance for around $50M link
The firm plans to install a new chief at its gaming subsidiary Shanghai Moonton Technology, after abandoning a plan to sell it link
And TikTok may lay off hundreds of employees as potential US ban looms link
Didi global president Jean Liu is stepping down from her role and as a board director following nearly a decade link
Tesla is pushing ahead with plans to power the global development of its self-driving system with data from China that could be processed within the country, part of a strategic shift by Elon Musk link
Meanwhile, Tesla is taking the lead from Apple and others after it told suppliers to start building components and parts outside of both China and Taiwan by as early as next year due to rising geopolitical uncertainties link
Suppliers making components such as printed circuit boards, displays and electronics control unit systems for use in Tesla models sold outside of China have received the request from the American EV maker, according to six supply chain executives with direct knowledge of the matter.
Source Code Capital, among the earliest backers of ByteDance, is raising one of China’s largest venture funds ($300M) as startups begin to draw renewed interest during the AI boom link
China’s SMIC ranks as world’s third-largest chip foundry by sales in first quarter on back of strong domestic demand link
India
Indian politicians are using audio and video deepfakes of themselves to bombard voters with millions of messages before the national election—many have no idea they’ve been talking to a clone link
Meanwhile, fake news verification tools fail the test during elections in India link
Rest of World tested 11 leading WhatsApp-based chatbots that promise to help Indian voters identify misinformation. There were long delays and inconsistencies in responses even for content that can easily be identified as AI-generated and fake.
Flipkart may be majority owned by Walmart, but that isn’t stopping the e-commerce firm from taking a $350M investment from Google as part of a $1B cash injection that was also funded by Walmart—Flipkart has raised from third parties since its acquisition back in 2018 and Google’s involvement now includes “cloud offerings” as well as capital to go after areas including quick commerce link
Ride-hailing startup BluSmart raised nearly $24M—following $25M in January and $66M last year—for growth, which will include expansion to Dubai link
A group of lenders to Byju's on Wednesday said a US bankruptcy court is set to impose penalties on the edtech company’s board member Riju Ravindran for not disclosing or ascertaining the location of the term loan money that is at the centre of a dispute link
Paytm may need to make layoffs to cut costs following the impact of its recent regulatory clampdown link
India plans to build its own version of a foundational model for AI which will be customised for use by Indian companies, entrepreneurs, academics and researchers link
Google is in advanced talks with Foxconn to locally manufacture Pixel smartphones in Tamil Nadu link
Southeast Asia
Temasek’s venture capital arm Vertex is expanding with a first Japan-focused fund with a target of $65M link
Temasek has backed AI investor AIC’s new $250M fund—the Luxembourg-based firm counts OpenAI among its investments link
Indonesia is using AI to preserve some of its 700 languages link
Meta and Coinbase have linked up with dating giant Match to fight scams link
On Tuesday, an unusual coalition of tech and crypto companies joined with Match—the online-dating giant that runs apps like Tinder—to announce Tech Against Scams, an initiative to share information and resources in order to combat romance scams and pig butchering. The coalition includes Meta, the parent company of Facebook and WhatsApp, as well as the crypto firms Coinbase, Kraken, Ripple, and Gemini.
Vietnam has pledged to secure more energy supply to meet demand from chip makers as the race to tap manufacturing opportunities heats up in Southeast Asia link
Until then, though, it is looking to conserve power with Foxconn reportedly among the firms that have been asked reduce their power usage by around 30% in assembly plants in the north of the country where there were electricity outages last year link
Elon Musk launches Starlink in Indonesia, where it is eying future opportunities link
South Korea
Samsung Electronics replaced the head of its semiconductor arm with a memory chip veteran to spearhead efforts to catch up with SK Hynix in the booming AI arena link
The South Korean government unveiled a $19B support package to spur its semiconductor industry to compete in global chip ‘warfare’ link
Japan
Nintendo doesn’t often do M&A but it acquired Miami-based, a developer that specialises in porting games to the Switch, in what looks like a move to beef up its upcoming Switch 2 with even more titles link
Japan is curbing Apple and Google's smartphone app duopoly with a new legislative bill that would compel the dominant platforms to allow third parties to launch their own app markets and to offer more payment options, while banning the technology giants from giving preferential treatment to their own products link
Taiwan
The arrival of a new Taiwanese Prime Minister have reignited China’s aggressive stance—one second order impact is the news that (reportedly) chip firms ASML and TSMC have ways to disable the world’s most sophisticated chipmaking machines in the event that China invades Taiwan link
Officials from the US government have privately expressed concerns to both their Dutch and Taiwanese counterparts about what happens if Chinese aggression escalates into an attack on the island responsible for producing the vast majority of the world’s advanced semiconductors, two of the people said, speaking on condition of anonymity.
In addition, Taiwan’s new technology minister Wu Cheng-wen said smart machines connected to the internet, including chip tools, can be remotely shut off in the event of a conflict on the island link
The strange journey of Lin Rui-siang, the 23-year-old Taiwanese man accused of running the Incognito black market, extorting his own site’s users—and then refashioning himself as a legit crypto crime expert. link