Why Alibaba Is Key to China’s Global GenAI Leadership
-
Loading... - Genji Cheng
- 05 Aug 2024
- 64 Views
- 0 Like
- 0 Comment
China has filed five times more GenAI patents than the U.S. in the last decade, with over 38,000 patent applications, according to the World Intellectual Property Organization. China excels in finding applications for new technologies, and this is evident in GenAI. The country's advancements range from autonomous driving, fueled by the electric vehicle boom led by Chinese carmakers like BYD, NIO, and Xpeng, to AI chatbots in e-commerce from companies such as Alibaba and Bytedance. However, the lesser-known champions like NetEase are also making significant strides. GenAI in China is transforming retailers and consumer journeys across sectors, leaving global executives to navigate in the dark. Alibaba's experience is illustrative and sets the stage for China’s GenAI transformation.
Lessons from China’s GenAI Pioneers
- Leverage China as an Innovation Hub for GenAI: Utilize China's rapid decision-making environment and flexible customer base as a testing ground for new GenAI-powered products and initiatives.
- Cast a Wide Net: The GenAI race has just begun. Business leaders should look at both current leaders, from Microsoft to Alibaba, and the influx of new players entering the GenAI space.
- Extract Business Value from GenAI: Chinese companies demonstrate the application of GenAI at scale. Either observe and learn, or better yet, partner with them to access the latest applications and business models.
- Protect Your Core: Prepare for China's GenAI advancements with robust data privacy and cybersecurity measures while maintaining a competitive position.
Alibaba’s Journey Toward GenAI at Scale
Alibaba has faced a tumultuous journey over the past decade, transitioning from untouchable growth in the 2010s to being challenged by competition, consumers, and regulators in the 2020s. In March 2023, the company announced a significant reorganization plan, initially aimed at splitting into one holding group, six business groups, and numerous business companies, with IPO and financing plans quickly unfolding.
However, by October, changes in U.S. export control rules for advanced computing chips directly impacted Alibaba Cloud's ability to offer high-end computing services, leading to a halt in the cloud business split. Concurrently, Alibaba underwent major executive changes, with Zhang Yong stepping down and Wu Yongming stepping in, focusing on technology-driven internet platforms, AI-driven technology, and a global commercial network.
GenAI at Alibaba: Not the Next OpenAI
Alibaba is strengthening its core e-commerce business while reevaluating offline retail investments and continuing to invest in new technologies. Despite facing U.S. government chip sanctions, Alibaba Cloud remains a leading contender in GenAI. In November 2023, Alibaba Cloud open-sourced a 72-billion-parameter general-purpose model, signaling its ambition to become a key player in AI, similar to Microsoft.
China's large-model industry is still catching up with GPT 3.5 but focuses more on creating applications based on large models compared to the West. This disparity is due to China's comparative disadvantage in terms of access to quality data and high-performing chipsets, but also a strategic preference for business application. The central government aims to change this with a renewed focus on foundational technologies in China.
Masters of GenAI Application
Alibaba Cloud's repositioning reflects broader trends in China's tech industry, where innovation and strategic flexibility are crucial for sustained success. While the U.S. may lead in cutting-edge AI systems, China excels in building and commercializing applications at great speed. Chinese companies have mastered the art of application by recombining new and existing technologies and business models, as seen in the success of Alibaba's Taobao Live and the global success of TikTok.
GenAI Underdog NetEase
NetEase has primarily focused on building virtual environments in gaming, digital communities, and communication. Despite intense competition, NetEase maintains a strong position, navigating regulatory challenges and adapting to policy changes. The company invests heavily in R&D, with a significant portion dedicated to AI applications for virtual environments. NetEase’s AI arm, Fuxi Lab, has partnered with China State Construction Engineering Corp to develop smart robots for the construction industry.
China’s GenAI Advantage Still in the Making
China prioritizes the use and adoption of GenAI solutions as it continues its economic reform. GenAI offers potential for boosting efficiency, automating production, leveraging a shrinking workforce, and speeding up scientific discoveries. However, it is too early to say if China’s industries will catch up quickly enough to create a new comparative advantage. What is clear is that China can no longer rely solely on cheap labor or manufacturing prowess and must increasingly depend on the application of AI and access to the latest technologies to maintain its competitive edge.
Alibaba's experience in navigating the challenges and opportunities of GenAI offers valuable lessons for global business leaders. By leveraging China as an innovation hub, casting a wide net, extracting business value from GenAI, and protecting their core, businesses can prepare for the transformative impact of GenAI. As China continues to evolve its GenAI capabilities, companies like Alibaba and NetEase are paving the way for a new era of technological advancement and application.
