China's generative AI firms rush to enter commercialization amid domestic innovation

Domestic AI start-ups show strength, potential amid global competition

Kimi chatbot, a large language model (LLM) application, has been gaining popularity, leading to a new wave of investment enthusiasm in the field of artificial intelligence (AI) and fueling hot discussion about the commercial prospects of LLMs in China.

Beijing-based start-up Moonshot AI, Kimi's developer, announced last week a breakthrough in its chatbot upgrading - able to handle up to 2 million Chinese characters in a single prompt, up from the previous 200,000 characters in October 2023.

In February, Moonshot AI generated 2.97 million visits, up 105.8 percent month-on-month, according to data from research firm Similarwe.

Analysts said that the emergence of Kimi chatbot as a "dark horse" in the Chinese AI market has caused a stir, and industry insiders are discussing the commercialization prospects of China's LLMs.

The ability to process long prompts is critical to the development of AI models, Yang Zhiling, the CEO and co-founder of Moonshot AI, told an industry event last year, media reports said.

The free and open Kimi chatbot's intelligent assistant is currently in beta testing and is limited to invited users before a wider roll-out, according to Moonshot AI. It is expected to release a commercial version of its open-source AI model this year.

"Kimi chatbot has strong document interpretation capabilities. It is currently the AI LLM created by a Chinese company that is nearly as strong as OpenAI's ChatGPT," an invited user surnamed Li told the Global Times on Sunday.

LLMs are used to train generative AI services. The success of Kimi chatbot indicates that Chinese manufacturers already have the strength and potential to commercialize LLMs, which also demonstrates China's ramped-up efforts in AI, Wang Peng, an associate research fellow of Beijing Academy of Social Sciences, told the Global Times on Sunday.

Experts and market observers believe that 2024 will be the year of AI applications, and the commercialization process of AI applications will continue to accelerate.

The active performance of Chinese generative AI firms in the research and commercialization of LLM technology also demonstrates China's strength and potential among its global counterparts, experts said.

Since ChatGPT drew global attention in 2022, Chinese companies have accelerated their research and development process of AI products.

For example, the less-than-one-year-old tech unicorn Moonshot AI, which was established on April 17, 2023, has completed two large financing rounds. After raising more than $1 billion earlier this year, the company was valued at $2.5 billion, making it one of the leading enterprises in the field of large models in China, media reported.

Also on the same racetrack, Chinese AI startup MiniMax has secured its funds from Alibaba Group Holding and other investors. After the new round of financing, MiniMax is valued at more than $2.5 billion, Bloomberg reported on March 5.

Last week, the AI-related stocks on the A-share market continued to surge, with Kimi concept stocks leading the way. Over the past year, the capital market has shown strong expectations and confidence in the commercialization of AI technology.

As Chinese investors and capital ventures are placing big bets on generative AI, nearly all leading Chinese internet companies, including Baidu, Alibaba, JD.com and ByteDance, have jumped on the AI-powered LLM bandwagon.

By the end of 2023, there were more than 200 LLMs in China, more than 20 of which have been approved to provide services to the public, China Media Group reported.

Meanwhile, more Chinese tech giants are training their own LLMs. Industry data showed that so far in 2024, China's LLM producers are focusing more on AI commercialization.

For example, Qihoo 360 announced on Saturday that it started beta testing for an AI browser that can process long prompts with up to 5 million Chinese characters. In February, 360's AI browser, which can handle 1 million Chinese characters, was opened to the public for free. Baidu's ERNIE Bot plans to raise the Chinese character handling limit to 2-5 million, according to domestic financial portal caijing.com.

Noting that the gap between China and the US in LLM technology development is narrowing, experts and business insiders believe these trends indicate that China has vast potential and opportunities in the field of AI.

Since 2014, driven by application demand, China's AI development has been at the forefront of the world, Liu Gang, chief economist at the Chinese Institute of New Generation AI Development Strategies, told the Global Times on Sunday, adding that in terms of applications of LLMs, the solid foundation of the Chinese manufacturing industry will promote a wide range of AI application scenarios.

China's AI industry has entered a period of rapid development. According to an official with the Ministry of Industry and Information Technology, the core AI industry in China reached 580 billion yuan ($80.23 billion) in 2023, up 18 percent year-on-year. The number of core enterprises exceeded 4,400, ranking second in the world.

Research firm IDC predicted that by 2027, China's overall AI market will be close to $40 billion. Both the software and service markets will see relatively rapid growth.