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$6.1 Billion in Funding and China Still Not Leading In AI Innovation

Jerrold Wang, Analyst
September 23, 2019

On the surface, all innovation-related data indicate that China is poised to take over the world. Diving deeper, we find that all the hype around artificial intelligence (AI) in China is warranted; however, it only highlights a few platform technologies and market segments.

Over the past four years, Chinese AI startups have received $6.1 billion in funding. However, despite immense amounts of investment and being second only to the United States in number of companies focusing on AI, China is not leading in cutting-edge AI innovation.

To better understand the progress of China's AI landscape we took a deep dive into China’s AI patents, research papers, venture capital (VC) funding, and other innovation data in our new report, “Will China Take Over the Global AI Industry?"

In our new report, we analyze the total number of AI-related VC funding, patents, and research papers in five major AI technology areas: fundamental AI, voice recognition, natural language processing (NLP), computer vision, and AI processors and edge computing.

VC investment in China AI
Chinese AI startups received $6.1 billion in VC funding over the past four years – almost 70% more than their U.S. counterparts, which raised $3.6 billion during the same period. The numbers dwarfed the amount of VC funding in other Asian countries, such as Japan, India, and South Korea. Although funding data make China appear to be a global leader in AI, the funding raised by Chinese AI startups is significantly concentrated in the technologies of computer vision and natural language processing.

Additionally, China has published more AI-related patents and papers than any other country in the world. Although China leads in volume of patents and papers, deeper analysis indicates that it is still not leading the world when it comes to developing truly innovative technologies.

Having focused only on technologies like computer vision, voice recognition, and NLP, as well as only a few market segments, such as finance, retail, and government, Chinese companies have seen rapid business growth in the domestic market, but they are having difficulty entering into the Western market.

Chinese AI companies will struggle to penetrate U.S. and European markets because they lack clear technology advantage over the leading local peers and their expertise in covering some Chinese market segments cannot be leveraged to cover the foreign market.

Our new report, "Will China Take Over the Global AI Industry?” provides in-depth data and insights that uncover China’s strengths and weaknesses as related to AI, including findings and opportunities by market and type of company. For more information, download the executive summary.




Further reading

- Executive Summary: Will China Take Over the Global AI Industry

-  Report: Improving the Front End of Innovation with Artificial Intelligence and Machine Learning (Members Only)

- Press Release: Despite $6.1 Billion in Funding, China Not Leading in Global AI Innovation

- Upcoming Webinar: How to Avoid AI Failures (Register Now)

- Blog: 4 Key Considerations for Digital Health Cybersecurity

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