What China Can Teach Southeast Asia About AI Development?

10/07/2019

Thanks to its unique approach towards technological progress, China is widening its lead in AI globally. So while Southeast Asia’s digital scene benefits from the Chinese presence in the region, what can SEA actually learn from the PRC about AI development?

 

Artificial intelligence (AI) is among the leading technologies of the past two decades and today, it is believed to significantly boost the global economy. Among all the countries, it is the People’s Republic and Asia, as a whole, which are driving the world’s AI development and commercialization.

According to IDC estimates, global spending on cognitive and AI systems will reach $77.6 billion in 2022, a threefold increase from the $24 billion forecasted for 2018 and a compound annual growth rate of 37.3%. Considering that artificial intelligence is expected to contribute an additional $15.7 trillion to the global economy by 2030, it’s no surprise that many companies now are wondering how to incorporate this technology into their business plan.

China is undoubtedly the front-runner in Asia’s AI ecosystem and the fact that Chinese AI startups attracted roughly half of all global venture capital in 2018 highlights the quality of their innovation and growth potential.

The country boasts the world’s most valuable AI tech companies in computer vision, drones, speech recognition, and waste disposal. Supported by enormous investments and advantageous government policies, China’s AI market is predicted to grow by 75% in 2018.

 

what china can teach sea about ai - beijing - cifnews

© Unsplash. Since 2015, China witnessed a huge growth of industries dedicated to the development of AI, reaching the number of 4040 AI companies in May 2018, whose 26% is located in Beijing.

 

In addition to the Middle Kingdom, several other Asian countries are investing in AI industries, especially Southeast Asia (SEA) regions where domestic companies could benefit from Chinese presence by learning from the Dragon’s experience and know-how.

Sharing the same digital evolution, the PRC is thus taken as a model by Southeast Asia. Here, while the competition between Chinese tech giants boosts the digital scene, domestic companies follow the “learn from China” strategy, building their own path towards the digital transformation.

For example, the application of AI-based facial recognition in Chinese cities such as Beijing and Shanghai is considered a role model solution for addressing public security concerns in cities across the globe.

An example is Qlue, an Indonesian mobile app, which leverages artificial intelligence to resolve many urban issues related to mobility, safety, and sanitation. As part of the initial program for Smart City Jakarta, the project shows some similarities with China’s Smart Cities across the country as it provides a platform with AI, Internet of Things technologies, and data integration, connecting citizens with the government to improve work productivity and efficiency in combating the city’s problems.

 

But while some companies like Qlue invest in artificial intelligence to launch innovative startups in the SEA region, according to a recent survey, only 37% plan to adopt AI technology in the next five years. And, as well as Qlue, these businesses can learn many valuable lessons from the Chinese experience.

 

The result is that while Chinese companies invest billions of dollars in local startups and ventures, a number of rival Southeast Asian firms have begun rolling out their own versions of Chinese platforms, brands, and projects. However, although some reports have characterized this as a “copy from China” strategy, these SEA startups are rather learning from successful Chinese companies and working to localize their ideas before China’s much larger tech companies get a foothold in Southeast Asia.

But what is China teaching to Southeast Asia about artificial intelligence?

First, the PRC experience in artificial intelligence teaches that government support is crucial. Among other factors, Beijing support is surely one of the most important ingredients in China’s recipe for success in the AI industry.

In the Middle Kingdom, the road to the AI supremacy was implemented in 2017 when the State Council released the New Generation Artificial Intelligence Development Plan. This project outlines the country’s strategy to build a domestic AI industry worth nearly $150 billion and to become the leading AI power by 2030.

The Plan thus officially marked the development of the AI sector as a national priority and part of the broader Made in China 2025 plan, which guides the country’s industrial modernization encouraging companies to embrace automation. Therefore, in conjunction with the national plan, the government has been extremely willing to implement public infrastructure and institutions to better help private companies flourish in the industry.

 

what china can teach sea about ai - qlue - cifnews

© Qlue. Thanks to the use of AI, Qlue delivers a range of Smart City applications that improve the lives of residents in Indonesian cities.

 

But to succeed in the AI sector, support without money will not do much, therefore, many see investment as an important measure of progress. This is why the large amount of money invested in AI projects by both the government and private companies is another lesson SEA countries should learn from China.

While the Indian government’s initiative to increase funding for its Innovate for Digital India program allocated $477 million in 2018, early that year the Chinese government reportedly earmarked more than $7 billion toward the development of two AI facilities in Beijing and Tianjin.

The Chinese government’s latest venture capital fund is expected to invest more than $30 billion in artificial intelligence and related technologies within state-owned firms, and that fund joins even larger state-funded venture capital funds.

 

Beijing has also asked the country’s four large AI-oriented firms – Baidu, Tencent, Alibaba, and iFlytek – to develop smart hardware and software systems. China thus continues to pour money into artificial intelligence, both through government funding and private investment.

 

For example, last year, China’s e-commerce giant Alibaba allocated a new round of funding worth $600 million to the Chinese startup SenseTime, a startup focused on facial-recognition. This funding reportedly gives SenseTime a total valuation of more than $4.5 billion, making it the most valuable AI startup in the world, according to analyst firm CB Insights.

Moreover, from China, SEA countries should also learn the business approach. Compared to other AI superpowers focused on visionary research that helps create new technologies, China is focused on practical business applications of that technology. Alibaba has, in fact, utilized artificial intelligence to optimize its product development, sales process, and supply chain.

This approach also reflects in the widespread of smart technologies. In a coordinated effort between companies with potentially conflicting business interests, the PRC demonstrates a culture that emphasizes communal knowledge to the benefit of all.

Therefore, data collection, a smartphone population that is highly connected, and advanced hi-tech manufacturing all contribute to the Dragon’s effort in artificial intelligence development. And in this dynamic ecosystem that promotes adaptation and collaboration among industry sectors, the Chinese approach to industry transformation has helped the country to reach immense breakthroughs for AI technology.

 

what china can teach sea about ai - jakarta - cifnews

© Unsplash. Jakarta. Indonesia represents the new Asian hub for cloud services, a technology that will certainly shape the future of AI.

 

Although not all governments in Southeast Asia will be as amenable to altering the country to support AI development as China does, they can still create incentives, partnerships, and beneficial regulatory environments.

However, while in countries like Indonesia and Singapore there is active development in the AI industry, there is no one common approach being adopted by all SEA countries. Therefore, here, the Chinese presence and investments serve as a total game-changer for the local technological scene.

Of particular significance is the fact that Asian governments have chosen to use artificial intelligence as an accelerator for broader development goals. A key example is Singapore’s Smart Nation, which shares with the Made in China 2025 plan the same goal of transforming the country through technological progress.

This ability to connect highly focused government AI programs to broader national objectives not only confirms the People’s Republic as a role model for neighboring countries but it will also affirm the position of Asian countries as AI centers of excellence globally.

Therefore, China’s approach to technological progress through putting artificial intelligence high on the agenda, its push for rapid development through governmental support and investments, and the combined practical business applications of artificial intelligence are the main lessons SEA countries should grasp within their “learn from China” strategy. And those will be the keys to driving AI technology in Southeast Asia.

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