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In many parts of the world, companies with plentiful cash can buy market share whenever they like. In China, first movers enjoy a level of success even “me too” investment cannot overcome. That is what makes Thursday’s launch of China’s homemade versions of ChatGPT so important.
Four Chinese tech firms have begun offering artificial intelligence chatbots to the public. They were the first to receive government approval. The chatbots include Ernie Bot, from China’s top internet search provider Baidu, and SenseChat, from dominant facial recognition group SenseTime.
The launches are a big win for the companies. Beijing was previously wary of AI chatbots. Now it is permitting them, albeit after rigorous scrutiny. Tough regulation had stoked fears launches would suffer long delays.
Baidu and SenseTime hope AI chatbots will bolster waning competitive advantage. First movers TikTok, Alibaba and BYD dominate areas of new technology such as short video, ecommerce and electric cars.
The duo can thank US rivals for speedy official approval in China. The popularity of US services such as OpenAI’s GPT-4 has spurred Beijing to encourage homegrown versions. China is afraid of falling further behind in AI.
The problem for this one-party state is that generative AI may create content that challenges the government. But unless Beijing allows chatbots to develop via public interaction, their capabilities will remain limited.
Shares in Baidu and SenseTime rose on Thursday, reflecting hopes they will take a lead. Both companies face challenges in their core businesses. Baidu trades at just 14 times forward earnings, a wide discount to global peers. SenseTime shares have fallen 34 per cent in the past year. The company has negative operating margins.
Anxious censors are not the only problem Chinese chatbots must overcome. A shortage of high-end US AI chips is another. But Baidu and SenseTime can at least count on Beijing keeping US rivals out of their home market.
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