Within the early fifteenth century, Zheng He (also often called Chong Ho), a Chinese mariner and explorer throughout the early Ming Dynasty, led seven major naval expeditions, often called the “Voyages to the Western Oceans”. His journey traced a path that went through Southeast Asia, the Middle East after which reached out to Africa. It was a daring move by China to ascertain diplomatic and trade relations with foreign lands, while exploring overseas opportunities. The word “出海” (Chu Hai, sailing abroad) has since held a special meaning about going global.
600 years later, China is once more making its mark internationally, evolving from a world manufacturing hub to a frontrunner in ICT, electric vehicles, and AI technologies. By 2024, Chinese firms have accelerated their overseas expansion, particularly in AI. A June report from Feifan Research shows that out of 1,500 lively AI firms worldwide, 751 are based in China, with 103 already expanding internationally. Many see this as an indication of China’s growing strength in tech innovation. Others argue that as domestic markets change into saturated and competition intensifies, expanding overseas could have change into the one viable option for these firms.
Who’s Expanding Overseas?
The primary firms which can be grabbing the opportunities of going global are, not surprisingly, leading Chinese tech giants. The likes of Huawei, Tencent, and Alibaba have chosen to concentrate on cloud computing and AI infrastructure when expanding overseas. In March 2024, Tencent Cloud partnered with Etihad Etisalat (Mobily), a number one telecom company in Saudi Arabia. Together, they launched the “Go Saudi” program, which goals to remodel the digital landscape of the Saudi Arabia Kingdom as a part of its Vision 2030 strategy. In May, Huawei launched Galaxy AI as part of a bigger initiative to spice up digital intelligence transformation in North Africa. An initiative which is an element of Huawei’s broader $430 million, five-year investment plan aimed toward accelerating smart transformation across the region. That very same month, Alibaba announced the development of knowledge centers in Korea, Malaysia, the Philippines, Thailand, and Mexico, alongside the discharge of the international version of its large model service platform, “Model Studio”.
Notably, these tech giants have centered their overseas strategies on Southeast Asia and the Middle East, aligning with China’s Belt and Road Initiative and the Digital Silk Road policy. Amid rising geopolitical tensions, selecting regions where Chinese is usually spoken, reminiscent of Southeast Asia, or emerging markets just like the Middle East and long-time allies like Africa, seems a more strategic selection.
ByteDance, known as an “App factory”, has chosen to concentrate on familiar Western Business-to-Customer markets, launching 11 overseas applications in only seven months. CapCut, launched in 2020, released its paid version CapCut Pro in 2022, then integrated AI features to start with of 2024 and becoming one among the world’s hottest apps, with over 300 million monthly lively users. In accordance with Sensor Tower, by July 2024, CapCut had generated $125 million in cumulative revenue from mobile applications.
Startups, despite being within the early stages of commercialization, are also wanting to join the overseas expansion. The Chinese AI unicorn startups have a distinct strategy based on adopting a model + application approach. Facing high costs for training models, some have begun to shift focus from updating foundational models to more profitable application and scenario exploration. For startups reliant on funding, expanding overseas has change into a necessity amid intense domestic competition. Many early-stage firms have chosen Western to-C markets, launching productivity, creative, and companion apps based on their respective models. For instance, among the many “Big Six” ( refers back to the six most-watched Chinese AI startups: 01.AI, Baichuan AI, Zhipu, Moonshot AI, MiniMax, StepFun. Nonetheless, the list often changes, some think DeepSeek AI and OpenBMB ought to be included.), apps “Talkie” from MiniMax and “PopAI” from 01.AI which has gained tens of millions of users and achieved a level of profitability.
Why Expand Overseas?
Domestic Market Competition
China has the world’s largest variety of web users and an enormous pool of technical developers, and nobody desires to be left behind within the AI boom. As more firms flood the space, AI technology has developed rapidly, but the expansion of applications and use cases has been slower. Each industry giants and startups face growth stagnation and profit pressure.
Between October 2023 and September 2024, China released 238 LLMs. After greater than a yr of fierce competition, they entered a phase of consolidation. The pressure built up in May 2024 throughout the first price cutting war, triggered by DeepSeek, an AI startup, which introduced architectural innovations that significantly reduced model inference costs. Following the announcement, major players like ByteDance, Tencent, Baidu, and Alibaba swiftly followed with price reductions, even cutting prices to below cost margins. This fierce competition stems from minimal technical differentiation between models and slower-than-expected productization.
From the launch of ChatGPT to July 2024, 78,612 AI firms have either been dissolved or suspended (resource:TMTPOST). The competition will not be only pushing out the players from the ring, survivors are also drilling right down to the area of interest to distinguish from the others. For instance, the industry-specific LLMs are gaining traction, with a major push from the federal government. The March 5, 2024 “Government Work Report” delivered by the Chinese Premier minister emphasized the “AI+” strategy, driving AI’s penetration across industries. By July 2024, the variety of AI models registered with the Cyberspace Administration of China (CAC) exceeded 197, nearly 70% were industry-specific LLMs, particularly in sectors like finance, healthcare, and education. The peace won’t last long, AI’s rapid integration into vertical industries is predicted to change into a key area of one other round of competition in the approaching months.
Under this circumstance, going abroad appears to be a way out.
Pressures from Policy and Investment Environment
Government will not be only incentivising, but additionally regulating. Between March and September 2024, the federal government introduced a series of regulatory policies, particularly around data privacy, algorithm transparency, and content labeling.
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March 5, 2024: The China National Information Security Standardization Technical Committee (TC260) released a technical document outlining basic safety requirements for generative AI services.
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September 14, 2024: The Cyberspace Administration of China (CAC) proposed latest rules requiring AI-generated content to be labeled, ensuring users can easily tell if content is human or machine-made.
Regulations are indispensable for any latest industry, nonetheless additionally they increase compliance costs for firms, especially for SMEs. Former Microsoft engineer Shao Meng commented, “Tighter regulations, especially for to-C teams, may push more firms to expand overseas, including their products and even their teams.”
On top of the policy pressure, the investment environment is getting an increasing number of rational during the last 6 months in comparison with the AI fever when ChatGPT was out. By mid-2024, Chinese AI startups raised roughly $4.4 billion across 372 funding rounds, a major drop from the height in 2021, when investments reached $24.9 billion.
Overseas Markets, promising land for Chinese AI firms
In comparison with the domestic market, one particular element in certain overseas markets is that the person customers have a greater willingness to pay, because of the healthy business environment. By proposing groundbreaking AI solutions meeting the local needs, Chinese AI firms can quickly develop stable revenue streams. As an example, in Southeast Asia, modern approaches like AI-powered digital human livestreaming are breaking into the e-commerce live-streaming sector.
As for enterprise or government clients, emerging markets like Southeast Asia, the Middle East, and Africa have change into the first decisions for Chinese AI firms as mentioned above. These regions, still within the early stages of digital transformation, are jumping on to the most recent technologies . In comparison with saturated Western markets, these areas have less competition, higher potential for growth, and lower entry barriers, where Chinese AI tech giants are expanding their market share by capitalizing on their technological strengths, cost-efficient structures, and government support.
What are the important thing success aspects ?
Localization
Regulatory Localization: China has relatively strict AI governance policies, nonetheless it focuses more on content safety. While going abroad, Chinese AI firms must navigate diverse data privacy, security, and ethical regulations worldwide, which comes even before the implementation of their business model. EU’s AI Act and privacy protection laws, is an ideal example for Chinese firms to regulate their AI models to satisfy the EU’s privacy-by-design principles, where data protection is built into the core of AI services and products.
Technical Localization: Despite the magic of AI, there continues to be nobody size matches all solution. In emerging markets with weaker infrastructure, firms need to regulate their products to accommodate network conditions, data storage, and algorithm adaptability. Meanwhile, in developed markets, complying with industry standards reminiscent of data localization and ISO certifications etc.
Boosting International Influence
Despite the fast growing AI innovation in China, Chinese AI firms haven’t yet gained enough awareness in overseas markets. Releasing open-source projects on the Hugging Face Hub change into an efficient approach to construct global visibility. Beyond raising awareness, these models have also contributed precious AI resources and diverse multilingual solutions to the worldwide community. For instance, not less than one model from China appears on Hugging Face’s trending model leaderboard almost each one to 2 weeks. These include Alibaba’s Qwen series, which has been a “long-running hit” on Hugging Face’s Open LLM leaderboard, considered today to be among the finest open LLM on the planet which support over 29 different languages; DeepSeek coder is one other one, that is very praise by the open source community; and Zhipu AI’s also open sourced its GLM series and CogVideo.
Through open-source initiatives, these projects have gained considerable influence within the international open-source community, helping to reinforce recognition, trust, and competitiveness for the Chinese projects in the worldwide market.
An interesting point is that many Chinese firms, after expanding overseas, are inclined to adopt a brand new brand name or prefer to advertise themselves using the name of their models or applications. “Chinese firms often create latest brands for oversea products, even one per country, while Western firms prefer to make use of unified product names globally.” Engineer from Hugging Face Tiezhen Wang said. This approach helps them fit into local markets higher and shields them from geopolitical pressure at the identical time.
Promoting ESG Strategy
AI for Good is little doubt a vital initiative to explore the potential of AI for a much bigger purpose, which is an all inclusive statement without boundary lines. In Beijing, the China ESG30 Forum released the “2024 China Enterprises Global Expansion Strategy Report.” This report highlighted the importance of ESG and AI, as two pillars for Chinese firms to integrate right into a latest phase of globalization. Some tech giants have already begun adopting green energy to drive the sustainable development of their global data centers, or using AI image recognition technologies to observe wildlife, amongst others. AI applications are also getting used with AI startups and traditional industries to co-develop green technologies, reminiscent of renewable energy and electric vehicles. Such innovations further promote product sustainability, helping Chinese firms stand out within the competitive landscape.
Conclusion
Chinese AI firms are at a critical turning point. Expanding overseas will not be just an easy market expansion strategy but a needed selection, due to a harsh domestic environment but additionally for seemingly promising overseas opportunities. Nonetheless, overseas expansion will not be guaranteed to succeed. Under unfamiliar markets and audiences, to find a way to quickly adjust to the local market, comply with regulations and construct awareness seems also no less difficult.
What’s more, AI continues to be in an early stage of development, and its true power is unleashed when AI firms find the sweet spot of being an AI enabler to reshape the industries. Going abroad is relevant today for Chinese AI firms to grow, nevertheless it would change into much more relevant when it actually integrates and brings value to the local industries.
Zheng He’s expedition to the “west ocean” was powered by a complete nation strategy because of its strong economic power. History appears to be repeating itself today but with a distinct context: technological innovation thrives not through centralized national efforts, but through the dynamic forces of the free market, where competition, entrepreneurship, and open exchange drive creativity and progress. China’s AI firms have made an extended approach to rise, and so they still are an extended approach to flourish.
Because of Tiezhen Wang, Luke Cheng, Shao Meng and Sam Guo for providing precious feedback.
Thanks for reading!
