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Chinese artificial intelligence startups try to corner the U.S. market to drive rapid revenue growth to emulate TikTok's success abroad amid a sluggish domestic industry.
MiniMax, ByteDance and 01.ai are amongst a gaggle of Chinese AI corporations which have launched AI products abroad, particularly within the United States, where there’s a bigger pool of high-spending users than of their home market.
Shanghai-based MiniMax, backed by HongShan, Alibaba and Tencent, has made great strides previously 12 months. The three-year-old unicorn has told investors it’s going to generate around $70 million in revenue this 12 months, a high forecast by the standards of AI startups which are struggling to monetize their technology.
Most of the revenue comes from MiniMax's avatar chatbot app Talkie, which has proven popular with U.S. teenagers, three people accustomed to the matter say.
TikTok owner ByteDance also launched various AI apps overseas last 12 months and integrated AI features into its existing apps, similar to photo editing app Hypic. Beijing-based startup 01.ai is behind productivity tool PopAi and is currently beta testing an AI search app, in line with an individual accustomed to the matter.
This underscores the potential for Chinese corporations to launch competitive AI apps within the US, despite chip restrictions in Washington and intense scrutiny of the sector. Experts imagine China has a competitive advantage in launching products like avatar chatbots, which don't require as much computing resources because they’re trained on smaller amounts of information than productivity chatbots.
But it also highlights the challenges Chinese AI startups face of their home market in generating revenue to cover the high computational costs related to model training, at a time when the pace of fundraising has slowed after a flurry of activity last 12 months.
The slower pace of funding is putting pressure on AI groups to point out they’ll grow revenue quickly, pushing them into foreign markets where they’ve a greater likelihood of creating wealth than in China, where consumers usually tend to shrink back from subscriptions.
Chinese AI corporations are at a “critical inflection point,” in line with Adina Yakefu, China AI expert at machine learning platform Hugging Face. “Given the issue of creating wealth in China and fierce competition within the domestic market, expanding abroad is a needed decision,” she added.
MiniMax, for instance, has struggled to monetize its domestic version of the talkie app, Xingye, as successfully as its foreign counterpart, in line with two people accustomed to the matter. MiniMax declined to comment.
The group generates most of its revenue from promoting on Talkie, but in addition has a premium subscription that enables users to proceed longer conversations with avatars.
One person warned that the group's sales forecast could change attributable to fluctuating demand. MiniMax was most recently valued at $2.5 billion in a funding round announced in March, raising $600 million.
Chinese AI groups try to avoid the issues ByteDance faces with Washington over a possible ban on TikTok by establishing their units overseas, either in Singapore, Hong Kong or the US.
They then operate the foreign apps on servers outside of China, in line with several people accustomed to the matter. MiniMax uses overseas AWS data centers to perform inference for its Talkie app.
According to data provider SensorTower, Talkie was the twelfth most downloaded AI app worldwide from January to August this 12 months, just behind US-based competitor Character.ai.
Other Chinese apps have also found their way all over the world. ByteDance's Hypic and Question AI, the homework assistant from edtech company Zuoyebang, are within the list of the 20 most downloaded apps.
