Building his own large language model (LLM) is out of the realm of possibility for startup founders like Zhang Haiwei. He’d need hundreds of millions of dollars, and he’d be competing with China’s internet giants, who have a long head start. The likes of Baidu and IFlyTek have been working on LLMs—the foundation of artificial intelligence systems that can mimic human intelligence—for years, long before the current AI boom took off.
Instead, Zhang’s motion-capture startup, Chingmu, is using OpenAI’s models trained with its own data to analyze how people and objects move, to use in animation and sports training.
“My view of this year is involution,” Zhang says, applying a popular term in China which describes a cycle of manic competition that leads to everyone working harder and harder for fewer rewards. Newcomers to the sector have little chance of breaking out, he says, even if they have money to burn. Besides the cost, there’s also the question of computing power and graphics cards. “Products are launched faster, there are more competitors, and customer budgets are down,” Zhang says, adding that while pressure was high in China, this is a global problem: “The world’s in recession; everything’s in recession.”
Like their counterparts in Silicon Valley, Chinese startups rode the surge of excitement about artificial intelligence, which has widely been hyped as transformative for the tech industry and the economy at large. But they’ve just as quickly come down to earth. No revolutionary applications have yet emerged, and limited supplies of GPUs (graphics processing units), which are foundational to AI, are curtailing growth. In a challenging economic environment, AI has become less about revolution and more about involution, and many startups are using it to make small efficiency improvements, hoping to gain enough of an edge to stay competitive.
“Startups and big tech companies are now focused on justifying the initial hype and excitement,” says Kevin Xu, a tech investor and founder of the AI newsletter Interconnected.
ChatGPT, the uncanny chatbot that launched the current wave of AI hype when it was released by the US startup OpenAI last year, is officially blocked in China, but many internet users scaled the Great Firewall to try it out, and a black market for the service soon sprang up. WeChat Moments, a timeline for people to post life and news updates, was filled with answers and references to the technology.
As in the US and Europe, ChatGPT sparked a frenzy of interest in AI, a sector that had started to look a bit moribund. “Some large companies had actually fired their teams working on large language models,” says Xie Mingxuan, founder of an AI startup called vrch.io, adding that the companies regret it now, because those teams then went on to found their own startups.
But developing AI models outside of big companies is a lot more challenging in China than it is in the US. American companies, like OpenAI, were able to access huge amounts of data from Google or social media platforms like Twitter and Reddit. But China skipped the open web, going, essentially, from no internet at all straight to apps, which are far, far harder to scrape for data.
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