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China’s AI start-ups race to crack US market
MiniMax, ByteDance and 01.ai launch apps overseas to boost revenue growth

MiniMax, ByteDance and 01.ai are among a group of Chinese AI companies that have launched AI products overseas © FT montage/Getty Images



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Eleanor Olcott in Beijing
2 hours ago
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Chinese artificial intelligence start-ups are trying to crack the US market to drive rapid revenue growth, in an effort to emulate TikTok’s success abroad amid a sluggish domestic industry.
MiniMax, ByteDance and 01.ai are among a group of Chinese AI companies that have launched AI products overseas, particularly targeting the US, which has a larger pool of high-spending users than in their home market.
Shanghai-based MiniMax, which is backed by HongShan, Alibaba and Tencent, has made inroads over the past year. The three-year-old unicorn has told investors it will net about $70mn in sales this year, a lofty projection by the standards of AI start-ups that have struggled to monetise their technology.
The bulk of the sales comes from MiniMax’s avatar chatbot app Talkie, which has proved popular with US teenagers, according to three people familiar with the matter.
TikTok-owner ByteDance has also launched a series of AI apps overseas as well as integrating AI features into its existing apps over the past year, such as photo-editing app Hypic. Beijing-based start-up 01.ai is behind the productivity tool PopAi and is beta testing an AI search app, according to one person familiar with the matter.
It underscores the potential for Chinese groups to launch competitive AI apps in the US, despite Washington’s chip restrictions and intense scrutiny of the sector. Experts believe China has a competitive advantage in launching products such as avatar chatbots, which do not require as much computing resources because they are trained on smaller amounts of data than productivity chatbots.
But it also highlights the challenges Chinese AI start-ups face in their domestic market in generating revenues to pay for the high compute costs associated with model training, at a time when the pace of fundraising has eased following a frenzy of activity last year.
The slower pace of financing has put AI groups under pressure to show they can quickly scale up revenues, pushing them into overseas markets where they have a better chance of making money than in China where consumers tend to shy away from subscriptions.
Chinese AI companies are at a “critical turning point”, according to Adina Yakefu, a China AI expert at machine learning platform Hugging Face. “Expanding overseas is a necessary choice given difficulties they have making money in China and fierce competition in the domestic market,” she added.
For example, MiniMax has struggled to monetise its domestic version of the Talkie app, Xingye, as successfully as its foreign counterpart, according to two people familiar with the matter. MiniMax declined to comment.
The group generates most of its sales from advertising on Talkie, but it also has a premium subscription that allows users to continue with lengthier conversations with avatars.
One person cautioned the group’s revenue forecast was liable to change given fluctuating demand. MiniMax was last valued at $2.5bn in a funding round announced in March, which led to it raising $600mn.

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Chinese AI groups are attempting to avoid the problems ByteDance is facing with Washington over a potential ban of TikTok by incorporating their entities overseas, either in Singapore, Hong Kong or the US.
These then operate the overseas apps on servers outside China, according to several people with knowledge of the matter. MiniMax uses overseas AWS data centres to run inference for its Talkie app.
According to data provider SensorTower, Talkie was the 12th most downloaded AI app worldwide from January to August this year, just behind US-based rival Character.ai.

Other Chinese-owned apps have also made inroads globally. ByteDance-owned Hypic and Question AI, the homework assistant run by edtech company Zuoyebang, are in the top 20 most downloaded list.
Additional reporting by Cristina Criddle in San Francisco

Copyright The Financial Times Limited 2024. All rights reserved.
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rightarmfast

1 hour ago


Standard rule is to avoid Chinese tech companies and their products.


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MesserWolf

1 hour ago

I just opened Talkie to see what is about, now I understand why it popular with teenagers…

I see a lot of potential for it to be very unhealthy ( see movie Her)


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CH

1 hour ago


No thank you. The data warehouse might be located outside of China but whatever you input can and likely will be replicated and stored in China. Plus their model was train in China, where CCP has free access to everything. Past mistakes like TikTok have proven to be difficult to remedy. This time they should be blocked from the get go.



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