BUSINESS

China’s AI App Startups Should Plan Overseas Expansion as ‘Quickly as Possible’

By Du Zhihang and Ding Yi

Published: Nov. 13, 2024 8:19 p.m. GMT+8

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Firms with a global strategy are more likely to attract investors and have the potential to tap higher-paying foreign customers, industry insiders say. Photo: AI generated

Going global may be the answer for many Chinese artificial intelligence (AI) app developers looking to get off the ground, as the potential to tap lucrative foreign customers is a sure way to attract investors, industry insiders said. However, gaining a foothold overseas can be a difficult and costly endeavor.

“Going global as early and quickly as possible” has become a priority for AI investors, said Chen Yu, a partner at Shanghai-based venture capital firm Yunqi Partners, explaining that overseas markets can be a major source of revenue as foreign users are “more willing to pay for AI apps” than their Chinese counterparts.

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Chinese AI developers see going global as crucial to attract investors, with overseas users more willing to pay for AI apps.
AI apps globally amassed 2.2 billion downloads and $2 billion in revenue from January to August 2023, with North America contributing 47% of revenue.
Overcoming challenges like high marketing costs, securing enterprise customers, and regulatory compliance are vital for success overseas.

AI generated, for reference only

Who’s Who

Yunqi Partners: Yunqi Partners is a Shanghai-based venture capital firm emphasizing the importance of Chinese AI developers going global early to tap into lucrative foreign markets. The firm's partner, Chen Yu, highlighted that overseas markets serve as critical revenue sources, given that foreign users are often more willing to pay for AI applications than those in China.

AI Waves Inc.: AI Waves Inc., a Hangzhou-based startup, develops AI-powered writing tools. Co-founder Wan Lei noted that overseas clients possess much higher consumption power compared to domestic ones, with individual users willing to pay $50 to $60 per month for app subscriptions. This contrasts sharply with China's market, where developers often reduce prices to increase sales.

Motiff: Motiff is a company that launched an AI-powered user interface design tool in June. Zhang Haoran, the vice president, emphasizes the need for localized sales and service systems to cater to large and midsize enterprises, which involves regular customer visits for feedback. Regulatory compliance, particularly for data security, is also a major concern.

Beijing Paoding Technology Co. Ltd.: Beijing Paoding Technology Co. Ltd., known for developing AI-powered document processing software, has faced significant costs in overseas marketing on platforms like Google and X. These expenses have accounted for more than half of their total global expansion expenditure, impacting overall profitability. Managing these marketing costs effectively is crucial for the company to compete with established players internationally.

SensorTower: SensorTower is a research firm that provided a report mentioned in the article, stating that AI apps amassed about 2.2 billion global downloads from January to August. The report predicts downloads will surpass 3.3 billion for the full year, marking a 26% increase on 2023. It also noted that global revenue from AI apps hit $2 billion in the eight-month period and forecasts full-year revenue to reach $3.3 billion, up 51% year-on-year.

AI generated, for reference only

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