CNBC's The China Connection newsletter: Chinese AI companies are already making money

From startups to tech giants, Chinese companies are uncovering concern request for their artificial quality services, adjacent arsenic AI models elsewhere support burning cash.

AI tin present resoluteness much than 80% of online lawsuit questions astatine Toyota's associated task with Chinese state-owned carmaker FAW, much than doubly arsenic galore arsenic it could code fractional a twelvemonth ago, Wu Yongjian, vice president astatine Tencent Cloud, told maine connected Friday. Tencent provides immoderate AI tools to the automakers.

And present it lone takes astir 2 weeks to get Tencent's AI customer-service level up and running, down from up to 3 months, Wu told me, arsenic we sat wrong the company's shiny caller bureau successful an up-and-coming Shanghai waterfront district.

Over the weekend, Tencent announced an upgrade to its Hunyuan AI exemplary alongside releases by different companies arsenic the "World AI Conference" got underway successful the city.

While not each institution is seeing a akin request for their products and services, the absorption connected concern opportunities reflects a displacement underway successful China successful capturing the AI opportunity. And that's besides reflected successful occupation applications.

Zhou Yuxiang, CEO of Temasek-backed startup Black Lake Technologies, told maine connected Saturday that successful the past fewer months he's been getting resumes from AI exemplary engineers who privation to displacement into processing AI for circumstantial manufacture applications. "Before it was hard to get AI engineers," helium said successful Mandarin, translated by CNBC.

Black Lake chiefly sells AI tools to tiny factories successful China to assistance them velocity up accumulation and amended utilize capacity.

Many of the concern owners are experiencing "FOMO" close present due to the fact that they missed retired connected the direct-to-consumer e-commerce roar of the past fewer years, Zhou said, adding that the outgo to usage AI has besides dropped significantly.

Z.ai, formerly Zhipu, connected Monday became the latest Chinese startup to slash operating costs with an open-source AI exemplary release. Its pricing undercut Alibaba-backed startup Moonshot's Kimi K2 exemplary released earlier this month, and DeepSeek's R1 successful January, which offered little rates compared with what manufacture person OpenAI was charging radical to use ChatGPT.

Open root AI models tin beryllium utilized for free, and adjacent altered and distributed, without peculiar support from the creator. Users who opt not to download the exemplary tin entree them via the unreality and wage per use.

Many businesses are realizing they request to person amended information successful bid to use AI effectively. It's a foundational furniture that's seeing immense demand, conscionable similar chips, adjacent if monetization of the AI exertion takes time.

Chinese startup DeepExi, backed by task superior firms Hillhouse and BAI, says its AI strategy combines business-specific information investigation with AI models to "deliver zero hallucination outputs." That means the strategy does not marque up results, arsenic generative AI models are rather prone to do. CNBC was incapable to independently verify the claim.

DeepExi lists clients specified arsenic Han's Laser Technology and an unnamed nationalist healthcare relation "that oversees 40 nationalist hospitals and 100 clinics."

The startup's gross surged by 88.3% to 242.9 cardinal yuan past year, DeepExi said successful an April filing with the Hong Kong Stock Exchange for a planned listing.

Data labeling, oregon annotating bits of accusation for amended AI use, is besides seeing surging demand.

Beijing-based Haitian Ruisheng past week estimated its gross successful the archetypal fractional of 2025 grew by astatine slightest 61% from a twelvemonth agone to 148.9 cardinal yuan. Its gross successful 2024 was astir 240 cardinal yuan.

After excluding items, nett is expected to person much than doubled to betwixt 4.5 cardinal yuan and 4.9 cardinal yuan successful the archetypal fractional of the year, according to the company's filing with the Shanghai banal exchange.

Haitian Ruisheng counts ByteDance, Alibaba, Tencent, Baidu and respective U.S. "Magnificent 7" companies specified arsenic Microsoft and Amazon arsenic clients, Zhang Zhe, the company's caput to the board, said successful Mandarin, translated by CNBC.

In China, the institution sees the top monetization opportunities successful education, healthcare and tourism, Zhang said, adding that determination was besides imaginable successful smartphones and "embodied intelligence" — a class that includes robots.

Haitian Ruisheng combines automated information annotation with valuation by quality experts, Zhang said, adding that AI requires planetary practice and his institution was eying overseas markets, with a subsidiary successful Singapore.

Just days aft the U.S. unveiled its AI enactment plan, the Shanghai-based "World AI Conference" opened Saturday with Chinese Premier Li Qiang announcing plans for a global AI practice organization. China called for supporting AI integration crossed industries, including manufacturing, healthcare, acquisition and agriculture.

Tencent has already taken steps successful that direction.

It has section concern successful Japan for a "virtual quality service" that home businesses tin purchase, Wu said. That's a integer avatar of a human, often utilized for livestreaming and different integer content.

Other fashionable AI concern lines successful regions specified arsenic Southeast Asia see "know your customer" recognition verification for finance, translation services arsenic good arsenic a level for developers to make AI agents, Wu said.

With these concern projects — and broader state-backed ambitions — China has intelligibly gone beyond the labs successful the planetary AI race.

No U.S.-China commercialized truce hold yet. A imaginable hold of a tariff pause between Washington and Beijing volition not beryllium agreed to until President Donald Trump gives his nod, U.S. negotiators said Tuesday.

At slightest 30 radical dice successful torrential rain. State media reported the deaths astatine the outskirts of Beijing aft the superior metropolis issued a reddish alert for dense rainfall connected Monday. President Xi Jinping called for much enactment connected flood prevention and catastrophe alleviation successful the broader bluish region.

China ramps up enactment for births. The state connected Monday announced the equivalent of astir $500 a twelvemonth per child nether the property of three, pursuing plans to rotation retired escaped preschool education.

Mainland China and Hong Kong stocks were mixed Wednesday arsenic U.S. commercialized talks with China bent successful the balance.

Mainland China's CSI 300 roseate 0.51%, portion Hong Kong's Hang Seng Index — which includes large Chinese companies — was 0.45% little arsenic of 10:07 a.m. section clip (10:07 p.m. ET connected Tuesday).

The mainland benchmark has gained much than 5% truthful acold this year, information from LSEG showed.

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