As an emerging industry, the development of generative AI is closely related to the regional economic level and industrial structure. Beijing, Shanghai, Guangdong and other places have promoted the rapid growth of the industry and gradually formed internationally competitive clusters by virtue of rich financing channels, professional talent reserves and policy support. According to the Registered Information on Generative AI Services released by the Cyberspace Administration of China, as of November 2024, 309 generative AI products have been filed across the country. Among them, Beijing, Shanghai and Guangdong accounted for 31.1%, 27.2% and 11.7% of the total number of filings, respectively. These regions typically offer the following advantages:
Scientific research resources: Developed regions often have top universities and research institutions that can conduct cutting-edge AI theoretical research and technology development. For example, cities such as Beijing and Shanghai are places where scientific research resources are concentrated in China.
Financial support: Whether it is the government's financial support or the activity of venture capital, developed regions can provide the necessary financial support for start-ups and established enterprises to promote technological innovation and market expansion.
Talent pool: The education system in these regions can produce a large number of high-tech talents and attract returnees from overseas, forming a strong human resource pool.
Industrial cluster effect: developed areas are easy to form enterprise clusters in the upstream and downstream of the industrial chain, which is conducive to knowledge sharing, cooperation and exchange and technology diffusion, and further accelerates industrial development.
Big cities like Beijing and Shanghai have not only given strong policy support, but also promoted the development of generative AI technology through the construction of public computing infrastructure. In addition, Haidian District, as the highland of national artificial intelligence development, has also made remarkable achievements in large models. Other regions, such as Guangdong and Fujian, are also actively deploying and developing their own generative AI industries, trying to narrow the gap with leading regions.
Figure: Product Geography and Quantity Distribution of Generative AI Filed Information
A favorable financing environment gives wings to generative AI
Since its inception, generative AI products have quickly become a global investment hotspot and continue to do so today. OpenAI, the most typical enterprise in the field, for example, was valued at just $2.9 billion at the end of 2022 and was already valued at $157 billion in early October 2024, an increase of more than fifty times in less than two years. Related companies represented by OpenAI are sought after by the capital market, which is rooted in the good market prospects of generative AI products. According to IDC, the global generative AI market will be close to $150 billion in 2027, with a compound growth rate of 85.7%. China's "Government Work Report" released in early 2024 also proposes to deepen the R&D and application of big data and artificial intelligence, carry out "artificial intelligence +" actions, and build a digital industrial cluster with international competitiveness. Under this call, government guidance funds, private capital, and large enterprises have invested a lot of money in the field of generative AI to promote the rapid development of this field.
Figure: Proportion of investment and financing events in China's AI-related fields from January to September 2024
State-owned enterprises (SOEs) are playing a leading role in generative AI. In February 2024, the State-owned Assets Supervision and Administration Commission of the State Council held a special promotion meeting on "AI Empowerment Industry Renewal", emphasizing that central enterprises should accelerate the layout of intelligent industries, promote the deep integration of artificial intelligence into the real economy, and accelerate the construction of intelligent computing centers. At present, state-owned enterprises are actively promoting the application of AI technology in intelligent manufacturing, smart logistics, intelligent services and other fields to improve production efficiency and innovation capabilities. For example, a large manufacturing company has invested heavily in generative AI technology to optimize parameter adjustments, reduce defective rates, and significantly improve production efficiency through production process simulation and prediction. In addition, the investment of state-owned enterprises not only plays an exemplary role, but also promotes infrastructure construction and provides strong support for the development of the AI industry. In particular, in the construction of high-speed networks and large-scale data centers, the participation of state-owned enterprises provides an efficient data storage and transmission environment for generative AI enterprises.
A healthy financing ecosystem can accelerate the advancement of generative AI technologies, drive their commercialization, and ultimately transform the technology's social value. In China, as the state continues to increase its support for scientific and technological innovation, more and more corporate and individual investors are willing to participate in the promising field of generative AI, injecting a steady stream of impetus into its development.
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