The U.S.-China decoupling is giving rise to a divided tech landscape between the two major economies, shaping the development of the red-hot area of generative AI, which turns text into various forms of content like prose, images, and videos.
China, in order to reduce dependence on the U.S. technological foundation, has been pursuing its own large language models that match OpenAI’s GPT models. But unlike the U.S., some of its most advanced AI endeavors are happening at established internet juggernauts, such as Baidu.
The search engine and autonomous driving giant rolled out its counterpart to ChatGPT in March. Now the 23-year-old firm wants to have a stake in other AI startups, too. The company aims to have a stake in other AI startups. During a JPMorgan summit in China this week, Baidu’s co-founder and CEO Robin Li announced the launch of a billion yuan ($145 million) fund to back generative AI companies.
The fund can be compared to the OpenAI Startup Fund, which started at $100 million and eventually grew to $175 million, as my colleague Connie noted. The fund will invest up to 10 million yuan, approximately $1.4 million, in a project. Given the check size, the fund is clearly targeting early-stage AI applications, which isn’t surprising, given that Chinese generative AI startups haven’t experienced widespread adoption and most investments are concentrated in the seed and early stages.
Furthermore, Baidu intends to use the fund to grow the adoption of its own large language model Ernie Bot. “American developers are building new applications based on ChatGPT or other language models. In China, there will be an increasing number of developers building AI applications using Ernie as their foundation,” Li said.
In that sense, the fund seems to be calling for applications of AI rather than developers of its foundational layer. The fund won’t be short of pitches. Over the years, Chinese startups have gained recognition for their ingenuity in devising novel business models, ranging from live streaming, live commerce to short videos. Li predicted that, in the generative AI age, Chinese companies will once again lead the way in discovering commercial applications for AI.
“I’m very bullish on China’s AI development. Over the past few decades, China has warmly embraced new technologies. Even though we didn’t invent Android, iOS or Windows, we developed a host of very innovative applications like WeChat, Douyin and Didi. Many of them are popular and useful. The same trend is playing out in the AI age. Technology ushers in a myriad of possibilities and we are good at capturing them to build applications.”
However, a pertinent question lies in whether the foundational level — China’s homegrown large language models — will be robust enough to support the range of real-life scenarios expected of them. China wants its homegrown LLMs so it won’t be prone to U.S. sanctions that cut off key technological supply, as seen in the semiconductor industry. Aside from Baidu, Chinese tech giants like Alibaba and Tencent are also developing their own large language models.
On Tuesday, Elon Musk commenced his high-stakes visit to China, marking his first since before the COVID-19 pandemic. In an era of decoupling, the Tesla CEO stands out as one of the very few Silicon Valley tech bosses who remain committed to China.
This commitment isn’t surprising, given the increasingly pivotal role China plays in Tesla’s ever-expanding electric vehicle empire. In Q1, the country accounted for more than half of the carmaker’s deliveries, partly thanks to its competitive pricing strategy. Musk is also unabashed about his support for China’s demanding work culture even as the rigorous “996” schedule has drawn fire from the country’s tech workers in recent years.
Chinese people have reciprocated Musk’s affinity. With over two million followers on Weibo, the country’s answer to Twitter, Musk shares his thoughts and admiration for China, earning him the endearing nickname “Iron Man.” His popularity extends to a man from eastern China who became an overnight sensation due to his striking resemblance to the billionaire.
Musk’s visit to China holds the potential to strengthen Tesla’s ties with the world’s largest auto market. As he busies himself with meeting high-ranking Chinese officials and core partners, we are compiling a rundown of Musk’s activities in China and their implications for Tesla’s future strategy for the country. The list will be continuously updated throughout his trip.
Building ties with China’s foreign minister
Bilateral relations took center stage on Musk’s first day in China, as he received a warm welcome from China’s foreign minister Qin Gang. The gesture indicates that Beijing attaches great importance to Musk’s visit, seeing it as an opportunity to send Washington a message amidst strained diplomatic relations.
While Qin stressed that China’s development is an opportunity for the world, Musk echoed this sentiment, stating that Tesla opposes decoupling or cutting off supply chains and is ready to expand business in China and share in China’s development opportunities, tweeted the nation’s foreign ministry spokesperson Hua Chunying. Musk here seems to be reassuring foreign firms affected by the escalating tensions between the U.S. and China that the gate of the Middle Kingdom is still open.
State Councillor and Foreign Minister Qin Gang met @elonmusk earlier today. Qin emphasized that China’s development is an opportunity for the world. pic.twitter.com/j23hHNbNCi
— Hua Chunying 华春莹 (@SpokespersonCHN) May 30, 2023
It’s worth noting that Musk has refrained from tweeting since his private jet reportedly landed in Beijing on Tuesday morning. This departure from his usual prolific tweeting is expected since Twitter is banned in China; he’d be publicly violating Chinese laws by circumventing the Great Firewall that blocks it. Knowing this trip’s objective is to facilitate important deals, Musk probably wants to avoid any controversy.
While Musk may not be active on Twitter publicly, he took to Weibo to sing a little praise for China. “The China space program is far more advanced than most people realize,” he wrote.
The comment is intriguing not least because SpaceX, Musk’s own company, is aiding U.S. efforts in putting astronauts back near the lunar surface by 2025. Outer space has become a significant arena for U.S.-China competition, with both nations intensifying investments in space programs. As evidence, China announced its plans on Monday to send astronauts to the moon before 2030.
Ensuring Tesla’s battery security
On the first night of his trip, Musk chose to dine with an essential supply chain partner. He met Zeng Yuqun, chairman of Contemporary Amperex Technology Co. Limited, according to Reuters.
CATL, the world’s biggest battery manufacturer, ranks among Tesla’s top three battery suppliers alongside LG and Panasonic. Since 2020, Tesla has been using CATL batteries in its vehicles made in China and soon became the battery maker’s biggest customer.
Batteries are the heart of electric vehicles, profoundly impacting a car’s overall energy efficiency and cost. Securing a stable battery supply is thus vital to ensure smooth production, prompting EV makers to forge close relationships with their battery partners.
Despite their close ties, Tesla is somehow not included in the list of EV makers participating in CATL’s aggressive price-cut scheme. According to Chinese media outlet 36kr, CATL is offering ce customers the option to buy lithium carbonate, a key material of lithium-iron-phosphate batteries, which dominate the EV market in China, for a set price of 200,000 yuan ($28,140) per ton. That’s a very competitive offer compared to the market price, which peaked at around 550,000 yuan per ton in November.
There’s a catch though. Nio, Geely’s Zeekr, Huawei and other carmakers opting into the program will need to source 80% of their batteries from CATL. However, Tesla seems to be taking a different approach by venturing into battery manufacturing and lithium mining. This move aims to enhance Tesla’s supply chain control, suggesting that it will not want to rely solely on a single supplier.
There could be other topics of discussion between the two. Tesla currently sources battery-grade lithium from suppliers including, China’s Ganfeng Lithium, but CATL is also making strides into the mining sector as it snatches up resources worldwide, even outbidding Ganfeng for a major miner. It remains to be seen how this partnership between Tesla and CATL will develop in the future.
Meeting China staff
Musk paid a visit to the Shanghai Gigafactory, where he met the staff behind Tesla’s popular Model 3 and Model Y, according to a social media photo posted by Grace Tao, Tesla’s global vice president.
Gigafactory Shanghai is playing an increasingly big part in Tesla’s production. Last year, the plant surpassed its California counterpart with an annual capacity of more than 750,000 units. The factory also exports vehicles to the rest of the world against a backdrop of China’s fast-growing export auto sector, which took the crown from Japan in the first quarter of this year.
“This factory has the greatest efficiency and best-in-class vehicles,” Tao quoted Musk as saying.
Chinese startups aspiring to make it big in the West now face a major hurdle: their connections to home. The scrutiny faced by TikTok in the U.S. over its management structure and data practices is a poignant reminder that relinquishing one’s Chinese affiliations might be essential for gaining acceptance overseas.
In their expansion to the West, Chinese startups are now decoupling from home, as we have detailed in a series of stories (here and here). The process could include moving their controlling entity to a foreign country, switching to overseas cloud centers and relocating their executives abroad.
Against the backdrop of decoupling, one company is taking an unconventional path. Instead of trying to mask its Chinese identity, Seafile, a low-code application developer founded in 2012, has expanded internationally by forging a symbiotic relationship with its German joint venture, SeaTable.
Since its founding in 2020, SeaTable has amassed nearly 200,000 users for its cloud-based database platform outside China while the software’s on-premise version boasts about 500 clients, including the German Armed Forces, a corporation listed in the German stock index Deutscher Aktien Index (DAX) and several universities.
Unlike many globalizing Chinese startups that are fuelled by heavy venture investment, Seafile has an enviably self-sustaining business. The company has raised no outside funding since nailing a one million yuan (~$142,000) angel round from Matrix Partners China back a decade ago. Today, it’s profitable and funds all of SeaTable’s ongoing development in-house. Seafile has 40 employees in China and 10 in Germany.
Forgoing control
In 2019, Seafile’s two Chinese co-founders, Daniel Pan and Jonathan Xu, approached their future partners, Christoph Dyllick-Brenzinger and Ralf Dyllick-Brenzinger, with an intriguing proposition: set up a joint venture to help Seafile grow overseas.
At the time, the two German brothers, who were consulting veterans, had been helping Seafile distribute its other product, a sync-and-share solution, for a few years. They were enticed by the opportunity to have a stake in a product they genuinely believed in — a low-code database tool that gives a self-hosting option.
SeaTable offers both cloud-based and on-premise solutions, a strategy it believes sets it apart from the industry giant Airtable.
“Europe is all about data privacy, data sovereignty,” Ralf, chief executive at SeaTable, told TechCrunch in an interview. “So there is going to be big market demand for the product in Europe.”
The Dyllick-Brenzingers took on the challenge and founded SeaTable GmbH, with Seafile holding a 50% stake to keep its commitment to product development while maintaining a firm separation from the German firm’s management and access to customer data.
Focusing on Europe, SeaTable is multilingual and comes in English, German, French and Russian, with Spanish and Portuguese under development. Language may seem like an inconsequential feature, but in underserved markets with high purchasing power, like France and Japan (as is the case with meeting productivity tool Airgram), having the localized option could help a startup get ahead. SeaTable also boasts a capacity of storing millions of records compared to Airtable’s scale of tens of thousands, according to Ralf.
In retrospect, the two Chinese founders have picked the best possible path for Seafile’s global expansion at a time when the public and government in the West are increasingly skeptical of companies’ Chinese links. But entrepreneurs who want to run an empire don’t let go easily, much less deal with partners who live thousands of miles away. As Ralf remarked: “I think it needs a lot of trust between the two sides.”
Though Seafile doesn’t engage in SeaTable’s day-to-day operation, it plays a key role by developing the database platform from Guangzhou, a setup that’s common amongst global tech firms that want to tap China’s affordable, quality engineers.
“The China team gives us a piece of software… that everyone can download from the internet, from the repository, and we the German team run with that. The repository is kind of like the separation line. Everything on this side of the repository is managed by Jonathan and Daniel and everything on that side is managed by us,” explained Ralf.
A repository, in computer programming, is a centralized digital storage that developers use to make and manage changes to an application’s source code.
SeaTable’s SaaS version is fully operated by the German joint venture and stores data in Europe. All customization and services happen at its German office, which handles everything from installing the software, running upgrades, managing backups, troubleshooting, reading and interpreting logs, to optimizing system performance.
“Managing the system are German nationals or European nationals. Apart from the fact that SeaTable is developed in China, it’s about as European as it can get,” the founder added. “It’s ironic that we all have hardware manufactured in China… but Chinese software has a difficult position in Europe.”
The German brothers admitted that SeaTable’s way of marketing isn’t the “safest”. While some customers are fine with its Chinese roots, others, including a ministry in France, have reservations about software originating from China. But this proactive approach sometimes leads to amicable discussions on new forms of cross-border collaboration that leverage software development in China on the one hand and localization efforts in the target countries on the other.
“Some customers I speak to are totally oblivious of the Chinese origin of SeaTable and it’s me who discloses it to them. We don’t want to engage in discussions and then at the very end it comes up like SeaTable is Chinese and then they say, look, you should have told us earlier,” said Ralf.
“So we are very proactive about that and many customers find this interesting because, in the early 2000s, the typical joint venture model was that European and American companies went to China and looked for a Chinese partner to build their business in China. Now we are an example of a Chinese company coming to Europe to form a joint venture. People realize that oh, this is actually interesting, so they are curious to learn more about that.”
Chinese startups aspiring to make it big in the West now face a major hurdle: their connections to home. The scrutiny faced by TikTok in the U.S. over its management structure and data practices is a poignant reminder that relinquishing one’s Chinese affiliations might be essential for gaining acceptance overseas.
In their expansion to the West, Chinese startups are now decoupling from home, as we have detailed in a series of stories (here and here). The process could include moving their controlling entity to a foreign country, switching to overseas cloud centers and relocating their executives abroad.
Against the backdrop of decoupling, one company is taking an unconventional path. Instead of trying to mask its Chinese identity, Seafile, a low-code application developer founded in 2012, has expanded internationally by forging a symbiotic relationship with its German joint venture, SeaTable.
Since its founding in 2020, SeaTable has amassed nearly 200,000 users for its cloud-based database platform outside China while the software’s on-premise version boasts about 500 clients, including the German Armed Forces, a corporation listed in the German stock index Deutscher Aktien Index (DAX) and several universities.
Unlike many globalizing Chinese startups that are fuelled by heavy venture investment, Seafile has an enviably self-sustaining business. The company has raised no outside funding since nailing a one million yuan (~$142,000) angel round from Matrix Partners China back a decade ago. Today, it’s profitable and funds all of SeaTable’s ongoing development in-house. Seafile has 40 employees in China and 10 in Germany.
Forgoing control
In 2019, Seafile’s two Chinese co-founders, Daniel Pan and Jonathan Xu, approached their future partners, Christoph Dyllick-Brenzinger and Ralf Dyllick-Brenzinger, with an intriguing proposition: set up a joint venture to help Seafile grow overseas.
At the time, the two German brothers, who were consulting veterans, had been helping Seafile distribute its other product, a sync-and-share solution, for a few years. They were enticed by the opportunity to have a stake in a product they genuinely believed in — a low-code database tool that gives a self-hosting option.
SeaTable offers both cloud-based and on-premise solutions, a strategy it believes sets it apart from the industry giant Airtable.
“Europe is all about data privacy, data sovereignty,” Ralf, chief executive at SeaTable, told TechCrunch in an interview. “So there is going to be big market demand for the product in Europe.”
The Dyllick-Brenzingers took on the challenge and founded SeaTable GmbH, with Seafile holding a 50% stake to keep its commitment to product development while maintaining a firm separation from the German firm’s management and access to customer data.
Focusing on Europe, SeaTable is multilingual and comes in English, German, French and Russian, with Spanish and Portuguese under development. Language may seem like an inconsequential feature, but in underserved markets with high purchasing power, like France and Japan (as is the case with meeting productivity tool Airgram), having the localized option could help a startup get ahead. SeaTable also boasts a capacity of storing millions of records compared to Airtable’s scale of tens of thousands, according to Ralf.
In retrospect, the two Chinese founders have picked the best possible path for Seafile’s global expansion at a time when the public and government in the West are increasingly skeptical of companies’ Chinese links. But entrepreneurs who want to run an empire don’t let go easily, much less deal with partners who live thousands of miles away. As Ralf remarked: “I think it needs a lot of trust between the two sides.”
Though Seafile doesn’t engage in SeaTable’s day-to-day operation, it plays a key role by developing the database platform from Guangzhou, a setup that’s common amongst global tech firms that want to tap China’s affordable, quality engineers.
“The China team gives us a piece of software… that everyone can download from the internet, from the repository, and we the German team run with that. The repository is kind of like the separation line. Everything on this side of the repository is managed by Jonathan and Daniel and everything on that side is managed by us,” explained Ralf.
A repository, in computer programming, is a centralized digital storage that developers use to make and manage changes to an application’s source code.
SeaTable’s SaaS version is fully operated by the German joint venture and stores data in Europe. All customization and services happen at its German office, which handles everything from installing the software, running upgrades, managing backups, troubleshooting, reading and interpreting logs, to optimizing system performance.
“Managing the system are German nationals or European nationals. Apart from the fact that SeaTable is developed in China, it’s about as European as it can get,” the founder added. “It’s ironic that we all have hardware manufactured in China… but Chinese software has a difficult position in Europe.”
The German brothers admitted that SeaTable’s way of marketing isn’t the “safest”. While some customers are fine with its Chinese roots, others, including a ministry in France, have reservations about software originating from China. But this proactive approach sometimes leads to amicable discussions on new forms of cross-border collaboration that leverage software development in China on the one hand and localization efforts in the target countries on the other.
“Some customers I speak to are totally oblivious of the Chinese origin of SeaTable and it’s me who discloses it to them. We don’t want to engage in discussions and then at the very end it comes up like SeaTable is Chinese and then they say, look, you should have told us earlier,” said Ralf.
“So we are very proactive about that and many customers find this interesting because, in the early 2000s, the typical joint venture model was that European and American companies went to China and looked for a Chinese partner to build their business in China. Now we are an example of a Chinese company coming to Europe to form a joint venture. People realize that oh, this is actually interesting, so they are curious to learn more about that.”
Shein is partnering with Reliance to re-enter India, a strategy which, if proven viable, could set an example for startups grappling with the China backlash amid rising geopolitical tensions.
The China-founded, Singapore-headquartered fast fashion giant is teaming up with Reliance Retail, the retail subsidiary of Indian conglomerate Reliance, The Wall Street Journal reported. A spokesperson for Shein confirmed the partnership without giving further details.
In 2020, India banned TikTok and Shein along with some 50 apps after tensions with China escalated on the countries’ Himalayan borders. TikTok remains unavailable, though its parent firm ByteDance still operates the music streaming app called Resso in the country.
The partnership comes at a time when Reliance Retail’s online shopping platform JioMart is undergoing a massive layoff that could affect over 10,000 employees.
At the heart of the Shein-Reliance alliance is localization. According to the WSJ report, Shein will be sourcing fabrics from small Indian businesses under the partnership. The company also has plans to build a production hub in India for export to the Middle East.
The partnership has received approval from the Indian government, which considers Shein to be a non-Chinese entity, sources told WSJ.
Being in the good graces of the Indian authority is a milestone for Shein. For one thing, it signals that India believes Shein’s reentrance could benefit the local market. As one Chinese cross-border investor told me, “A company’s ability to demonstrate its contribution to the local economy, whether it’s through job creation or tax revenue generation, can help mitigate the vulnerabilities posed by geopolitical complexities.”
Getting the greenlight from India must have been a relief for Shein, which is mustering its forces to shed its Chinese label. Founded in Nanjing and Guangzhou over a decade ago as an online fashion exporter, Shein moved its holding entity to Singapore in early 2022 while its founder Sky Xu was applying for permanent residence in the city-state.
Shein has set up operational teams around the world and has also been trying to diversify its supply chain, opening a manufacturing base in Turkey.
Disentangling one’s ties with China while showcasing an unwavering commitment to a foreign market is a formidable task. And the extent to which these measures should be undertaken hinges largely on the evolving dynamics of the country’s relationship with China.
In the U.S., for instance, Shein is stumbling on roadblocks. In mid-April, a Congress body singled out Shein and PDD-owned Temu in a report, accusing these” Chinese fashion e-commerce platforms” of exploiting trade tariff loopholes, violating intellectual property rights, alongside other issues.
TikTok, one of the very other few China-founded internet platforms that have made it big abroad, has a harder time unraveling its Chinese links. Despite its pledge to spend about $1.5 billion on erecting a data firewall between its U.S. business and its Chinese ownership, a plan dubbed Project Texas, the U.S. government is still pushing for a sale of the short video giant from its parent.
China has banned some sales of Micron products after launching a probe into the American memory chip giant for cybersecurity risks in early April.
The decision is widely seen as part of the tic-for-tac in the ongoing U.S.-China economic competition, which has started to upend a deeply intertwined global tech supply chain.
Last year, the U.S. added China state-backed memory chip maker Yangtze Memory Technologies Corporation to the entity list, barring U.S. companies from supplying it without approval. The U.S. has also restricted Nvidia from exporting H100, its state-of-the-art GPU for generative AI training, to China.
The Cyberspace Administration of China on Sunday told domestic firms that provide “key information infrastructure” to stop buying from Micron. Products of Micron “have serious cybersecurity issues and pose a big risk to the country’s key information supply chains, raising cybersecurity concerns.”
Micron, which opened its first factory in China 16 years ago, specializes in producing computer memory and data storage such as dynamic random-access memory, known as DRAM, and flash memory. China is its third-largest market, accounting for 10.7% of its annual revenue in 2022. We’ve reached out to Micron for comment.
“Key information infrastructure”, as China defines it, includes telecommunication, energy, transportation, finance, defense and any other area that concerns national interests.
The authority did not specify in what ways Micron poses a cybersecurity risk, but it did cite China’s Cybersecurity Law that took effect in 2016, a wide-ranging regulation aimed at strengthening the government’s oversight on the internet, with rules like real-name verification and storing local user data on local servers.
Micron anticipated its challenges in China in its 2022 annual report.
In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities, such as Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc. (“CXMT”), that is intended to advance China’s stated national policy objectives. In addition, the Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies.
The ban could benefit Micron’s competitors in China, the South Korean giants Samsung Electronics and SK Hynix. But the U.S. also urged South Korea not to fill China’s market gap in memory chips if Micron gets banned, according to the Financial Times.
In response to the ban, the U.S. Department of Commerce said it will “engage directly with Chinese authorities to detail the U.S. position and will engage with key allies and partners to address what it termed as distortions of the memory-chip market caused by China’s actions.”
In recent years, China has been working to shore up its technological self-reliance in key industries like advanced semiconductors, which have historically depended on foreign suppliers. For example, there’s been a push to substitute foreign hardware and software with domestic alternatives across state-owned enterprises.
As large language models from Western tech firms show the potential to disrupt everything from marketing, teaching, to coding, China is rushing to cultivate its home-grown AI pioneers by stepping up state support.
Beijing is now seeking public opinion on a draft policy aimed at developing artificial general intelligence, or AGI, a category of AI that can theoretically carry out all human tasks. The policy’s goal, in short, is to buttress AI firms by beefing up support from cloud providers and data companies.
It’s not uncommon to see the capital city spearheading policymaking in emerging industries. Beijing, for example, was the first in letting driverless robotaxis ferry passengers on open roads under certain restrictions.
The AGI blueprint lays out action plans around three main areas: computing power, training data and applications.
The first strategy calls for closer collaboration between cloud providers, the sources of computing power, and universities and companies, which consume large amounts of processing power to train large language models, multimodal learning and other AI. The policy proposes a state-backed, centralized platform that allocates public cloud resources to users based on demand.
Alibaba accounted for over a third of China’s cloud infrastructure services spending last year, coming in first, according to market research firm Canalys. Huawei, Tencent and Baidu trailed behind.
The second strategy acknowledges the lack of quality Chinese-language data and encourages the “compliant cleansing” of such data sets, which includes data anonymization, likely an effort to meet China’s new, stringent privacy law. The process will no doubt be time-consuming and labor-intensive, as we’ve seen how OpenAI relies on Kenyan workers to manually label training data and remove toxic text.
Beijing’s big data exchange, launched by the government in 2021 to facilitate data trading across facets of society, will aid the process of data sourcing.
Lastly, the policy lays out a list of potential pilot applications of AI, ranging from using AI in medical diagnosis, drug making, financial risk control, transportation, to urban management.
The proposed policy also touches on the importance of software and hardware infrastructure for AI training. Amid an escalating U.S.-China competition, the latter is striving to shore up innovation in key technologies such as semiconductors.
The U.S. already restricts the export of Nvidia’s powerful AI chip H100 to China. In response, Nvidia came up with a less powerful processor for China to circumvent export controls. Domestic companies, such as tech giant Huawei and startup Biren, are also working on Nvidia alternatives.
After igniting a global obsession over generative art, ten-month-old Midjourney appears to be entering the Middle Kingdom, the world’s largest internet market.
In an article posted on the Tencent-owned social platform WeChat late on Monday, a corporate account named “Midjourney China” said it has started accepting applications for beta test users. But the account soon deleted its first and only article on Tuesday.
It’s unclear why the post disappeared after receiving an overwhelming reception in China. Applications would only be open for a few hours every Monday and Friday, the original post said, and users quickly filled up the first quota on launch day. TechCrunch hasn’t been able to test the product.
The owner of the WeChat account is a Nanjing-based company called Pengyuhui, which was founded in October and had very little public information available. TechCrunch hasn’t been able to verify the identity of the firm and has reached out to Midjourney for comment.
Launching an internet application in China is no small feat given the country’s strict regulatory environment. As such it’s not uncommon to see foreign startups teaming up with local partners who help operate their services on their behalf.
There have been plenty of applications that claim to be Midjourney’s Chinese version, but this one seems the most serious. The copycats are easy to detect as they don’t bother about community building and straight out ask for users to pay. “Midjourney China” said in the post that it is introducing a new iteration every 1-2 days and has a 24×7 support team to answer user questions.
In all fairness, “Midjourney China” has a well-thought-out strategy. It chose to run on a QQ channel, the country’s closest thing to a Discord server. QQ, a PC-era legacy messenger built by Tencent, has taken center stage in facilitating community building amid China’s generative AI craze. A rising open-source neural network project called RWKV, for example, has gathered several thousand developers and users on QQ.
Tencent and “Midjourney China” haven’t entered into an official partnership in using QQ, according to a person with knowledge of the matter. Rather, the latter has joined as a third-party client and initiated its own user acquisition.
Midjourney fandom
Tech-savvy Chinese netizens are no strangers to Midjourney, but so far they’ve been accessing the text-to-image generator through informal means and circumvention methods.
To access Discord, where the Midjourney bot runs, they need virtual private networks to get around the Great Firewall that bans the social network. Then to pay for Midjourney subscriptions, users without credit cards have needed to seek out agents who help with signup and fund top-up. Credit cards aren’t common in China as the country has largely leapfrogged from cash to mobile payments.
The absence of ChatGPT, Stable Diffusion and the likes in China has given rise to a host of local alternatives. It’d be interesting to see if the Francisco-based company manages to win users from Baidu’s art generator ERNIE-ViLG and startup Tiamat, if “Midjourney China” turns out to be legitimate.
“Midjourney China” looks not that different from the original art generator at first glance. Users send prompts on the QQ channel to generate images, which they can then modify with further instructions, according to its debut article. After 25 free images, they need to start paying through a price scheme that’s on par with the Discord-based version.
A complicated market
“Midjourney China” is popping up at a time when a number of Western internet giants are retreating. Just a week ago, LinkedIn announced it would be closing down InCareer, an app that was built to suit China’s regulatory environment but arguably didn’t have enough demand. Midjourney would face the same challenge of fulfilling the country’s compliance requirements whilst competing head-on with more established domestic players.
Any foreign player that covets the China market needs to brace for its ever-evolving regulations. To start with, China requires real-name verification for users of generative AI, as with virtually all other internet services that operate within its jurisdiction. “Midjourney China” might have conveniently met the criterion by running on QQ where all user accounts are by default linked to one’s real identity.
There are more complicated requirements. China recently introduced a set of rules specifically for synthetic media use. Service providers are responsible for labeling fake pictures that can mislead the public, for example. They are asked to keep records of illegal uses of AI and report incidents to the authorities. There’s no doubt that Midjourney in any of its manifestations will need to censor keywords that are considered politically sensitive in China — which the company already does to some extent.
The question then is how “Midjourney China” and QQ divide the burden and costs of monitoring user behavior if and when the application reaches a critical mass in the country.
This is a developing story — stay tuned for updates.
Chinese smartphone giant Oppo is disbanding its young chip design unit Zeku as weak global demand forces major handset manufacturers to cut costs and restrategize.
The decision comes as a surprise to those who believe the phone maker is bolstering its in-house chip development as rising geopolitical tensions with the U.S. threatens to cut Chinese firms off key suppliers. In the foreseeable future, Oppo will have to revert back to relying on third-party chip partners.
While Oppo managed to finish Q1 2023 as the world’s fourth-largest smartphone vendor, its shipment dropped 8%, according to market research firm Canalys. Other than Apple, all five of the top phone makers saw a decline in shipments. All in all, the global smartphone market shrank by 13% in the quarter.
Oppo explained its decision to cut its once-promising chip team in a statement issued today: “Due to the uncertainties in the global economy and the smartphone industry, we have to make difficult adjustments for long-term development. Therefore, the company has decided to cease the operation of Zeku.”
In December 2021, Zeku revealed its first self-developed chipset, MariSilicon X, a neural processing unit designed to boost photo and video performance through machine learning, following Apple’s path to bring chip design in-house. Zeku also set up a research base in Palo Alto.
The end of Zeku comes off as abrupt given Zeku was still hiring over 100 positions a month ago, according to its LinkedIn page.
It’s unclear how the move will affect the over 2,000 employees at Zeku, which has been offering competitive salaries to attract talent from other established chip firms. Oppo is reticent about the whereabouts of the team for now, saying only “the company will properly arrange related matters and continue to deliver great products and service to users worldwide.”
Oppo’s retreat from chips signals another struggle from Chinese phone companies to strengthen their control over the semiconductor supply chain. Huawei lost access to advanced chips from the U.S. due to Trump-era sanctions, and its attempt to design its own high-end chips through HiSilicon floundered after the U.S. cut it off major foundries. The company resorted to spinning out its budget handset brand Honor, a move seen as a way to help the subsidiary circumvent the sanctions that have decimated Huawei’s consumer business.
Chinese smartphone giant Oppo is disbanding its young chip design unit Zeku as weak global demand forces major handset manufacturers to cut costs and restrategize.
The decision comes as a surprise to those who believe the phone maker is bolstering its in-house chip development as rising geopolitical tensions with the U.S. threatens to cut Chinese firms off key suppliers. In the foreseeable future, Oppo will have to revert back to relying on third-party chip partners.
While Oppo managed to finish Q1 2023 as the world’s fourth-largest smartphone vendor, its shipment dropped 8%, according to market research firm Canalys. Other than Apple, all five of the top phone makers saw a decline in shipments. All in all, the global smartphone market shrank by 13% in the quarter.
Oppo explained its decision to cut its once-promising chip team in a statement issued today: “Due to the uncertainties in the global economy and the smartphone industry, we have to make difficult adjustments for long-term development. Therefore, the company has decided to cease the operation of Zeku.”
In December 2021, Zeku revealed its first self-developed chipset, MariSilicon X, a neural processing unit designed to boost photo and video performance through machine learning, following Apple’s path to bring chip design in-house. Zeku also set up a research base in Palo Alto.
The end of Zeku comes off as abrupt given Zeku was still hiring over 100 positions a month ago, according to its LinkedIn page.
It’s unclear how the move will affect the over 2,000 employees at Zeku, which has been offering competitive salaries to attract talent from other established chip firms. Oppo is reticent about the whereabouts of the team for now, saying only “the company will properly arrange related matters and continue to deliver great products and service to users worldwide.”
Oppo’s retreat from chips signals another struggle from Chinese phone companies to strengthen their control over the semiconductor supply chain. Huawei lost access to advanced chips from the U.S. due to Trump-era sanctions, and its attempt to design its own high-end chips through HiSilicon floundered after the U.S. cut it off major foundries. The company resorted to spinning out its budget handset brand Honor, a move seen as a way to help the subsidiary circumvent the sanctions that have decimated Huawei’s consumer business.
