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Top 6 Fast Growing Tech Industries in China: Artificial Intelligence & Healthtech (Part 2/3)

10 min read

In this article series (3 articles), we will dive into the fastest growing tech industries in China, trying to understand main questions we all constantly ask: Why, What, Who, When, How come ?

Part 1 - Fintech and Edtech

Part 2 - Artificial Intelligence and Healthtech

Part 3 - Internet Of Things and Social Media

3- Artificial Intelligence Is The Next Chinese Big Thing In Technology

Technological innovation in Artificial Intelligence (AI) is revolutionising the world. Cognitive computing, machine learning, natural language processing are just the initial technologies which are being developed and showing tremendous progress in recent years.

AI is the capability of a machine to imitate intelligent human behaviour, and to emulate human cognitive functions such as recognising speech or images. It uses deep learning techniques to solve a specific problem. Broadly speaking, AI consists of deep learning, robotics, querying methods, and natural language processing, amongst others.

In 2015, the Global AI market was $127 billion big and is predicted to reach to $165 billion this year. It is expected to exceed 200 billion dollars in 2018.

With its focus on science, technology and engineering, China is making waves in AI. Over the next three years, the country is aiming to expand its AI products market to $15 billion. This funding is to support the Made in China 2025 initiative, which aims to improve the quality of Chinese-made goods whilst upgrading the country’s factories with smart machines.

A report released by the World Internet Conference showed AI research in China attracted $2.6 billion of investment in 2015.

3-1. Huge Data To Engage In Deep Learning AI Experimentation

Internet and phone savvy Chinese are generating huge volumes of user data. The more data to mine, the more efficiently AI programs can engage in deep learning (deep learning involves the use of computer algorithms to perform pattern recognition and data analysis).

The country has 710 million Internet users accounting for 51.7 percent of its total population. In 2014, there were more than 480 million smartphone users in China; by 2019, this is expected to increase to 690 million. By 2019, over 60 percent of the Chinese mobile phone users will use smartphones. As such, with the number of Internet users in China growing at an exponential scale, there is a wealth of data for AI programs to mine and learn from.

At present, AI is in its early stages of development and top priority is being given to projects related to search engine optimisation with voice recognition features.

For example Sogou, has come up with a voice recognition system which is 95% accurate in a quiet environment. Translation is 90% accurate. The company has huge amount of user data at its disposal as it's website has an in-built search engine. It is second most known search engine after Baidu in the chinese market and is popular for Pinyin input system. It is used everyday by roughly 300 million smartphone users to generate Mandarin from Latin character. This input system has helped to optimise the Sugou's data analysis for its AI program.

3-2. Pools of AI Talent Due To Focus On Engineering Education

The country is developing its technical higher education at a rapid speed and increasing the number of homegrown engineers, doctors and scientists etc.

In 2010, out of the 200,000 doctorates given in science and engineering worldwide, 31,000 were awarded by Chinese universities. In 2010 more than 5.5 million first degrees were awarded in science and engineering worldwide, with students in China earning about 22%. Currently, science and engineering degrees account for about 50% of all degrees in China creating huge pools of talent for the country to draw on to fast-track its development of AI.

China is also outpacing the US in research and development in deep learning and deep neural networks. China's top universities, such as Tsinghua University, are now offering computer science program that are ranked amongst the top 25 computer science programs offered by universities worldwide.

3-3. Future AI Based Projects

Baidu's AI-powered driverless car

  • Driverless cars that make use of AI

Baidu is applying AI to automobiles and aiming to mass-produce a driverless car within five years. The company spent RMB10.2 billion ($1.5 billion) last year on research and development, of which AI was a crucial part.

Plans to adopt a 'plug and play' approach for new cruise missiles with tailor-made commands are in progress. These missiles will be fitted with AI technology in order to give the missiles the autonomy and flexibility to change targets in accordance to combat conditions and other requirements.

Chinese companies are also funding practical approaches to AI, such as Yunji Technology. The company is developing service robots to use in hotels in Beijing, Shanghai and Suzhou.These robots take voice commands from humans and can give orders to other machines.

3-4. Big Players See Huge Potential In AI

The Supercomputer AlphaGo

After supercomputer AlphaGo defeated a world champion in the ancient strategy game Go this year, AI has become one of the most popular fields for investments.

  • Apart from investing on driverless car, Baidu is also working on speech recognition, where it is teaching its AI system to process spoken words. The program has become so good at understanding spoken words it is claimed to be better than a human being.
  • Didi, raised $7.3 billion in its latest fundraising effort and now has $10.5 billion in disposable funds to focus on AI technologies including machine learning and computer vision. The company is working on technologies to optimise its dispatch system and route planning.
  • Tencent Holdings invested $10 million for AI start-up Diffbot in the US. In 2015, Tencent came out with a robot journalist, called 'Dreamwriter.' In one minute this robot can write 1,000-word news report.

The AI industry is still at a nascent stage and specialists who understand AI are limited, yet the startup industry is getting major backing from VCs. The future technologies and market relies heavily on AI, and investors are quickly jumping on the band wagon.

3-5. AI Startups Getting Immense Capital Support

SenseTime is a microcosm of China's AI start-ups (100 startups). About 65 of these start-ups received more than RMB $2.91 billion ($42.2 million) in funding in 2015.

Flytek Co Ltd, another AI startup, is developing a robot that will seek to beat 80 percent of Chinese students and become eligible for admission into a top-level university in 2020.

Ninebot develops personal transportation robots and has raised $80 million. It is backed by popular market players like Sequoia Capital China, Shunwei Capital Partners, WestSummit Capital, Xiaomi and Intel Capital.

CloudMinds makes cloud based service robots . The company will reportedly launch a full-service housekeeping robot by 2025. It has raised $30 million from investors Foxconn Technology Company, Hon Hai Precision Industry, Kaixuan Capital, Softbank China Venture Capital and Walden International.

A.I. Nemo manufactures desktop robots with a webcam to schedule video calls with family members, track movement of children across the room, and read out text messages amongst other functions. It raised $10 million and is backed by Chengwei Capital, China’s Innovation Works, Foxconn Technology Company and Lightspeed China Partners.

China-based manufacturers are also opting for related fields in AI and consumer robots. China’s home appliances company, Midea Group, entered into a bid to buy German industrial robotics manufacturer Kuka AG.

Intel also will invest RMB 10 million ($1.5M) every year towards incubating consumer and industrial robotics companies.

4- Healthtech Has a High Disruptive Potential in China

4-1. Healthtech Is a Way Forward For Healthy Living

China's health-conscious younger generation and the huge potential for innovations in the internet healthcare sector is shaping China’s Healthtech industry. Whilst the government is spending a lot on the healthcare sector, the Healthtech industry is still untapped with possibilities to generate vast opportunities and become a game-changer in the tech space.

Health technology is the use of technology (databases, applications, mobiles, wearables) to solve health problems and improve quality of lives.

China's healthcare IT sector is predicted to double to RMB 34 billion ($5.6 billion) by 2017. The mobile medical market size will also exceed to RMB 10 billion by the end of 2017. The healthtech wearables and gadgets market will be worth RMB 16.94 billion this year. In China alone, around 40 million wearable devices were sold in 2015 as consumers become more health-conscious.

4-2. Healthtech, An Alternative To Healthcare Sector

Despite the Chinese government’s efforts for continuous healthcare reforms, the rapid rise of urbanization has led to crowded hospitals and a shortage of doctors and skilled workers.

As a result, an emerging trend of Internet based healthcare is being opted by the masses. For example, offline and online Ningbo Cloud Hospital was founded last year and is China’s first cloud hospital utilising cloud computing, big data, Internet and Internet of Things services. the hospital's services include online appointments, video consultation, diagnosis to e-prescription, online payment, and medicine delivery at home.

Hospitals in cities such as Hangzhou, Guangzhou and Wuhan have also have their online services.

Self-Diagnosis machines are becoming popular in China

Self-Diagnosis Opens Market For Healthtech

In China, many prefer to self-diagnose and monitor individual fitness and food intake to eliminate the need to consult directly with a doctor. This in turn has opened up the market for healthtech such as blood pressure monitors, food safety checkers, activity trackers and more. The medical products market reached $20 billion in 2011 and has only grown since.

Upward Trend For Chic, Stylish Gadgets

A new craze for trendy health gadgets and wearables by the health conscious public has led to an influx of stylish fitness wearables on the healthtech market. An example of this is the Apple Watch, which monitors heart rate and activity in addition to updating email and social media. Intel, Sony, Samsung and LG have also launched their fitness wearables (bracelets, bands etc) in the Chinese market. The local companies like Xiaomi, Geak Electronics, and Baidu amongst others are coming up with cheaper alternatives.

Mobile and computer companies such as IBM Corp, Microsoft Corp, BT Group and Siemens AG and locally, China Mobile, Huawei Technology Co Ltd and ZTE Corp are also competing to get into the online healthcare market .

Although tech companies are diving in head first, there is still plenty of scope to explore and innovate in areas such as home health gadgets and smart food electronics which are relatively untouched.

4-3. Government To Strengthen Health Information Technology (HIT) initiative

China’s HIT is a unified software system which aims to establish an all-encompassing, integrated, and advanced system to connect healthcare institutions nationwide. HIT was established in mid-1990s, but is still unevenly developed across regions. This is due to a lack of skilled software professionals, resources and infrastructure in 2nd and 3rd tier cities.

In future, HIT will aim to provide institutions with health industry data that is collected and processed in digital form to enhance medical care services, public health, and health administration. This medical data system is to be shared with medical facilities and insurers, pharmacies, and doctors who use patient medical histories.

So far the government has made some progress in improving the HIT initiative and in 2003 released a National Information Development Plan (2003-10) for the implementation of electronic health records and Regional Health Information Networks (RHINs) across the country.

China has also launched an “all-in-one” medicare card that can be used in designated hospitals and drug stores. It has information on user’s name, gender, payments, and consumption patterns and is also connected to banking and insurance system.

4-4. Growing Market For Startups

  • Wuzhen Internet Hospital, is China's largest online hospital registration booking system, medical treatment and healthcare service platform founded by the We Doctor group. Its mobile app is called We Doctor and its website is Guahao.com. After five years of its founding, 270 million consultations have been given through this system. The hospital covers 27 provincial regions, 1,900 co-operative key hospitals and more than 190,000 doctors.
  • Tencent has invested $100 million in Guahao.com. It has also invested $70 million in Dingxiangyuan, or dxy.cn, one of China's most popular medical and bioscience websites that doubles up as a social media platform for medical professionals.
  • Alibaba Group invested $170 million to acquire the licence of a pilot third-party online pharmacy and electronic drug supervision code system, as well as building online medical and health provider Alihealth.
  • Chunyuyisheng.com, one of China's largest mobile medical service providers, received $50 million in investment by several individual investors to expand patients and medical practitioners. More than 410,000 doctors are working part-time in this five-year-old company which has 92 million active users.
  •  Apps that turn fitness time into goal-oriented smartphone games are also hugely popular with Chinese netizens especially, millennials. Companies such as social workout app Keep (a GGV investment), Daily Yoga, Run-tracker Codoon and Yuepaoquan, help users find and schedule running groups.Social media centred sports apps that allow a user's friends to follow and comment are also becoming a rage.

by XNT

contact@thexnode.com

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