Key Developments in China’s AI Industry

According to the “2024 World Artificial Intelligence Legal Blue Book” released at the conference, China’s core AI industry reached a scale of 578.4 billion RMB in 2023, a year-on-year growth of 13.9% according to TMT Post.

Despite a decrease in the number of investment and financing events by 18.2% compared to 2022, the total financing amount surged by 51%, totaling 263.1 billion RMB.

China’s AI industry has seen a significant number of investments, primarily from industrial investors such as Qiming Venture Partners, Sequoia Capital, Shunwei Capital, Alibaba, Tencent, and Baidu.

As of December 14, 2023, the Chinese AI industry recorded 10,110 investment events with a total financing amount of 377.62 billion RMB. The primary investment areas include enterprise services, advanced manufacturing, and automotive transportation.

Global AI Landscape

Globally, there are approximately 30,000 AI enterprises, with the US accounting for 34% and China 15%, totaling over 4,500 companies in China. The period from 2023 to the first quarter of 2024 saw 234 AI unicorns globally, with the US hosting 120 and China 71.

The report indicates that there are currently 1,328 AI large models worldwide, with the US leading at 44% and China at 36%. This positions China as a significant player in the AI domain, with a robust development trajectory.

Expert Insights and Predictions

At the WAIC 2024, several experts provided their insights into the future of AI.

Tao Mei, a foreign academician of the Canadian Academy of Engineering and founder and CEO of Zhixiang Future, emphasized the rapid growth of the AI industry.

Mei predicted that generative AI would contribute to a 14% increase in global GDP, with 74% of the world’s economic output being impacted by AI technology. He also forecasted that 26% of China’s GDP growth would be related to generative AI.

Mei likened generative AI to fundamental infrastructure like water and electricity, suggesting that it will revolutionize human-computer interaction and various sectors, including AIGC and the metaverse.

The Emergence of AI Super Apps

Li Xuexia, co-founder and CEO of Wu Wenxin, described AI large models as “super models” and AI-native applications as “super apps.”

The discussion at the conference highlighted the growing anticipation for AI super apps akin to WeChat, TikTok, and Toutiao. However, industry leaders urged patience, noting that the development of such applications involves multiple factors beyond just technological advancements.

Zhang Peng, CEO of Zhipu AI, emphasized the importance of taking action rather than merely anticipating the arrival of super apps. He pointed out that the maturity of technology, market readiness, and demand discovery are all crucial elements in the emergence of these applications.

Jun Jie, founder and CEO of MiniMax, projected that it would take at least three years for AI super apps to become mainstream, underscoring the need for a step-by-step approach to achieving this goal.

The Future of Generative AI

Zhou Zhifeng, managing partner at Qiming Venture Partners, shared his expectations for the future of generative AI at the forum. He predicted that within three years, AI video generation technology would see widespread adoption, transforming industries such as film, animation, and short videos.

Other key forecasts included:

• The gradual fusion of GPT and diffusion models, unlocking new capabilities.
• Significant improvements in high-quality data acquisition and organization, with synthetic data playing a larger role in pre-training.
• Advances in multi-agent technology enhancing the efficiency and effectiveness of generative AI.
• The emergence of unified continuous representation of images and text, leading to more powerful multi-modal models.
• A five-fold increase in the compression rate of image and video latent space representation, accelerating generation speed.
• The rise of super multi-modal large models incorporating diverse modalities like text, images, voice, music, 3D, and sensor data.
• A reduction in the cost of commanding machines to complete complex tasks, driven by AI’s ability to bridge human and machine languages.
• Significant growth in edge-side inference, propelled by advances in inference optimization algorithms, edge-side inference chips, and large models.

Zhou concluded by emphasizing the transformative potential of AI in various industries, advocating for patience as the world anticipates the advent of AI super apps.

Conclusion

China’s AI industry is on a trajectory of significant growth and innovation. With substantial funding and strategic investments, the sector is poised to make transformative impacts across various fields.

As experts predict the emergence of AI super apps and advancements in generative AI, the global AI landscape will continue to evolve, driven by technological breakthroughs and strategic foresight. The future of AI promises to be a dynamic and integral part of economic and technological development.

Operational Highlights

AI and Cloud Services

CEO Robin Li noted the stability of Baidu Core’s online marketing revenue and growth in AI Cloud revenue driven by the optimization of their AI technology stack. The ERNIE family of models has been expanded with several lightweight versions, enhancing affordability and efficiency for various applications.

Intelligent Driving

Baidu’s Apollo Go, the autonomous ride-hailing service, provided approximately 826,000 rides in Q1 2024, a 25% increase year-over-year. As of April 2024, Apollo Go has provided over 6 million cumulative rides.

Mobile Ecosystem

In March 2024, Baidu App’s monthly active users (MAUs) reached 676 million, a 3% increase year-over-year. Managed Page accounted for 50% of Baidu Core’s online marketing revenue, demonstrating significant user engagement.

AI Developer Community

The PaddlePaddle developer community grew to 13 million by mid-April 2024. Baidu launched and improved tools on its MaaS (Model as a Service) platform, facilitating the development of AI-native applications and customized models for enterprise customers.

Financial Highlights

• Revenue: Total revenues for Q1 2024 were RMB31.5 billion (US$4.37 billion), a 1% increase year-over-year.
  • Revenue from Baidu Core was RMB23.8 billion (US$3.30 billion), a 4% increase year-over-year, driven by a 3% rise in online marketing revenue
  • 6% increase in non-online marketing revenue, primarily from the AI Cloud business.
• Operating Income: Operating income was RMB5.5 billion (US$760 million), a 10% increase year-over-year.
  • Baidu Core operating income was RMB4.5 billion (US$629 million), with a 19% operating margin.
  • Non-GAAP operating income was RMB6.7 billion (US$924 million), with Baidu Core contributing RMB5.6 billion (US$774 million).
• Net Income: Net income attributable to Baidu was RMB5.4 billion (US$755 million), a 6% decrease year-over-year.
  • Non-GAAP net income attributable to Baidu was RMB7.0 billion (US$971 million), reflecting a 22% increase year-over-year.
  • Non-GAAP diluted earnings per ADS were RMB19.91 (US$2.76), up 24% year-over-year.
• EBITDA: Adjusted EBITDA was RMB8.2 billion (US$1.14 billion), maintaining a 26% margin. Adjusted EBITDA for Baidu Core was RMB7.1 billion (US$986 million), with a 30% margin.

Since the beginning of Q1 2024, Baidu has returned US$229 million to shareholders, bringing the total repurchase to US$898 million under the 2023 share repurchase program.

Unified Branding and New Releases

One of the most notable changes is the rebranding of ByteDance’s AI models. The previously known “Lark” models are now unified under the “Doubao Model Family” name.

This family includes nine models, streamlined into two primary categories: general-purpose models and seven specialized models tailored for various functions, including role-playing, speech recognition, speech synthesis, voice cloning, and text-to-image generation.

The Doubao general-purpose models are available in two versions: Pro and Lite, catering to different user needs. This approach contrasts with competitors’ broad, all-encompassing models, highlighting Doubao’s more focused strategy.

Impressive Performance Metrics

In terms of performance, Doubao models are impressive, according to data shared at the conference.

Currently, these models process an average of 120 billion tokens of text and generate 30 million images daily.

The Doubao App, a major AI application built on these models, leads the domestic AI-generated content (AIGC) market, topping download charts on both the Apple App Store and major Android platforms in China.

According to Zhu Jun, ByteDance’s Vice President of Products and Strategy, the app has seen the creation of over 8 million intelligent entities and boasts 26 million monthly active users.

Competitive Pricing Strategy

Volcano Engine also announced a groundbreaking pricing strategy, setting the cost at 0.0008 yuan per thousand tokens. This is significantly lower than competitors, such as OpenAI’s GPT-4o, which charges approximately 0.035 yuan per thousand tokens for input and 0.1 yuan per thousand tokens for output.

In comparison, domestic large model providers average around 0.12 yuan per thousand tokens.

This substantial price reduction is attributed to several factors, including optimization in model structure and the adoption of distributed inference methods, which enhance computing efficiency.

Volcano Engine’s head, Tan Dai, emphasized that this pricing strategy is not intended as a price war but follows a sustainable business logic aimed at fostering long-term commercial cooperation.

AI Market and Future Developments

Despite the advancements, the AI application market is still in its early stages.

According to QuestMobile, the AIGC industry had 73.8 million users as of March 2024, a significant increase from the previous year but still only 6% of the total mobile internet users.

The competitive landscape is gradually intensifying, with companies like Alibaba Cloud and Tencent Cloud also announcing price cuts, although primarily for CPU-based general computing power rather than AI-specific GPU computing power.

ByteDance’s aggressive pricing for AI capabilities is a strategic move to lower the barrier for AI adoption and expand market reach.

This strategy is expected to continue throughout the year as foundational model prices further decline, driven by technological advancements and increased market competition.

Human-like AI and Accelerated B2B Adoption

The trend towards more human-like AI is evident in this year’s major tech releases. OpenAI’s GPT-4o and Google’s Project Astra have set new standards for interactive AI, with real-time conversational capabilities and emotional intelligence.

Similarly, ByteDance’s Doubao App aims to provide a more human-like interaction experience, with enhanced ASR (Automatic Speech Recognition) and TTS (Text-to-Speech) technologies, making AI interactions feel more natural and intuitive.

In the B2B sector, ByteDance’s AI ecosystem is rapidly taking shape. Volcano Engine is building a robust developer ecosystem and AI services platform, supporting a wide range of applications from mobile phones to smart vehicles.

Strategic partnerships with major automakers like Geely, Great Wall Motors, and Seres, along with integration into smartphones from Oppo, Honor, and Xiaomi, highlight ByteDance’s comprehensive approach to AI adoption.

Volcano Engine has also launched the enterprise version of its low-code AI development platform, “Coze” (Kouzi), offering high flexibility and various integration options for developers.

This platform is already being utilized by leading enterprises such as China Merchants Bank, Haidilao Hot Pot, and Super Monkey fitness centers to build intelligent assistants and personalized services.

The e-commerce giant’s focus on enhancing customer experience and strategic investments has resulted in notable year-over-year growth, despite challenging market conditions.

Strategic Initiatives and Business Review

Alibaba’s strategic initiatives have significantly impacted key sectors, including e-commerce, cloud computing, digital media, and logistics. The company’s focus on improving user experience, technological advancements, and expanding international commerce has paid off.

• E-commerce: Alibaba’s Taobao and Tmall Group saw a 4% year-over-year revenue growth, reaching RMB 93.2 billion, driven by a 5% increase in customer management revenue. The group also reported double-digit growth in online GMV and orders.
• Cloud Computing: The Cloud Intelligence Group reported a 3% revenue increase, reaching RMB 25.6 billion, with a notable 45% rise in adjusted EBITA. This growth was driven by higher adoption of public cloud services and AI products.
• International Commerce: The Alibaba International Digital Commerce Group experienced a 45% revenue increase to RMB 27.4 billion, thanks to strong performance in cross-border e-commerce, particularly from AliExpress.
• Logistics: Cainiao Smart Logistics Network’s revenue surged by 30% to RMB 24.6 billion, primarily due to increased demand for cross-border fulfillment services.
• Local Services Group: Reported a 19% revenue increase to RMB 14.6 billion, driven by Ele.me and Amap’s strong order growth.
• Digital Media and Entertainment Group: Revenue slightly decreased by 1% to RMB 4.9 billion, despite growth in Alibaba Pictures and Damai.

Financial Highlights

Alibaba’s financial results for the March quarter demonstrated resilience and strategic growth:

• Revenue: The company reported a 7% year-over-year increase in revenue, totaling RMB 221.9 billion (US$30.7 billion).
• Income from Operations: Despite a 3% decline, income from operations stood at RMB 14.8 billion (US$2.0 billion).
• Net Income: Net income attributable to ordinary shareholders decreased by 96% to RMB 919 million (US$127 million), mainly due to investment losses.
• Adjusted EBITA: Non-GAAP adjusted EBITA decreased by 5% to RMB 24.4 billion (US$3.3 billion).
• Share Repurchases and Dividends: Alibaba repurchased US$12.5 billion worth of shares in fiscal 2024 and announced a US$4.0 billion dividend.

Alibaba’s Q1 2024 results highlight the success of its strategic initiatives and investments in enhancing customer experience and technological infrastructure. The company’s focus on e-commerce, cloud computing, and international expansion positions it well for future growth. As Alibaba continues to innovate and adapt, it remains committed to delivering value to shareholders and capturing new market opportunities.

The company, a leading internet and technology conglomerate in China, has reported substantial improvements in gross profit and net profit, reflecting its strategic focus on high-quality revenue streams and innovative technological advancements.

Strategic Initiatives and Business Review

Tencent’s latest quarterly results highlight the company’s dynamic approach to growth and innovation. The tech giant has focused on enhancing its core business segments while venturing into new revenue streams, leveraging its technological prowess and market leadership.

In the gaming sector, Tencent continues to solidify its dominance both domestically and internationally. Several flagship titles, including “Fight of the Golden Spatula” and “CrossFire Mobile,” achieved record-high gross receipts. Meanwhile, international hits like “PUBG Mobile” and Supercell’s “Brawl Stars” reported impressive gains in user engagement and revenue, underscoring Tencent’s global appeal in the gaming industry.

The company has also made significant strides in digital content. WeChat Video Accounts saw a dramatic increase in user engagement, with total user time spent rising by over 80% year-over-year.

Similarly, Mini Programs, a staple feature of WeChat, reported a 20% increase in user engagement, reflecting Tencent’s ability to continuously innovate and expand its ecosystem.

Tencent’s advertising sector has benefited greatly from its advancements in AI technology. The introduction of generative AI-powered tools has revolutionized its advertising platform, resulting in higher engagement and more effective ad campaigns. This innovation has been particularly impactful for Video Accounts and Mini Programs, driving substantial growth in advertising revenue.

In the FinTech arena, Tencent’s wealth management business has shown robust growth, marked by a surge in user numbers and average fund investments. Tencent Cloud Media Services, a leader in the media and entertainment sectors, has maintained its strong market position, further demonstrating the company’s diverse and resilient business model.

Operating Metrics

• Combined MAU of Weixin and WeChat: 1,359 million, a 3% YoY increase.
• Mobile Device MAU of QQ: 553 million, a 7% YoY decrease.
• Fee-based VAS Registered Subscriptions: 260 million, a 12% YoY increase.
• Video Accounts Total User Time Spent: Increased over 80% YoY.
• Mini Programs Total User Time Spent: Increased over 20% YoY.

Financial Highlights

Tencent’s financial performance in Q1 2024 reflects its strategic focus and operational efficiency:

• Total Revenues: RMB 159.5 billion ($22.5 billion), a 6% year-over-year (YoY) increase.
• Gross Profit: RMB 83.9 billion ($11.8 billion), up 23% YoY.
• Non-IFRS Operating Profit: RMB 58.6 billion ($8.3 billion), a 30% YoY increase.
• Net Profit Attributable to Equity Holders: RMB 50.3 billion ($7.1 billion), up 54% YoY.

Segment Performance

• Value-Added Services (VAS): Revenue slightly decreased by 0.9% YoY to RMB 78.6 billion, with social networks and domestic games experiencing minor declines, while international games revenue grew by 3%.
• Online Advertising: Revenue surged by 26% YoY to RMB 26.5 billion, driven by increased engagement and enhanced AI-powered ad targeting.
• FinTech and Business Services: Revenue increased by 7% YoY to RMB 52.3 billion, with solid growth in cloud services and wealth management.

Tencent’s first-quarter results highlight its resilient business model and strategic adaptability. The company’s revenue growth, though moderate, is accompanied by a substantial increase in gross profit and operating margin, indicating improved operational efficiency.

Comparing these results with previous quarters and industry peers, Tencent stands out for its balanced growth across diverse revenue streams. The company’s focus on high-margin businesses, such as cloud services and digital content, is a strategic move that is paying off well.

According to IDC, by 2027, AI-integrated PCs are expected to constitute 85% of new computer setups in China, marking a significant shift from cloud-based to device-local AI applications.

This transition heralds a new era where PCs are not merely tools for computing but evolve into sophisticated personal assistants

AI’s Role in Reinventing PCs

As AI technology permeates everyday devices, its impact on the personal computer market is profound.

Lenovo’s CEO, Yang Yuanqing, noted that despite the growing ubiquity of smartphones, PCs remain the preferred platform for running sophisticated AI applications due to their superior processing power.

This sentiment is echoed by major PC manufacturers worldwide, who view AI-enhanced PCs as a pivotal market opportunity.

Industry-wide Transformation

The infusion of AI is redefining the entire PC ecosystem—from silicon and operating systems to the end-user experience.

AI integration is not just about enhancing computational capabilities but also about reimagining the PC as an intelligent entity that can anticipate user needs and handle complex tasks.

This shift is prompting a radical restructuring of the PC industry, affecting hardware components like chips, storage solutions, and thermal management systems.

Market Predictions and Pricing Challenges

IDC’s forecast that 85% of new PCs in China will be AI-equipped by 2027 highlights the anticipated widespread adoption.

However, this technological advancement comes with heightened costs. AI PCs, such as the Yoga Book 9i and ThinkPad T14p, are currently priced significantly higher than their traditional counterparts, a factor that could hinder their accessibility to the average consumer.

Chen Shuxin, IDC’s Senior Research Manager in China, points out that the enhanced performance requirements of AI PCs necessitate more sophisticated, and consequently more expensive, hardware components.

Addressing Cost Concerns

In response to these pricing challenges, Lenovo’s Liu Jun asserts that AI PCs are currently viewed as premium products.

To counteract this perception and make AI PCs more accessible, Lenovo is actively engaging with its supply chain to negotiate cost reductions and streamline production processes.

The goal is to position AI PCs within mainstream price ranges, making them as common as traditional PCs.

The impending dominance of AI-integrated PCs in China represents a significant technological leap and a potential market shift.

While the benefits of such advancements are clear, the industry faces the dual challenge of managing costs while maintaining the pace of innovation.

As manufacturers like Lenovo lead the way in making AI PCs more affordable, the next few years will be crucial in determining whether these intelligent machines become the standard in personal computing across China.

The user base has exceeded 200 million, with daily API calls also surpassing 200 million. The service now caters to 85,000 customers and has more than 190,000 AI-native applications developed using the Qianfan platform.

Robin Li also noted that one doesn’t need to know coding to create certain applications; it’s possible to develop smartphone apps without programming. AI is fostering a wave of creative energy. “The future of application development will be as simple as making a short video; everyone will be a developer,” Li stated.

After officially announcing the open access to “Ernie Bot” in August last year, Baidu has on one hand used large models to rebuild client-side products for consumers and integrated AI features across multiple Baidu products. On the other hand, in the business sector, it has launched the enterprise-level one-stop large model platform “Qianfan Large Model Platform” through its cloud business.

Baidu’s GenAI App Offers Digital Twin Creation

In early 2024, Baidu has announced an innovative feature within its Wenxin Yiyan app (its GenAI product; a.k.a. Ernie Bot) that allows users to create digital twins with unprecedented ease. Both iOS and Android users can access this feature for free upon updating to the latest version of the app.

The new function simplifies the creation of a digital twin to just a photo and three voice recordings. Users can customize their digital counterpart with a unique name, voice, and even MBTI personality type. This flexibility extends to the choice of making their digital twin public or keeping it private, catering to various needs such as companionship, knowledge exploration, and entertainment.

Traditionally, creating a digital twin involved complex processes like 3D scanning to create a model, texturing through rendering technologies, and integrating motion capture and voice synthesis. Baidu’s latest update significantly reduces the complexity and time required to create a digital persona.

Baidu also teased upcoming themes for digital twins, including various New Year backgrounds and exclusive digital personas for a “mysterious national idol,” AI God of Wealth, and AI family portraits among other activities.

Recently at the tenth Wave Summit, a biannual deep learning developer conference hosted by Baidu, the Chinese AI giant unveiled remarkable achievements in artificial intelligence.

Ernie Bot has reached a new milestone, surpassing 100 million users as of Dec 2023.

ERNIE Bot: A Versatile AI Tool

Since its public release on August 31, 2023, ERNIE Bot has rapidly become an indispensable tool for users across diverse fields. It has generated 3.7 billion words of text in workplace environments, aiding over 2 million users, according to information CIW received from Baidu.

ERNIE Bot’s versatility is further highlighted by its ability to write 300 million lines of code and process 400 million words of contracts, showcasing its utility in technical and legal domains. Additionally, it has created 5 million travel itineraries and drafted 10.83 million messages of care and support, reflecting its wide-ranging applications in personal and emotional contexts.

The popularity of ERNIE Bot is also reflected in the user feedback, with 20 million likes and appreciations, signifying high satisfaction and reliance on this AI tool.

Technical Innovation and Industry Empowerment

The Wave Summit also shed light on Baidu’s commitment to technical innovation and industry empowerment through its PaddlePaddle platform. Dr. Haifeng Wang, Chief Technology Officer of Baidu, revealed that PaddlePaddle has been instrumental in supporting over 10.7 million developers and 235,000 enterprises.

A staggering 860,000 models were created using the platform as of December 2023, indicating the platform’s significant impact on AI development and application.

The Future of ERNIE Bot and Baidu’s AI Initiatives

The continuous improvement of the ERNIE Foundation Model, which saw a 32% overall performance enhancement in just two months, clearly indicates Baidu’s dedication to advancing AI technology.

ERNIE Bot’s growing popularity and increasing user inquiries highlight the potential and demand for advanced AI solutions in various industries.

Baidu’s achievements with ERNIE Bot and the PaddlePaddle platform underscore the company’s position as a leader in China’s AI innovation. As Baidu continues to break new ground in AI technology, the global community eagerly anticipates further advancements and applications that will transform industries and everyday life.

originality.ai’s founder and CEO, Jonathan Gillham, recently wrote an in-depth analysis article discussing Baidu’s ERNIE Bot and its latest model- ERNIE 4.0, which you can find here.

Financial Highlights

Huawei reported a total revenue of RMB 704.2 billion (approximately USD 99.4 billion), marking a 9.6% increase from the previous year.

The company’s net profit rose dramatically to RMB 86.95 billion (approximately USD 12.28 billion), illustrating Huawei’s effective management and strategic realignment in response to external pressures and market dynamics.

The ICT infrastructure segment, a cornerstone of Huawei’s business, generated RMB 362 billion, a modest increase of 2.3% year-over-year. Meanwhile, the consumer business, including smartphones and other smart devices, brought in RMB 251.5 billion, surging by 17.3%.

The company’s burgeoning cloud computing and digital energy sectors witnessed growth rates of 21.9% and 3.5% respectively, further diversifying Huawei’s revenue streams. Notably, the smart car solutions business stood out with a remarkable growth of 128.1%, although from a smaller base, signaling Huawei’s strategic pivot towards new technology frontiers.

Strategic Investments in R&D

Huawei’s commitment to research and development (R&D) remained steadfast, with an investment of RMB 164.7 billion in 2023, accounting for 23.4% of its total revenue.

Over the past decade, the company has invested more than RMB 1.1 trillion in R&D, underscoring its long-term vision to lead in technological innovation and contribute to the global digital economy.

Expanding Global Footprint and Ecosystem

The report highlights Huawei’s efforts in expanding its global ecosystem and fostering open innovation. By the end of 2023, Huawei Cloud boasted over 6 million developers and more than 40,000 partners worldwide, creating a vibrant and innovative digital ecosystem.

Future Outlook

Looking ahead, Huawei remains optimistic about its future growth prospects. The company plans to continue its investment in core ICT technologies and platforms, enhancing its product and service offerings across different sectors.

Huawei’s chairman, Hu Houkun, emphasized the importance of quality, innovation, and open collaboration with partners to create greater value for customers and society at large.

Financial Highlights: A Glimpse into Growth

Tencent’s fiscal narrative for 2023 is one of notable achievements, underscored by a 10% year-over-year growth in total revenues, reaching an impressive RMB609.0 billion (USD86.0 billion).

This expansion is further emphasized by a 23% increase in gross profit, showcasing the company’s enhanced profitability in a fiercely competitive digital marketplace. Furthermore, the non-IFRS profit attributable to equity holders witnessed a substantial 36% increase from the previous year, indicating strong core earnings performance .

The final quarter of 2023 continued this trend, with revenues escalating by 7% year-over-year to RMB155.2 billion (USD21.9 billion), and gross profit and non-IFRS profit attributable to equity holders of the company experiencing significant increases of 25% and 44% respectively.

In 2023, Tencent’s revenue breakdown highlighted the diversity of its business portfolio, with significant contributions from various segments.

The FinTech and Business Services sector emerged as the largest revenue source, representing 31% of the total revenue and amounting to RMB189.0 billion. This segment’s leading position underscores Tencent’s stronghold in the FinTech industry and its successful foray into comprehensive business services.

Following the FinTech and Business Services sector, the Online Games segment was the second-largest contributor to Tencent’s revenue, accounting for 29% and totaling RMB177.0 billion. This demonstrates the continued vitality of online gaming within Tencent’s business model.

The fastest-growing segment in 2023 was Tencent’s Cloud Computing business, which experienced a remarkable 30% year-over-year revenue increase, reaching RMB109.0 billion. This growth outpaced the other segments, notably the Social Networks segment, and underscored Tencent’s effective strategy and execution in the competitive cloud services market.

Overall, Tencent’s 2023 financial performance showcased the strength of its FinTech and Business Services as the leading revenue generator, with the Cloud Computing segment leading in growth, reflecting the company’s adaptability and strategic positioning in China’s evolving digital landscape.

Strategic Endeavors and Innovation

2023 saw Tencent advance through strategic milestones:

Enhancing User Experience: Tencent’s WeChat Video Accounts doubled in user time spent, thanks to improved algorithms and creator support. Additionally, the Mini Games platform’s gross receipts soared by over 50%, reinforcing Tencent’s leadership in China’s casual gaming sphere .

Pioneering in AI: The launch of Tencent Hunyuan, an AI model of a trillion-parameter scale, marks a leap in Tencent’s technological prowess, solidifying its commitment to spearheading digital innovation .

Commitment to Society and Environment: Tencent’s digital philanthropy platform set a new record with RMB3.8 billion raised during the 99 Giving Day campaign, while its New Cornerstone Investigator Program supported 104 scientists, promoting scientific research .

As of the end of 2023, Tencent Music Entertainment Group (TME) reported a notable increase in its music subscribers. The total number of online music paying subscribers reached 90 million, marking an 18% year-over-year growth.

Market Engagement and User Dynamics

Tencent’s operational statistics reveal evolving trends in user engagement:

• The MAUs of Weixin and WeChat stood at 1,343 million by December 2023, a 2% increase year-over-year, highlighting the platforms’ expanding influence in social media .
• Despite a marginal decline in VAS revenues, Tencent’s strategic emphasis on content diversity and innovative services positions it for sustained growth amidst market challenges .

Tencent’s 2023 saga is one of strategic brilliance and financial vigor, positioning it at the forefront of China’s digital transformation. With its commitment to innovation, user-centricity, and societal impact, Tencent is poised to continue shaping the contours of China’s digital future.

Mobile reach in China: Tencent, Alibaba, Baidu, ByteDance, vs. Kuaishou

Strategic Moves: EV Sector and Smartphone Market

Xiaomi’s entry into the smart Electric Vehicle (EV) market and continuous innovation in the smartphone segment have been central to its financial success.

The company retained its position as the third-largest smartphone vendor globally, with a total shipment of approximately 145.6 million units.

A notable strategy was the premiumization of its smartphone offerings, which led to an over 19% increase in the average selling price in mainland China.

Growth in IoT and AIoT Platforms

Revenue from Xiaomi’s IoT and lifestyle products reached RMB 80.1 billion, with a gross profit margin of 16.3%.

The number of connected IoT devices on Xiaomi’s AIoT platform as of December 31, 2023, stood at 739.7 million, a 25.5% increase year-over-year.

This expansion is reflective of Xiaomi’s strong position not only in the domestic market but also internationally, with significant presence and market share growth in various regions including the Middle East, Latin America, Africa, and Southeast Asia.

Future Directions: R&D and Global Technology Leadership

Xiaomi announced its strategic goals for 2020–2030, emphasizing long-term investment in foundational core technologies to assert its leadership in global tech innovations.

The company’s R&D expenses for 2023 amounted to RMB 19.1 billion, a 19.2% increase from the previous year, highlighting its commitment to innovation.

About Xiaomi Corporation

Xiaomi Corporation was founded in April 2010 and listed on the Hong Kong Stock Exchange in July 2018. With its core in smartphones and smart hardware connected by an IoT platform, Xiaomi aims to create quality products that enhance global living standards through innovative technology.

Introduction to Xiaomi e-commerce platform Youpin