The China Report
Today, we’re diving into the AI power shift happening in China, thanks to DeepSeek. Credit to Xinrou Shu and Ivy Yang for their reporting on this.
In the Wake of DeepSeek: What Does it Mean For China’s AI Giants?
Since its launch, DeepSeek has sent shockwaves through China’s AI scene. It’s forcing major players to rethink their strategies, governments to adopt new AI policies, and investors to recalibrate where they put their money. The Chinese AI landscape, which has long been dominated by companies like ByteDance and the so-called AI ‘Four Little Dragons’ and ‘Six Tigers,’ is now facing a serious disruption.
Let’s break this down.
ByteDance: The Latecomer Fighting to Catch Up
ByteDance, the force behind TikTok, was a late entry into the AI arms race. While other startups were diving into AI models as early as 2018, ByteDance only started taking large-scale AI seriously in 2023. By 2024, they had aggressively expanded into generative AI, covering everything from images to music, speech, and 3D.
Now, they’re playing catch-up, launching projects like Doubao 1.5 Pro and their ambitious ‘SeedEdge’ research initiative. But here’s the kicker—by the time ByteDance started competing at the top level in late 2024, DeepSeek had already shaken up the industry. So, while ByteDance is a major player, its future dominance is no longer guaranteed.
The Four Little Dragons: Yesterday’s Kings, Today’s Underdogs
Remember SenseTime, Megvii, Yitu, and CloudWalk? These were China’s AI darlings of the 2010s, specializing in facial recognition and security tech. They worked closely with the Chinese government and private sectors, but that came at a cost. Thanks to their involvement in controversial surveillance projects, they landed on the U.S. Entity List, cutting them off from critical Western investments.
Now, the rise of generative AI has overshadowed them. Big tech giants are building their own AI models, reducing their reliance on third-party AI services. Even once-dominant players like Megvii have seen their revenues take a major hit. SenseTime is pivoting to AI cloud services and multimodal models, but will that be enough? Time will tell.
The Six Tigers: AI Startups Facing an Uncertain Future
These six—Stepfun, Zhipu, Minimax, Moonshot, 01.AI, and Baichuan—were poised to be China’s answer to OpenAI. They had momentum, funding, and promising LLMs. But DeepSeek’s rise has put them under pressure.
Take Moonshot, for example. Before DeepSeek, their Kimi model was leading the domestic AI chatbot space with over 75 million monthly users. Now, they’re scrambling to keep up. MiniMax’s Talkie was the top AI companion app last year, but staying ahead in a market where giants like DeepSeek and ByteDance are flexing their muscles isn’t easy.
What’s Next?
DeepSeek has shifted the AI battleground in China. Investors are getting picky—startups now need more than just great tech; they need commercialization potential and ecosystem support. Even 01.AI, a billion-dollar startup, has decided to stop chasing ultra-large models, instead partnering with Alibaba Cloud for more practical AI applications.
Baichuan is diving into healthcare AI, launching its ‘AI Pediatrician’ in Beijing, while Zhipu AI is doubling down on enterprise AI solutions. Meanwhile, Stepfun, MiniMax, and Moonshot are all scrambling to maintain relevance by either open-sourcing their models or pivoting to niche markets.
Final Thoughts
The AI race in China is no longer just about who has the best technology—it’s about who can survive the commercialization challenge. ByteDance is still a powerhouse, but DeepSeek has fundamentally changed the game. The Four Little Dragons are struggling to stay relevant, and the Six Tigers are now fighting to prove they can compete in a rapidly shifting landscape.
The bottom line? China’s AI ecosystem is being reshaped before our eyes. The winners will be those who adapt, innovate, and secure their place in the evolving AI economy.
That’s it for today’s China Report. Thanks for tuning in! Don’t forget to like, subscribe, and drop your thoughts in the comments.
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About the Author
Curt Doty, founder of CurtDoty.co, is an award winning creative director whose legacy lies in branding, product development, social strategy, integrated marketing, and User Experience Design. His work of entertainment branding includes Electronic Arts, EA Sports, ProSieben, SAT.1, WBTV Latin America, Discovery Health, ABC, CBS, A&E, StarTV, Fox, Kabel 1, and TV Guide Channel.
He has extensive experience on AI-driven platforms MidJourney, Adobe Firefly, ChatGPT, Murf.ai, HeyGen, and DALL-E. He now runs his AI consultancy RealmIQ and companion podcast RealmIQ: Sessions on YouTube and Spotify.
He is a sought after public speaker having been featured at Streaming Media NYC, Digital Hollywood, Mobile Growth Association, Mobile Congress, App Growth Summit, Promax, CES, CTIA, NAB, NATPE, MMA Global, New Mexico Angels, Santa Fe Business Incubator, EntrepeneursRx, Davos Worldwide and AI Impact. He has lectured at universities including Full Sail, SCAD, Art Center College of Design, CSUN and Chapman University.
He currently serves on the board of the Godfrey Reggio Foundation and is the AI Writer for Parlay Me.
