Gaming Dominance Solidifies Tencent’s Leadership

Gaming remains Tencent’s most dominant segment, with revenues from its Value-Added Services (VAS) business—comprising gaming and social networks—rising 9% YoY to RMB 82.7 billion.

Domestically, hit titles like Honor of Kings and Peacekeeper Elite continued to deliver solid growth, supported by Valorant and the newly launched Delta Force. In the international market, Tencent expanded Valorant to consoles, boosting gross receipts by over 30% YoY.

This success underscores Tencent’s ability to maintain engagement in a competitive gaming landscape. The company’s investments in AI-driven personalized experiences and enhanced live-service elements further strengthen its position globally.

Social Media: Expanding Beyond Communication

Tencent’s social media platforms, Weixin (WeChat) and QQ, remain integral to its ecosystem. WeChat’s combined Monthly Active Users (MAUs) grew to 1.382 billion, while QQ saw a modest increase in MAUs.

WeChat Mini Programs achieved a Gross Merchandise Value (GMV) exceeding RMB 2 trillion, driven by expanded use cases like food ordering and electric vehicle charging. These initiatives reflect Tencent’s strategy of embedding commerce and services directly into its social platforms, enhancing user convenience and stickiness.

Leveraging AI, Tencent improved WeChat Search’s ability to handle complex queries, significantly increasing commercial click-through rates. QQ also saw innovation with upgraded infrastructure and new features, marking a return to YoY MAU growth.

Marketing Services and Advertising Resurgence

Tencent’s Marketing Services revenue, which rose 17% YoY to RMB 30 billion, demonstrates strong demand for its advertising solutions. Key contributors included Video Accounts, Mini Programs, and WeChat Search.

The Paris Olympics provided an additional boost, as advertisers sought to capitalize on high-profile events. Notably, eCommerce and gaming advertisers increased spending, offsetting weakness in categories like real estate and food and beverage.

FinTech and Business Services: Mixed Growth Amid Economic Headwinds

Revenue from FinTech and Business Services rose by 2% YoY to RMB 53.1 billion. FinTech services, encompassing payment and wealth management, showed stability, with the latter benefiting from increased user activity and assets under management.

Payment services, however, faced subdued consumption. In Business Services, growth in cloud services revenue was a highlight, aligning with Tencent’s broader focus on supporting digital transformation.

Tencent’s ongoing partnerships, such as the integration of JD Logistics with Taobao and Tmall, reflect its strategy of extending its influence across China’s digital ecosystem.

AI-Driven Innovations: A Key Pillar of Future Growth

Tencent’s AI investments came to the forefront with the launch of Hunyuan Turbo, an upgraded foundation model leveraging a heterogeneous Mixture-of-Experts (MoE) architecture. This model delivers double the training and inference efficiency at half the cost compared to its predecessor, underscoring Tencent’s commitment to deploying cutting-edge AI across its businesses.

The company has integrated AI capabilities into various offerings, from personalized gaming experiences to Weixin’s search algorithms and targeted marketing services. These initiatives aim to enhance operational efficiency and deliver value to users and advertisers.

Financial Strength and Shareholder Returns

Tencent continues to demonstrate financial resilience, with gross profit rising 16% YoY to RMB 88.8 billion and non-IFRS profit for equity holders increasing 33% YoY to RMB 59.8 billion. Free cash flow stood at RMB 58.5 billion, reflecting strong operational performance.

The company’s share repurchase program, totaling HKD 35.9 billion during the quarter, underscores its commitment to delivering shareholder value. With net cash of RMB 95.5 billion, Tencent is well-positioned to pursue strategic investments and initiatives.

Challenges and Strategic Focus

While Tencent’s diverse portfolio shields it from sector-specific risks, challenges such as fluctuating consumer spending in FinTech services and intensified competition in the cloud space remain. However, its strategic investments in AI, content, and ecosystem integration signal a clear focus on long-term growth.

Tencent’s third-quarter performance highlights its ability to adapt and thrive in a rapidly evolving market. By aligning its core businesses with emerging trends in AI, digital transformation, and consumer engagement, Tencent is not just navigating challenges but setting a course for sustainable growth.

Tencent’s Q2 2024 Results

Tencent Holdings announced its unaudited consolidated results for the second quarter of 2024, showcasing robust growth and strategic advancements across its diverse business segments. The company’s performance underscores its commitment to leveraging its platform plus content strategy, with notable successes in both domestic and international markets.

WeChat Video Accounts and Mini Programs:

Video Accounts: Tencent reported a substantial year-on-year increase in total user time spent on Video Accounts, driven by enhanced recommendation algorithms and an expanded array of local content. The company is systematically strengthening transaction capabilities within this platform to deliver seamless shopping experiences, thereby driving sales for merchants.

Mini Programs: The total user time spent on Mini Programs also grew by over 20% year-on-year, benefiting from the platform’s robust commerce and content ecosystem. Notably, the gross merchandise value (GMV) facilitated by Mini Programs experienced double-digit percentage growth, and total gross receipts from Mini Games increased by over 30% year-on-year.

Tencent Channels and Long-form Video

Tencent Channels: This community-based platform, which evolved from QQ, was rebranded and upgraded to enable moderators to manage channels with customizable tools. Users can now interact through text, image, and live streaming features, accessible from Weixin/WeChat, game apps, and QQ.

Tencent Video: The release of popular drama series fueled a 13% year-on-year growth in long-form video subscriptions, reaching 117 million subscribers. Notable titles like “Joy of Life 2” and “The Legend of Shen Li,” based on IPs from China Literature and produced by New Classics Media, were significant contributors to this growth.

Gaming

Domestic Games: Tencent’s flagship domestic games, such as “Honour of Kings” and “Peacekeeper Elite,” resumed year-on-year growth in gross receipts. Additionally, “Naruto Mobile” achieved a new milestone with 10 million monthly average daily active users (DAU) in May 2024, while the newly launched “DnF Mobile” showed promising retention rates.

International Games: International Games revenues reached RMB13.9 billion, marking a 9% year-on-year increase. “Brawl Stars,” with frequent content updates and social features, achieved a historical high in quarterly average DAU and saw gross receipts grow more than tenfold year-on-year.

Advertising and AI Initiatives:

Online Advertising: Revenues from online advertising increased by 19% year-on-year, primarily due to the strong performance of Video Accounts and long-form video advertising. The company upgraded its advertising technology platform to analyze user interests more effectively, resulting in deeper insights and more relevant ad recommendations.

AI Initiatives: Leveraging its top-tier foundation model, Tencent Hunyuan, the company released its AI assistant application, Yuanbao, to the public. Yuanbao is noted for its competitive strengths, including accurate image understanding, advanced natural language processing, and enhanced AI search capabilities.

Financial Highlights

Tencent’s financial performance in Q2 2024 was marked by significant growth across key metrics, reflecting the company’s successful execution of its strategic initiatives.

• Total Revenues: Tencent’s total revenues for the second quarter reached RMB161.1 billion (USD22.6 billion), representing an 8% increase year-on-year.
• Gross Profit: The company reported a gross profit of RMB85.9 billion (USD12.1 billion), a 21% increase compared to the same period last year, with a gross margin of 53%.
• Non-IFRS Operating Profit: On a non-IFRS basis, operating profit grew by 27% year-on-year to RMB58.4 billion (USD8.2 billion), with an operating margin of 36%.
• Net Profit: Profit attributable to equity holders of the company increased by 53% year-on-year to RMB57.3 billion (USD8.0 billion), highlighting strong profitability.
• Free Cash Flow: Tencent generated RMB40.4 billion (USD5.7 billion) in free cash flow during the quarter, up 35% year-on-year, contributing to a total cash position of RMB415.2 billion (USD58.3 billion).
• Shareholder Returns: The company repurchased approximately 103.7 million shares on the Hong Kong Stock Exchange for a consideration of HKD37.5 billion and paid a final dividend of HKD31.7 billion for the year ended December 31, 2023.

Tencent’s Q2 2024 results underscore the company’s resilience and adaptability in a competitive market, with its diverse business segments continuing to deliver strong growth and profitability.

Tencent’s Impressive Q1 2024 Financial Performance Sets Strong Foundation for Future Growth

Tencent Holdings Limited has announced its unaudited consolidated results for the first quarter of 2024, showcasing robust growth across various sectors despite challenging market conditions.

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.

Financial Highlights

• Revenue: Reached RMB236.5 billion (USD33.7 billion), marking a 5% year-over-year increase.
• Net Income: Surged 63% year-over-year to RMB43.5 billion (USD6.2 billion), driven by equity investment gains and operational efficiency improvements.
• Adjusted EBITA: Decreased 5% year-over-year to RMB40.6 billion (USD5.8 billion), reflecting Alibaba’s strategic investments in e-commerce and technology.
• Free Cash Flow: Declined 70% to RMB13.7 billion (USD1.96 billion), attributed to increased investments in cloud infrastructure and strategic refunds to merchants.

E-Commerce Growth: Strengthening Core Operations

The Taobao and Tmall Group remained central to Alibaba’s business:

• Revenue: Grew modestly to RMB93 billion (USD13.3 billion), supported by double-digit order growth and increased customer management service revenues.
• 88VIP Membership: Increased by double digits to 46 million, underscoring its role in driving loyalty and higher purchase frequencies.

Strategic changes, including the elimination of Tmall’s annual service fees and the introduction of transaction-based software service fees, were pivotal in enhancing the platform’s competitive edge.

Read more on Double 11 performance, China’s largest annual shopping festival.

Cloud Intelligence Group: AI-Driven Expansion

• Revenue: Grew 7% year-over-year to RMB29.6 billion (USD4.2 billion).
• AI Leadership: Achieved triple-digit growth in AI-related revenues for the fifth consecutive quarter. The Qwen large model family, including its open-source Qwen 2.5 series, positioned Alibaba as a leader in China’s public cloud and AI infrastructure sectors.
• Operational Enhancements: Introduced cost-efficient AI services and upgraded infrastructure to support scalability and performance.

Global Commerce Expansion

The Alibaba International Digital Commerce Group achieved a robust 29% revenue increase year-over-year to RMB31.7 billion (USD4.5 billion):

• AliExpress and Trendyol: Continued to gain traction in Europe and the Gulf region, leveraging local inventory and cross-border logistics efficiencies.
• Cross-Border Focus: The AliExpressDirect model improved fulfillment speeds and customer satisfaction, strengthening its competitive positioning.

Cainiao Logistics and Local Services Growth

Cainiao Smart Logistics Network delivered 8% revenue growth to RMB24.6 billion (USD3.5 billion), supported by enhanced cross-border fulfillment capabilities.

Local Services Group reported:

• Revenue: Increased by 14% to RMB17.7 billion (USD2.5 billion).
• Operational Efficiency: Losses narrowed significantly, benefiting from scaled operations and marketing service growth.

Strategic Share Repurchase Program

Alibaba repurchased shares worth USD4.1 billion during the quarter, reducing its outstanding shares by 2.1% since June 2024. This initiative reflects Alibaba’s commitment to shareholder value, with USD22 billion remaining in its repurchase authorization through March 2027.

Alibaba Group highlights for Q2 2024

Alibaba Group released its financial results for the quarter ending June 30, 2024, showcasing both growth in strategic areas and challenges in maintaining profitability. The company continues to focus on its core businesses, particularly cloud computing and international expansion, while navigating a complex economic landscape.

Business Overview

Cloud Intelligence Group Sees Strategic Expansion Alibaba’s Cloud Intelligence Group reported notable year-on-year growth, driven by increasing demand for cloud services across sectors such as finance, retail, and logistics.

The expansion of AI-powered solutions and cloud infrastructure remains a cornerstone of Alibaba’s strategy to diversify its revenue streams and position itself as a leader in the global cloud market.

The international digital commerce segment recorded solid performance, underpinned by Alibaba’s strategic investments in key markets.

The company’s international operations, including platforms like Lazada and AliExpress, demonstrated strong user growth and increased transaction volumes, particularly in Southeast Asia and Europe. These regions are becoming increasingly significant as Alibaba seeks to reduce its reliance on the domestic Chinese market.

During the quarter, Alibaba continued to invest heavily in technological innovation, focusing on enhancing its AI, machine learning, and data analytics capabilities.

These investments are aimed at driving long-term growth and improving operational efficiency across all business units. Additionally, Alibaba’s commitment to building a robust technological infrastructure reflects its strategy to maintain a competitive edge in the rapidly evolving digital economy.

Financial Highlights

In the June quarter of 2024, Alibaba Group reported a revenue of RMB243.2 billion, a 4% year-on-year increase. While this growth reflects the company’s strong positioning in cloud computing and international commerce, the overall revenue expansion was moderate, indicating potential challenges in its core domestic market.

Net income for the quarter declined to RMB34.3 billion, reflecting a significant impact from increased spending on technology development and international market expansion. This decline suggests that while Alibaba invests for future growth, these investments weigh on current profitability.

Alibaba’s adjusted EBITDA stood at RMB52.8 billion, showing resilience in operational efficiency despite broader market challenges. Free cash flow was robust at RMB31.9 billion, underscoring the company’s strong cash-generating ability and providing a buffer for continued investment in growth initiatives.

Alibaba’s Strategic Investments Yield Mixed Results in Q1 2024

Alibaba Group Holding Limited reported a robust performance for the quarter ending March 31, 2024, showcasing a strategic rebound and growth across its diverse business segments.

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.

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.

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

This advancement, spearheaded by the collaborative efforts of Professor Zhao Guoguang’s team from Capital Medical University Xuanwu Hospital and Professor Hong Bo’s team from Tsinghua University School of Medicine, represents a global first in the application of implantable extradural electrode brain-computer interfaces (BCI) for assisting patients with cervical spinal cord injuries.

On October 24, 2023, the teams successfully completed the first clinical implantation trial of the wireless, minimally invasive BCI device, NEO (Neural Electronic Opportunity), embedding two coin-sized processors into the skull of a patient with complete cervical spinal cord injury caused by a car accident. This 54-year-old male patient had been living with quadriplegia prior to the procedure.

Utilizing near-field wireless power supply and signal transmission, the NEO device operates without the need for an internal battery, a significant technological leap over existing BCI technologies, including those developed by high-profile companies like Neuralink.

The patient was able to return home ten days after the surgery, where the external device powers the internal mechanism through the scalp and receives neural signals to facilitate brain-computer communication.

After three months of home rehabilitation training, the patient demonstrated the ability to autonomously drink water using a pneumatic glove driven by brain activity, achieving a grasp accuracy rate of over 90%.

Both the ASIA clinical score and sensory evoked potentials showed improvements, indicating a positive impact on the patient’s spinal cord injury.

This clinical trial, which received approval in April 2023 and was registered internationally and domestically for implantable medical device clinical trials, showcases the potential of BCI technology not only in aiding patients with neurological diseases such as ALS, spinal cord injuries, and epilepsy but also in advancing human cognitive abilities through brain-machine integration.

The efforts of Professor Zhao Guoguang’s and Professor Hong Bo’s teams underline China’s commitment to leading in the field of medical technology, contributing significantly to the global understanding and application of BCI technology.

This milestone not only enhances the quality of life for individuals with severe disabilities but also opens new pathways for the treatment of neurological disorders and the development of advanced neurotechnological applications.

Focusing on the Chinese market, investments in AI are projected to hit $38.1 billion by 2027, accounting for nearly 9% of the global investment pool.

In recent years, rapid technological advancements and market maturity have spurred Chinese companies to accelerate their intelligent upgrades. The emergence of large AI models at the end of 2022 provided a crucial overtaking opportunity for new entrants to the market.

Previously, the widespread adoption of large models was limited, creating bottlenecks as companies sought to transition AI technologies from pilot trials to full-scale applications, hampered by a fragmented talent and resource landscape.

The introduction of large AI models has significantly lowered the barriers to technology adoption and enhanced AI’s generalization capabilities, fostering the development of innovative applications and solutions. The model-as-a-service business model could potentially reshape the current market dynamics, leading China into a new era of digital business development.

IDC’s recent release, “IDC FutureScape: Worldwide AI and Automation 2024 Predictions – China Implications,” offers vital insights for IT and business decision-makers responsible for leveraging solutions and directing AI and automation expenditures.

The report, outlining ten predictions for the AI and automation markets from 2024 to 2029, assesses each forecast based on its impact and time frame. These predictions are designed to guide strategic planning, adjustments, and resource allocation in the AI and automation spheres for IT and business leaders.

Key Predictions for China’s AI and Automation Market

1. GenAI Security and Governance: By 2025, 40% of cloud and software platform providers will integrate GenAI security and governance with their primary services, tripling the reduction in GenAI-related risks.
2. Regulatory Divergence: AI regulatory differences across regions will pose significant challenges for multinational companies by 2026, increasing the time and effort required to manage sensitive issues by 20%.
3. Digital Assistants Over Software Interfaces: By 2027, GenAI digital assistants will replace 20% of enterprise software interfaces, playing an increased role in business processes.
4. Outcome-Focused Automation: Following GenAI technology attention, 50% of enterprises will focus on the outcomes of GenAI rather than the implementation of specific technologies by 2024.
5. AI in IT Expenditure: By 2026, China’s top 500 companies will allocate over 30% of their core IT spending to AI, accelerating product innovation and process improvement at a double-digit rate.
6. Stabilizing Economic Impact of AI: By 2028, the overall economic impact of AI will stabilize as companies address fundamental issues and refocus resources on innovation and new business opportunities, promoting steady growth.
7. Practical Application of Automated Knowledge Retrieval: Two-thirds of enterprises will use a combination of generative AI and RAG for domain-specific automated knowledge retrieval by 2027, improving decision efficiency by 55%.
8. Disruptive Business Models: By 2025, 50% of China’s top 500 companies will leverage innovative business models to double the profit potential of generative AI.
9. Impact of AGI: By 2027, 25% of China’s top 500 companies will experiment with AGI systems, heralding transformative societal impacts along with significant opportunities and challenges.
10. Reversal in Chip Revenue: By 2028, spending on accelerator chips (GPUs, FPGAs, ASICs, or ASSPs) versus traditional CPUs will invert, reaching a 55/45 ratio.

China’s AI Market Booms with Focus on Professional Services, Government, and Finance

This achievement signifies DingTalk’s dominance in the communication platform sector and reflects China’s accelerating digital transformation.

The platform’s president, Ye Jun, announced this milestone, emphasizing DingTalk’s commitment to enhancing workplace productivity through cutting-edge technological integration.

The recent introduction of an AI agent, powered by Alibaba Cloud’s Tongyi Qianwen, into the platform, is a testament to this commitment. This AI agent, designed to serve as a versatile workplace assistant, can perform various tasks ranging from drafting documents to facilitating business trip bookings on external platforms.

DingTalk’s customer demographics reveal a diverse clientele, with small and micro enterprises forming 58%, medium-sized businesses at 30%, and large corporations at 12%.

As of March 2023, DingTalk had already garnered over 100,000 businesses subscribing to its paid software services, highlighting its expansive reach across various business sizes and sectors.

Integrating AI into DingTalk marks a significant shift in the platform’s capabilities.

Users, both individuals and enterprises, can now customize their AI assistants to perform tasks tailored to their specific workplace needs. This level of customization allows for a more efficient and personalized user experience.

For instance, corporations can leverage AI agents for intricate tasks like recruitment and financial analysis, whereas individual users can utilize them for routine tasks.

Furthermore, DingTalk’s expansion of its corporate user base to 25 million, with 28 million daily active paid users and 120,000 paying enterprises, indicates its growing influence in the digital workspace sector.

The platform’s strategic focus on generative AI and the planned launch of a marketplace for AI agents, expected to grow to over 10 million in the next three years, positions DingTalk at the forefront of AI integration in business communications.

DingTalk also boasts a low-code platform, enabling the rapid development of custom applications for various industries. This feature has proven especially beneficial for sectors like education and large-scale event management.

For instance, schools and universities have adopted DingTalk for online assignment distribution and grading tasks. The platform has also been customized for major events like the 19th Asian Games in Hangzhou, streamlining communication and task management for the organizing committee and participants.

DingTalk’s recent achievements and ongoing innovations firmly establish it as a pivotal player in China’s digital landscape, setting new standards for workplace communication platforms worldwide.

Alibaba’s DingTalk user profile

The brand recognition of HarmonyOS has been steadily increasing year by year. From 50% in February 2021, it has risen to 85% in June of this year.

Currently, more than 700 million Harmony ecosystem devices are in use. These devices include smartphones, wearables, car cockpits, smart screens, tablets, smart home, headphones, and more.

In addition, the number of HarmonyOS developers has exceeded 2.2 million, with API calls reaching 59 billion times per day.

Regarding multi-device collaboration, there has been a 32% growth in fitness and health recording, and mobile application downloads have increased by more than 33%.

It is reported that Huawei began planning its proprietary operating system “HarmonyOS” in 2012 and officially released HarmonyOS in August 2019. After several iterations, HarmonyOS has gradually been applied to Huawei products such as smartphones, TVs, watches, and intelligent cockpits.

Huawei’s focus on HarmonyOS is a significant aspect of its strategy to create a complete ecosystem beyond smartphones. By covering various types of devices, such as wearables, car systems, and smart home appliances, HarmonyOS aims to provide a seamless user experience across the spectrum of everyday technologies.

The increase in brand recognition and the vast number of devices operating on HarmonyOS signal a positive trend for Huawei’s ambitions. With a growing developer community and a clear increase in application downloads, Harmony’s ecosystem seems to be maturing.

These achievements are essential for Huawei, particularly as international tensions and restrictions have impacted its operations in several markets. The development and success of HarmonyOS can give the company more control over its technology and reduce its dependence on foreign operating systems.

The latest updates shared during the Huawei Developer Conference 2023 mark a new milestone in the growth of HarmonyOS.

With significant advancements in multi-device collaboration and a surge in the developer community, Harmony is positioning itself as a comprehensive and versatile operating system. The continued expansion of Harmony’s ecosystem will likely play a crucial role in shaping Huawei’s future, strengthening its presence in various technological domains.

The fourth quarter of 2021 saw a year-on-year increase of 33% to US$7.7 billion. Canalys predicts that by 2026, the scale of the cloud infrastructure market in the mainland will reach US$85 billion, and the five-year compound annual growth rate will be 25%.

Visit here for AI Cloud market share.

Alibaba Cloud remains the leader with a 37% market share, ranking first in the cloud market in 2021, Huawei Cloud and Tencent Cloud second and third respectively, and Baidu AI cloud fourth. In 2021, the four cloud providers jointly accounted for 80% of the market share.

Huawei Cloud reached an 18% market share in 2021, with an annual growth of 67%. The rapid growth has widened the gap between Huawei cloud and Tencent Cloud, ranking second in the market.

Tencent cloud, the third-largest provider, accounted for 16% of the market share, an increase of 55%. Tencent Cloud grew steadily as a whole in 2021, with diversified growth in multiple sectors.

Baidu AI Cloud, the fourth-largest vendor, accounted for 9% of the market share, an increase of 55%.

Top 10 forecasts for China cloud computing market 2021-2024

China’s Public Cloud Services Market to Grow to 10.5% of global share by 2024

In 2020, the overall market size of global public cloud services (IAAs/PAAS/SaaS) reached US$312.42 billion, with a year-on-year growth of 24.1%, according to IDC.

The overall market size of China’s public cloud services reached US$19.38 billion, with a year-on-year growth of 49.7%, with the highest growth rate in all regions of the world. IDC predicts that the global share of China’s public cloud service market will increase from 6.5% in 2020 to more than 10.5% by 2024.

Check out market share of IaaS and PaaS markets in China here.

CIW Subscribers (Annual) can download the chart here to see the comparison of the cloud platforms in China.

Download China Internet Overview whitepaper here.

The leap in robot density globally has been significant, more than doubling in the past six years. In Asia, this increase is marked by an impressive compound annual growth rate (CAGR) of 18% since 2016, largely due to significant installations of robots.

In 2021, South Korea held the top spot globally with a record 1,000 industrial robots per 10,000 workers, bolstered by its renowned electronics and automobile industries.

Singapore and Japan followed closely, with 670 and 399 robots per 10,000 workers, respectively.

Meanwhile, Germany remained Europe’s biggest robot market, and China distinguished itself as the world’s fastest-growing robot market. Despite a slight increase in robot density from 2020 to 2021, the US ranked ninth globally.

Top 10 forecasts of China’s manufacturing industry

The White Paper sees Web3, a modern scientific and technological culmination, as the inevitable trend for the future of the internet industry. It encompasses immersive interactive experiences and a fusion of virtual and physical realities.

This scope includes a blend of sensory experiences and economic activities in the physical and virtual world, covering the Metaverse and Web3.

According to Star Mine data from Cailian Press, 46 listed companies, including Wanxing Technology and Tianyu Digital Science, are already positioning themselves in the Web3 space.

The White Paper identifies generative artificial intelligence, XR interaction terminals, and content creation tool platforms as the research hotspots of the Web3 industry.

Technology giants domestically and globally, including Apple, Meta, Microsoft, Google, Nvidia, Baidu, ByteDance, and Tencent, have been actively positioning themselves and leading industry development.

New applications such as digital personas and digital collections are rapidly developing, with innovative entities exploring practical applications.

Yu Jiajing, Executive Director of the China Mobile Communications Federation Metaverse Industry Committee, believes that Web3 is the most critical new species of the next digital economic era.

The digital economy, a more advanced stage of economic development and a future global direction, becomes a critical mechanism for stabilizing economic growth and achieving economic recovery in the context of global economic downturn pressure.

Web3, according to Yu, is a new value internet system that not only inherits the previous internet ecosystem but also further upgrades it with the autonomy of personal data ownership. It will create application fields that were not present in Web1.0 and Web2.0. For instance, prototypes appearing in the Metaverse will rapidly develop in Web3.

Wang Zhiwu, CEO of Yuanjing Technology, believes that the value of Web3 lies in better meeting people’s needs, improving production efficiency, promoting economic development, and advancing social progress.

The development of Web3 will also bring more business opportunities and innovative spaces, providing more possibilities for corporate development.

In the view of Wang Zhiwu, the positioning of Web3 by Tianyu Digital Science is to understand better consumer needs through the application of new technologies such as artificial intelligence, improve the quality and efficiency of products and services, achieve digital transformation, and further enhance the core competitiveness of enterprises.

The regulatory landscape in China is poised to evolve as Web3 continues to mature. On the one hand, the government is likely to encourage Web3 applications aligning with its technological innovation, economic growth, and social development objectives. On the other hand, it will also aim to mitigate risks associated with data privacy, cybercrime, and financial stability.

In response, Chinese companies investing in Web3 technology must carefully navigate this balance between innovation and regulation. It’s expected that companies will need to collaborate closely with regulators, comply with applicable laws and regulations, and possibly contribute to the development of new standards and guidelines for Web3.

Furthermore, in the spirit of decentralization that underpins Web3, Chinese regulators may have to consider regulations that ensure fair competition, protect user rights, and prevent the concentration of power or resources.

China’s approach to Web3 regulation, like the technology itself, is still in the early stages of development. As Web3 technologies mature and their societal impact becomes more apparent, Chinese regulations will also need to evolve accordingly, shaping the future of the country’s digital economy.

From the IaaS + PaaS market perspective, the first half of 2021 increased by 43% (vs. 48.6% in H1) year-on-year, down 6% from the first half of 2021, but still maintained the highest growth rate in the world.

In the next five years, China’s public cloud market will continue to grow at a compound growth rate of 30.9%. By 2026, the market is expected to reach US$105.76 billion, and the global share of China’s public cloud service market will increase from 6.7% in 2021 to 9.9%.

The competition in China’s cloud computing extends from focusing on infrastructure to the competition of comprehensive cloud platform capabilities. In addition to increasing investment in infrastructure construction at the IaaS layer, cloud vendors also continue to strengthen chip self-research capability, improve PaaS capability (data processing capability, cloud-native, low code development, etc.), build leading, fast, and perfect solution service capability and implementation and delivery ecology and develop a more comprehensive cloud platform.

The digital transformation of government and enterprises has fully entered the cloud era.

In the first half of 2021, the State Council put forward decisions on deepening the integrated development of new-generation information technology and manufacturing industry and creating new advantages of the digital economy.

Also read: the latest on China’s public cloud market

Local governments and regulators have issued relevant technical specifications and application standards of cloud computing platforms, actively promoted the all-around and in-depth integration of digital technology and social development, and accelerated the application and implementation of digital technology in various industries.

Cloud computing has become the basis and hub of digital transformation. Under this background, there is a huge demand and market space for cloud services in the field of government and enterprises.

Cloud vendors have released their own cloud-native strategies to seize the opportunity from the aspects of products, partners, standard-setting, talent cultivation, and so on.

Industry digitization and low-carbon development have become the mainstream trend. In terms of themselves, cloud vendors continue to improve product energy efficiency and promote the low-carbon development of the cloud industry by investing in innovative energy-saving technologies.

In terms of industry empowerment, cloud manufacturers invest in power electronics technology and integration and innovation with digital technology, promote the development of clean energy and the digitization of traditional energy, bring digital technology to each industry, and support all walks of life to promote low-carbon development through digitization.

In both IaaS and Iaas+PaaS markets, the competition is tight. The leading vendors Alibaba Cloud, Huawei Cloud, and Tencent Cloud have firmly taken the top three positions and jointly have 60% of the market share.

Cloud vendors in the network operator camp grew rapidly, with independent research and development and cloud network integration as their keywords.

The fourth ranked China Telecom Tianyi Cloud formed a full-stack cloud product system by the end of 2020, further deepened to the vertical industry and territory in 2021, sank the resource and service team to the local city, and the local cloud business grew rapidly, creating a new growth level for Tianyi Cloud.

Pricing only the 2nd most important in China for choosing cloud vendors