In the slipstream of DeepSeek, China AI 'tigers' and 'dragons' bask in the global limelight

China's artificial intelligence industry has welcomed "the DeepSeek Moment" as a tipping point for global recognition of domestic AI players.

The explosive popularity of DeepSeek, an AI startup whose conversational models rival US-based OpenAI's GPT-4, opens the door to other breakthroughs in China's AI sector, from open-source, multi-modal systems to ambitious initial public offerings.

The sector is demonstrating its capacity to innovate, scale up and compete on the world stage.

Just this week, Shanghai-based StepFun released the world's largest open-source video generator, offering features similar to OpenAI's Sora model.

Wang Tiezhen, China head of Hugging Face, a leading open-source platform powering AI innovation where developers globally collaborate to build and share, dubbed the new system "the next DeepSeek," and Clément Delangue, co-founder and chief executive of Hugging Face, re-posted Wang's assessment on X.

Besides DeepSeek, there are six "AI tigers" in China, including StepFun and MiniMax based in Shanghai. They are coming up with promising AI features, though they are small in comparison with industry giants like Alibaba, ByteDance and Tencent.

Global recognition

StepFun on Tuesday unveiled two open-source, multi-modal models, including an open-source voice-interaction model and Step-Video-T2V, a 30-billion-parameter video generation model. Capable of producing 204-frame, 10-second and 540-pixel resolution videos with cinematic coherence, the model outperforms rivals in handling complex motion, bilingual inputs and aesthetic consistency.

With its open-source method, StepFun invites developers worldwide "to collectively push technical boundaries and industrial applications."

The startup's management and technical team are largely drawn from Microsoft Bing and Google, Shanghai Daily learned on a visit to StepFun's office in Xuhui District.

Another "tiger" MiniMax, also headquartered in Xuhui, had its video-generation tool Hailuo hit top global traffic rankings last month, surpassing OpenAI's Sora in second place. The success followed DeepSeek's going viral.

"DeepSeek's global breakout shattered the myth that China lags in foundational models," Liu Hua, MiniMax's vice president, said. "Overseas developers now see that the gap with US leaders like OpenAI isn't insurmountable."

Liu highlighted his firm's unconventional strategy: a youth-driven research and development team with over a third of employees aged 30 or less, and a focus on algorithm innovation.

A paradigm shift

DeepSeek's success has indeed been a turning point. Its conversational AI models, which combine reinforcement learning and synthetic data techniques, challenged assumptions about China's reliance on Western research.

Like its Western competitors ChatGPT, Meta's Llama and Claude, DeepSeek uses a large-language model – massive quantities of texts to train everyday language use. But unlike Silicon Valley rivals, DeepSeek is open-source, meaning anyone can access the app's code, which was developed at about a 10th of the cost of Western models.

DeepSeek democratizes access to high-performance models, redefining global benchmarks and attracting overseas partnerships, industry officials said.

Former Google CEO Eric Schmidt described DeepSeek's rise as "a turning point." Some opinion leaders have called it "AI's Sputnik moment" – a reference to the Soviet satellite launch that sparked the Cold War space race.

China's AI innovators and "tigers" are leveraging open-source advocacy, niche expertise and youthful creativity to carve a space in the global arena.

WeChat, China's top social and messaging app, with over 1.3 billion users, has just begun testing an AI-powered search feature integrating the DeepSeek-R1 model.

The growing power of AI startups like DeepSeek may reshape the market landscape for both industry newcomers and current market leaders like Microsoft and Baidu, said research firm International Data Corp.

Hangzhou-based Manycore Tech, developer of the AI-powered interior design platform called Coohom, has filed for a Hong Kong IPO, forecasting robust revenue growth in its prospectus. Its overseas revenue remains modest but is growing. It accounted for 7.4 percent of total income in the first nine months of 2024, compared with 6 percent in 2023.

Manycore, DeepSeek, Unitree Robotics and "Black Myth: Wukong" developer Game Science are among the so-called "six dragons" from Hangzhou, a group rapidly gaining global recognition. Both "dragons" and "tigers" are animals symbolic of power, luck and fortune in Chinese culture.

Electric vehicle applications

MiniMax's Liu poses the question: Is it possible for China's AI firms to draw lessons from the booming electric vehicle industry?

He is referring to Chinese electric carmakers who have achieved global dominance through vertical integration and niche innovation.

China's passenger car exports last year rose 23 percent from a year earlier to 6.4 million units, according to the China Passenger Car Association

Electric vehicle manufacturers BYD and Geely made it to the list of the top 10 global automakers in terms of sales in 2024, an unprecedented phenomenon. BYD overtook US-based General Motors and Ford, to claim fifth place, and Geely ranked 10th.

By blending open-source collaboration, classified specialization and cost-effective models, DeepSeek and "Chinese tigers" are crafting a blueprint for global influence.

StepFun's new AI voice models may be adopted by Geely for in-car voice systems. MiniMax dominates AI-driven voice cloning, powering apps like Talkie, which boasts millions of monthly active users in the US market.

It all sounds like the successful script of Chinese electric-carmakers like BYD and Nio. They have leveraged cost efficiency and supremacy in battery technology to redefine "Made in China." AI firms are targeting similar paths of excellence.

However, Liu is still cautious.

"It's too early to say that Chinese AI outperforms US-based AI," he told Shanghai Daily. "But we have found hope after DeepSeek's success."

It's important to remember that all Chinese firms, including DeepSeek, face the challenge of strict export controls on technology, like US chip restrictions. However, China's AI players are parlaying constraints into advantages. After all, chips can be regarded as the "batteries of AI."

Chinese startups, including StepFun, MiniMax and several dozen AI firms, will attend Global Developer Conference in Shanghai that opens Friday in Xuhui. Policies, deals and partnership will be announced at the event.