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TO ACCESS MORE INFORMATION ON THE AI INDUSTRYIN CHINA, PLEASE CONTACT DX@DAXUECONSULTING.COM
dx@daxueconsulting.com +86 (21) 5386 0380
July. 2019
HONG KONG | BEIJING | SHANGHAI
www.daxueconsulting.com
1
By DAXUE CONSULTING
THE AI ECOSYSTEM IN
CHINA
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
OVERVIEW
I. INTRODUCTION
II. MACHINE LEARNING
III. NATURAL LANGUAGE PROCESSING
IV. EXPERT SYSTEMS
V. ROBOTICS
VI. VISION
VII. SPEECH
VIII. CASE STUDIES
IX. CHINESE AI COMPANIES
2
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
INTRODUCTION
3
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
The history of artificial intelligence (AI) in China
4
• Along with the gradual maturity of China’s artificial intelligence (AI) technologies in recent years, many industry
giants increased their investment in the market.
• The applications of AI technologies also expanded.
• AI has broad market prospects in China.
2011
Since the development of big data, cloud
computing, Internet of things and other
information technologies, AI started to
enter a rapid growing stage.
2012
During this year, the
security market was
flooded by computer vision
startups.
2018
In 2018, AI ushered in the first year of
commercial applications in China.
More than 1,000 AI-related
companies in China.
2015
‚Chinese Congress on Artificial
Intelligence 2015‛ in Beijing gave
the direction of AI-related industries
in China.
AI was included in the Chinese
government report, as a
national strategy in China.
2017
Source: http://dy.163.com/v2/article/detail/DRJEA2SB05312F1A.html
http://www.js.xinhuanet.com/2019-05/20/c_1124518281.htm
http://finance.sina.com.cn/chanjing/cyxw/2017-10-06/doc-ifymrqmp9427654.shtml
© 2019 DAXUE CONSULTING
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5
Applications
Basic
Technology
Healthcare Intelligent robots Autonomous Drones Education
Speech
recognition
Sensors
Image
recognition
Mapping/Semantic
analysis
Others
Integrated
circuits
Cloud, data
and algorithms
Comprehensive
companies
(companies working in
all 3 sectors above)
Finance Security Logistics City Retail
Factories Personalized
promotions
Marketing Virtual
assistants
Others
The main sectors covered by AI
China’s Artificial Intelligent companies
 AI covers a wide range of segments in China, including basic layer (base parts and algorithms of AI products),
technology layer (technologies support AI products) and applications (AI products in different industries).
© 2019 DAXUE CONSULTING
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Market size of AI technology in China
Source: https://bg.qianzhan.com/trends/detail/506/190417-a2f95525.html
6
 China's artificial intelligence industry is becoming one of the most important markets in the nation. However,
the market of AI in China is not mature yet, there is still a large space for development.
 In 2018, the size of China‘s artificial intelligence market reached 33.9 billion RMB and the CAGR was more than
44% from 2015 to 2018. By 2020, the market size is expected to reach 71 billion RMB.
11.24
14.19
21.69
33.9
50
71
0
10
20
30
40
50
60
70
80
2015 2016 2017 2018 2019E 2020E
China's artificial intelligence market size
(billion RMB, 2015-2020)
© 2019 DAXUE CONSULTING
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Distribution of AI companies by industries
 The AI-related companies established in 2018 mainly belong to the security, speech interaction and healthcare
industries. These areas have strong market demand and mature technology applications
 A large portion of China's AI market share is from speech, computer vision and natural language processing
technology.
7Source: http://www.askci.com/news/chanye/20190219/1707171141931.shtml
http://www.199it.com/archives/748996.html
34.90%
24.80%
21.00%
11.30%
8.00%
China's AI market share by different industries
(2017)
Computer Vision Speech
Natural Language
Processing
Algorithm
Hardware
related to AI22
4
5
5
5
7
8
8
10
10
16
Others
Robotics
Retail
AI chip
Autonomous
SLAM
Finance
Image recognition
Healthcare
Speech interaction
Security
The number of AI-related companies established in 2018 by
industries
© 2019 DAXUE CONSULTING
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Distribution of AI startups in different regions
AI companies are mainly concentrated in China‘s economically developed first and second-tier cities and coastal
areas. Inland provinces are trying to grasp the development boom as well.
8
Source: http://www.199it.com/archives/748996.html
http://www.ccidwise.com/uploads/soft/181220/1-1Q220152528.pdf
https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/inno
vation/deloitte-cn-innovation-ai-whitepaper-zh-181126.pdf
Top 5 cities ranked by number of AI
companies.
0-10
100-20
200-100
>200
20-10
1 Beijing 395 AI companies
Number of AI companies by provinces
(2018)
Sichuan province has the
most AI companies (20) in
southwest China
 Beijing, Shanghai, Shenzhen and
Hangzhou are ranked among the Top20 in
the world for quantity of AI companies.
 Beijing had the most AI companies
because its workforce talent, industrial
resources and capital were superior to
other regions and cities.
2 Shanghai 210 AI companies
3 Shenzhen 119 AI companies
4 Hangzhou 63 AI companies
5 Guangzhou 46 AI companies
© 2019 DAXUE CONSULTING
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Investments
 In 2018, the investment value in China’ s AI industry reached 131.1 billion RMB, increased by 67.7 billion RMB
compared to 2017. The scale of investment ranked first in the world.
 Although the growth of AI financing events slowed down in 2018, the total investment value still increased
significantly. Large financing events occurred frequently and capital was more concentrated in leading companies.
9Source: https://www.iimedia.cn/c400/63429.html
5.8
9.8
26.8
37.2
63.4
131.1
25
159
345
487
518
597
0
100
200
300
400
500
600
700
0
20
40
60
80
100
120
140
2013 2014 2015 2016 2017 2018
Investment value and the number of financing events in China’s AI industry
(2012-2018)
Investment value (Billion RMB) Number of financing events
Investmentvalue(BillionRMB)
Numberoffinancingevents
© 2019 DAXUE CONSULTING
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Why China’s AI is developing so fast ?
10
The ubiquity of the mobile Internet
China has a massive base of smart-phone users.
Mobile internet users create large amounts of data,
which is the fuel that AI technology consumes to
develop.
By using apps on smart-phones, individual users can
easily control products, such as smart-speakers and
clearing-robots.
Big Data and computing power
The fast-growing big data and cloud computing
effectively improve machine learning and cognitive
ability.
In recent years, especially in specific application fields,
there has been a great development in machine
learning usage, which is a precondition for the
creation of new AI technologies.
© 2019 DAXUE CONSULTING
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Tech parks in China
In order to promote AI’s development, the Chinese government launched a series of AI industrial parks in the eastern
and southern parts of the country. In 2018, China had more than 60 AI tech parks.
Industrial parks usually have preferential policies to attract AI companies, such as rental subsidies and tax concessions.
11
Cities AI industrial parks
Beijing
Zhongguancun Software Park, Mentougou AI
Park, Vpark, etc.
Shanghai
Qingpu District AI Park, Linggang AI Industrial
Park, etc.
Hangzhou
Binjiang AI Industrial Park, Hangzhou AI Town,
etc.
Shenzhen
Shenzhen Bay AI Tech Park, Longhua AI
Industrial Park, etc.
Guangzhou
Nansha AI Industrial Park, Guangzhou
International AI Study Park, etc.
Nanjing
AI demonstration zone, Xingang High-tech AI
Base, etc.
Number of China’s AI tech parks by
provinces (2018)
Beijing
had 5 AI tech parks
Guizhou Province
had 6 AI tech parks Guangdong Province
had 7 AI tech parks
Shanghai had
6 AI tech parks
Source:https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/i
nnovation/deloitte-cn-innovation-ai-whitepaper-zh-181126.pdf
https://doc.mbalib.com/view/9e167725daadbe6dde85f8e6b04c9ac4.html
© 2019 DAXUE CONSULTING
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12
On Zhihu, the most common questions and posts about AI consist of the following:
• How will AI change people's lives in the future ?
• Which industries will be replaced by AI in the future ?
• How to protect personal privacy when using AI products ?
With the rapid development of AI, what should we do about
our personal privacy?
With the development of AI and the Internet, many smart
devices can record personal information. Especially smart voice
devices, which can record anything you say.
According to industry insiders, manufacturers of smart devices
collect and retain as much data as possible to improve their
products, but they also sell the data to advertisers for money.
Zhihu
Zhihu is the first Q&A website in China, and has transitioned to a social media
sharing platform gathering more than 100 million answers on various topics.
The platform is especially relevant to reach higher-, well-educated social classes
Chinese perceptions of AI on Zhihu
In which industries workers will be replaced by AI in the
next 30 years?
• What will AI replace
• How will AI change industries
• AlphaGo versus Lee Sedol
• AI and art
• AI and healthcare and academia
© 2019 DAXUE CONSULTING
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13
Positive perceptions on Weibo & Wechat:
• AI can help to improve traffic conditions and reduce the
occurrence of road crimes.
• AI can improve the diagnosis and treatment efficiency in
the healthcare industry
• AI can promote the innovation of teaching methods
Weibo
Translation
AI provides more chances for the medical industry
The deep integration of artificial intelligence, big data, 5G and
other technologies in the medical industry greatly improved the
quality of medical service and profoundly changed the mode and
concept of medical service.
12 6 55
Wechat
62
Translation
AI makes traffic management smarter
Intelligent road traffic control system can monitor the traffic
flow in real time. It can also automate traffic lights based on
traffic flow to reduce congestion.
Positive perceptions of AI
Wechat
Wechat is the #1 social media in China and an absolute must-have for a
market entry promotion. It accounts for over 1 billion active users.
Weibo is China’s biggest social media network that was launched in 2009.
Over the past years, it has transformed from a Chinese equivalent of
Twitter to a comprehensive platform.Weibo
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14
AI is the greatest threat to human civilization. It could lead to
social unrest and unemployment. More forward-looking
regulations are needed, instead of reacting passively. Otherwise,
if one day robots kill people, we won’t know how to fix it.
Fears of AI on Weibo & Wechat:
• AI could cause social problems, such as mass
unemployment in some industries.
• AI brings challenges to personal info protection.
• Autonomous driving technology cannot deal with
emergencies with the same urgency as humans.
Weibo Wechat
Users tend to overlook the dangers to privacy and personal data
posed by new technologies. Intelligent applications become an
indispensable tool in people's life. They collect a lot of personal
information to push accurate marketing information to users
while providing life services. - China Telecommunications Trade
Wechat
Wechat is the #1 social media in China and an absolute must-have for a
market entry promotion. It accounts for over 1 billion active users.
Weibo is China’s biggest social media network that was launched in 2009.
Over the past years, it has transformed from a Chinese equivalent of
Twitter to a comprehensive platform.Weibo
Fears of AI
293 413 198 125
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MACHINE LEARNING
15
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Definition
What is machine learning?
16
“Machine learning”
Machine learning is an application of artificial
intelligence that provides systems the ability to
automatically learn and improve from experience
without being explicitly programmed.
Types of algorithms
Supervised learning
Unsupervised learning
Reinforcement learning
Feature learning
Sparse dictionary learning
Anomaly detection
Association rules
1
2
4
3
5
7
6
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Main players (1/2)
The top 4 Chinese open-source machine learning platforms
17
 The 1st Chinese open source machine
learning platform.
 Deep learning platform that supports multi-
GPU and multi-machine parallel computing.
 Applications include OCR, autopilot, precise
information recommendations for user,
image recognition, virus detection,
translation.
 Applications: voice & image recognition,
urban traffic computing, enterprise cloud
computing, manufacturing, healthcare.
 General learning frameworks will be
provided and libraries of algorithms will be
opened up in the future.
1. Baidu: PaddlePaddle 2. Alibaba: DTPAI
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Main players (2/2)
Chinese TOP4 open-source machine learning platforms
18
 High performance computing framework for
large scale data, very low barriers to use
 Applications: Tencent video, Tencent social
advertising, user portrait mining
 Service target: enterprises with big data
processing needs, rather than individual
developers (which PaddlePaddle does)
 The only open-source machine learning
project that started in Chinese academia
 Applications: automatic face recognition
 Lowered hardware threshold of face
recognition to a single Intel i7
3. Tencent: Angel 4. Seetatach
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Where is machine learning used (1/2)
19
1. Online Search
• Perhaps it is the most famous application of machine learning. The program
observes how the user responds to the results when the latter uses a search
engine.
• How it works: If the user chooses the top-result, and remains on that webpage,
the machine learning program assumes that the user just found what he or she
was looking for. If the user chooses a result on the second page of the search
engine, then, the program surmises that the search engine could not find the
results the user was looking for.
2. Healthcare
Machine learning algorithms can process more information and spot more patterns
than their human counterparts. Additionally, machine learning can be used to
understand risk factors for disease in large populations.
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Where is machine learning used (2/2)
20
3. Smart Cars
A smart car can not only integrate into the Internet of Things (IoT), but also
learn about its owner and its environment. It might adjust the internal settings —
temperature, audio, seat position, etc. — automatically based on the driver. In
addition to autonomous driving, it can report and even fix mechanical problems,
and offer real time advice about traffic and road conditions.
4. Data Security
Malware is a huge and growing problem. Their learning model has only 2–10%
variations, and we can predict which files are malware with great accuracy. In
other situations, machine learning algorithms can look for patterns in how data in
the cloud is accessed, and report anomalies that could predict security breaches.
© 2019 DAXUE CONSULTING
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Product analysis (1/2)
21
Dark factory
NIO
 NIO is a Chinese electric smart car producer. It
uses machine learning to build its own autopilot
system. In June 2019, its second generation of
autonomous cars entered the market.
 Machine learning is the core of the autopilot
systems. After becoming a hot topic, also some
of the more established Chinese car companies
started to develop Autopilot technology. Autonomous car (NIO
Pilot)
 Foxconn, the world‘s largest foundry, used
robots for production in China. It currently has 10
fully automated production lines.
 At Foxconn, some smartphone-component
factories produce goods without lights. They are
referred to as "dark factories", as they are fully
automated and require no human presence on-
site. This is possible due to machine learning and
AI equipment.
Source: https://www.auto-testing.net/news/show-100773.html
http://www.elecfans.com/d/941861.html
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Financial institutions increasingly rely on machine
learning technologies.
Product analysis (2/2)
22
 In 2017, the Guangxi province people's hospital
started to use an esophageal cancer screening
system developed by Tencent to assist the
doctor's clinical diagnosis, with an accuracy as
high as 90%.
 The Chinese AI company iCarbonX built a big
data platform specialized on health management,
called MiWo (觅我). The platform can analyze
users' health condition based on aspects like:
physical activity, diet and skin condition.
 Ant Financial is one of China's financial
service agencies. Through machine learning
in Micro credit and Credit Pay business, the
false trading rate was reduced to 1/10th the
previous rate. Alipay Document Audit System,
based on machine learning, shortens
document checking time from 1 day to 1
second.
Esophageal cancer screening
system
Hospital
Finding business
opportunities
Personalized
service
Preventing
bank fraud
The application of machine
learning in financial institutions
Source: https://36kr.com/coop/toutiao/5051729.html#
https://www.sohu.com/a/232635161_99914564
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NATURAL LANGUAGE PROCESSING
23
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Definition
What is natural language processing (NLP)?
24
“Natural Language Processing”
Natural language processing (NLP) is a subfield of artificial
intelligence concerned with the interactions between
computers and human (natural) languages, in particular
how to program computers to process and analyze large
amounts of natural language data.
Voice recognition
Natural language understanding
Natural language generation
Types
Parsing
Text categorization
Information retrieval & extraction
Question answering
Source: https://www.sas.com/en_hk/insights/analytics/what-is-natural-
language-processing-nlp.html
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In Nov 2018, Grand Data raised 160 million RMB in
series B funding. It set a new financing record in the
field of natural language processing in China
By June 2017, China's total investment value for the
natural language processing industry reached 12.2
billion RMB, which ranked second among all AI
fields. 92 natural language processing startups
were founded during 2017.
Market size and investments
25
12.2 billion
RMB
92 startups
Over 200
million
RMB
Cumulative
financing
amount
Xiaomi technology co. LTD applied Xiaoai (virtual
assistant based on natural language) to its smart
devices such as phones, audio equipment,
television sets, etc. By October 2018, more than 100
million smart devices were activated and there
were more than 34 million monthly active users.
The revenue of IFLYTEK‘s B2C business based on
natural language processing reached 2.52 billion
RMB in 2018, up 96.54% compared with 2017.
34 million monthly
active usersMI
100 million smart
devices
iFLYTEK
2.52 billion
RBM
Source: http://www.raincent.com/content-11-10287-1.html
http://www.sohu.com/a/277224098_195713
Source: https://www.infoq.cn/article/BvlY5qB_pcZRMwsIRgGk
http://static.cninfo.com.cn/finalpage/2019-04-19/1206054637.PDF
© 2019 DAXUE CONSULTING
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Main players
Natural language processing is one of the most important technologies for AI products, many high-tech companies
started to enter the field several years ago.
26
Top Companies Main business related to natural language processing
Microsoft focuses on developing natural language understanding and computer
vision technologies. It has great advances in those areas.
Sogou
Sogou built a popular search input method software by developing natural
language processing technology.
iFLYTEK
iFLYTEK is the first listed company in China’s natural language processing
industry. Its NLP technology has been applied to smart education, medicine,
automobile and online services.
AISpeech
AISpeech mainly provides natural language processing solutions to other
enterprises.
Unisound
Unisound is a leading player in China’s AI service market. Natural language
processing is one of the company’s main technologies.
Alibaba Group
Alibaba built labs to develop AI technologies for its products like smart
speakers. Natural language understanding and voice interaction are important
directions.
Data Grand
Data Grand is devoted to the development of smart software (writing, searching,
etc.) by natural language understanding and speech synthesis
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Machine translation includes language-
to-language translation, text-to-speech,
speech-to-speech, text-to-emotion, etc.
iFlytek applies MT to generate intelligent
hardware voice interaction solution for
2C products.
NLP, combined with concepts of
machine learning, are used to build
spam filter for email or SMS text
messages.
A question answering parses queries for
natural language questions and then
integrates with back-end systems to
deliver direct answers rather than just a
list of results containing the keyword.
NLP might allow a company to garner
insights that can be used to assess a
creditor’s risk or gauge brand-related
sentiment across the web.
Three main applications: credit scoring,
sentiment analysis, document search.
NLP is greatly applied in both pre-
sale and after-sale customer services.
For example, JD’s Intelligent
customer service robot and voice
navigation.
NLP tools and techniques help process,
analyze, and understand unstructured
‚big data‛ in order to operate
effectively and proactively.
Applications of NLP
27
Retail
Intelligent Search
Machine translation
Spam detection
Question answeringFinance
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Product analysis
28
Tencent Medpedia
 Tencent Medpedia is a medical science information
app. Based on NPL and big data technologies, its
virtual assistant system can automatically answer
questions about basic medicine knowledge. It also
can accurately provide relevant knowledge about
600 kinds of disease.
Tencent Medpedia's virtual
assistant interface
iFLYTEK
 iFLYTEK applies NPL technology to translation
devices. Its second-generation translators sold more
than 200,000 units in five months. The latest
generation of translation machine supports photo
translation based on OCR (Optical Character
Recognition) technology. It only takes two seconds
to complete the translation.
iFLYTEK’s translation
device
Source: https://intelligent.pconline.com.cn/1259/12591709.html
https://vcbeat.top/MDBjYjA5NmI4YWMxNzAwMThjNmFlYTI5YjMxYzI0ZDM=
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EXPERT SYSTEMS
29
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Definition
What is expert system?
30
It is a computer program that is designed to emulate and mimic human intelligence, skills
or behavior. It is mainly developed using artificial intelligence concepts, tools and
technologies, and possesses expert knowledge in a particular field, topic or skill.
“Expert System”
Human
Expert
Knowledge
Engineer
Knowledge
Base
Inference
Engine
User
Interface
User
Source: https://en.wikipedia.org/wiki/Expert_system
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Applications of expert systems
Expert systems are mainly used in these 6 areas.
31
Providing the index of yield and
benefit. Infering the cause of
problems and providing
solutions
Agricultural
Military
Strategic planning, forecasting,
combat simulation, command
and decision making
Chemical
Chemical synthesis design, physical
property estimation model selection,
equipment selection and process
synthesis.
Education
Educational resources utilization,
academic performance analysis,
psychological quality
assessment, online teaching,
etc.
Medical
Explanation, prediction,
diagnosis, and treatment
plans.
Geological
Geological disaster prediction, engineering risk
assessment and construction countermeasures
Source: https://wenku.baidu.com/view/36483ea2998fcc22bcd10db7.html
https://www.sohu.com/a/124133425_100663
https://www.docin.com/p-1398390460.html
https://www.ixueshu.com/document/3f800fcf6f1aa7d0318947a18e7f9386.html
http://www.doc88.com/p-0532632992288.html
https://max.book118.com/html/2018/0102/146940739.shtm
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Where are expert system used (1/2)
32
1. TCM computer-aided diagnosis and treatment system
Collects data from patients tongue, pulse etc. and compares data with database to diagnose according to the
principles of traditional Chinese medicine.
2. Expert systems for forecasting agricultural diseases and pests
Diseases and pests are categorized based on geographical regions. Users input info about diseases and
pests that their agriculture is experiencing, then the system automatically maps this information.
3. "Head start" expert system
A system which uses the reverse reasoning control strategy to helps primary and secondary students to
learn knowledge.
Sorce: https://www.ixueshu.com/document/6eb1b43780c448f4.html
http://www.wendangku.net/doc/33991761783e0912a2162ab0.html
https://max.book118.com/html/2015/0318/13427986.shtm
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Where are expert system used (2/2)
33
4. Chemical process development expert system
The system not only assists chemical engineers to solve chemical process design, development, production
optimization, process program evaluation and screening, but also improves work efficiency and saves a lot
of labor costs.
5. CPNEES- expert system for coalfield exploration
Based on geological data, the system simulates the judgment of human experts and bonds to the
advantages of computer numerical processing, which makes the exploration of coal field more precise and
efficient.
Sorce: https://www.ixueshu.com/document/6eb1b43780c448f4.html
http://www.wendangku.net/doc/33991761783e0912a2162ab0.html
https://max.book118.com/html/2015/0318/13427986.shtm
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Product analysis (1/2)
ESOPP’s (Expert System for Optimizing the Production Planning) of Sinopec Group
34
Products Gasoline Kerosene Diesel Lubricating oil Fuel oil Asphalt
Chemical
light oil
The total
products
Total profits
(RMB)
Expert system 63.1 13.5 77.5 2.7 53.3 9.9 22.3 273.1 19,909
The original
plan
64.1 12.9 77.6 2.6 54.4 8.8 22.3 273.6 18,444
Source: https://www.ixueshu.com/document/542c14fcdd8e32bf318947a18e7f9386.html
 Based on Sinopec’s production target and actual
completion in recent years.
 Uses linear programming to calculate the preliminary plan
of refinery production with the goal of maximizing profit.
 The crude oil distribution and product structure are
adjusted according to the obtained expert knowledge and
linear programming information.
ESOPP
 Simplifies the production process of petrochemical
enterprises
 There are many kinds of crude oils. The system
allocates the output of crude oil and each product to
maximize the economic benefits of Sinopec Group.
Purpose
The production plan formulated by this system was similar with the original plan from Sinopec Group (reduce the difficulty of
implementation), however, the system’ s plan made with less time and provided more profits to the company.
Achievement
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Product analysis (2/2)
Glaucoma diagnosis expert system based on computer image analysis
35Source:
https://www.ixueshu.com/document/f7431d5a27dea97a318947a18e7f9386.html
 It is a system that obtained the symptoms of glaucoma by 7 image characteristic parameters through back propagation (BP,
it’s an algorithm for supervised learning of artificial neural networks using gradient descent).
 The training samples of BP neural network were obtained from clinical data.
 The training algorithm adopted the fast algorithm proposed by Chen Shanguang (expert of BP neural network learning
algorithm).
Glaucoma diagnosis system
To solve problems in glaucoma diagnosis such as poor
objectivity, low accuracy and fatigue in doctors.
Purpose
 Realized the quantitative measurement of fundus tissues
 Made a clear difference between normal and abnormal
tissues
 Standardized the diagnosis process of glaucoma
 It improved the accuracy, reliability, and consistency of the
diagnosis results. Also opened up a broader application
prospect.
Achievement
The original
image
Image
enhancement
Image
segmentation
Image
description
Image feature
parameter
Diagnosis of
different types
of glaucoma
Core diagnostic process :
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ROBOTICS
36
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Types and market share of robots
37
 Most market demand of robots in China are for industrial robots.
 Service robots show good potential in China’s market since many families accept household robots.
71%
21%
8%
Market share by the main types of robots
(2018)
Industrial robots
Service robots
Specialized robots
Source: http://www.sohu.com/a/249860283_436079
Industrial robots are used for manufacturing,
they mainly consist of welding robots, transport
robots, palletizers, packaging robots, painting
robots, cutting robots, etc.
Industrial robots
Service robots operate semi- or fully
autonomously to perform services useful to the
well-being of humans, they usually include
household/domestic robots, medical service
robots and public service robots.
Service robots
Specialized robots are purpose-built for
particular task, such as working in high-risk
environment. They generally include military
robots, emergency rescue robots, etc.
Specialized robots
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Market size and consumption
 China is the largest industrial robots market in the world, making up 1/3 of global industrial robots demand
 An increasing aging population feeds the demand for medical and housekeeping services
38
Source: http://www.sohu.com/a/249860283_436079
2.68
3.00
3.93
5.12
6.23
7.57
0.46 0.64
0.94
1.28
1.84
2.80
2014 2015 2016 2017 2018 2019F
The sales value of industrial and service robots in China
(billion USD, 2014-2019)
Sales of industrial robots
Sales of service robots
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Angel, 12%
Series A, 64%
Series B, 10%
Series C, 3%
Others, 11%
Financing activities in industrial robotics field by rounds
(2018)
Investments
 In 2017, the investment value was up to 20 billion RMB, about 29 times of 2014. By June 2018, there have been
7,544 robot-related companies built in China.
 Policy subsidies were important reasons for the rapid growth of investment in robotics field.
 In 2018, financing activities in the field of industrial robotics were mainly concentrated in Series A round. It means
most industrial robotics companies in China were still at the initial stage.
39
0.69
3.31
5.03
20
0
5
10
15
20
25
2014 2015 2016 2017
The investment value of robotics in China
(billion RMB, 2014-2017)
Source: https://www.roboticschina.com/news/2396.html
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 Step is mainly engaged in the research &
development, production and sales of
industrial automation control products. It
has R&D centers and manufacturing centers
in China and Germany.
Main players in robotics
40
 Siasun was the first listed robotics company
in China. Its main business includes
industrial robots production, logistics and
warehousing automation equipment,
automatic assembly machines and traffic
automation systems.
 Estun was founded in 1993 and listed on
the Shenzhen Stock Exchange in 2015. Its
main businesses include automation core
components & motion control systems and
industrial robots & intelligent manufacturing
systems.
 Topstar was founded in 2007 and its main
business focuses on research &
development, manufacturing and sales of
industrial robots.
Main
players
Source: http://www.elecfans.com/d/890020.html
3.53 billion
RMB
revenue in 2018
3.10 billion
RMB
revenue in 2018
1.49 billion
RMB
revenue in 2018
1.20 billion
RMB
revenue in 2018
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 Along with the progress of ‚industry 4.0‛ and ‚Made in China 2025‛, China is developing its manufacturing
industry towards automation, integration and intelligence. Industrial robots are becoming more and more widely
used.
Where are robotics used – Industrial Robots
41
• In the field of electrical and electronic, industrial
robots excel in a series of processes such as
sorting and packing, tear film systems, laser
plastic welding, and high-speed palletizing.
• The application of industrial robots in food and
beverage consists of: packaging, picking, palletizing,
and processing.
• The chemical industry is one of the main
application areas of industrial robots.
• Faced with the requirements of precision, high
purity, high quality and miniaturization of
modern industrial products, cleaning technology
brought by robots is critical to product quality.
• Robotic technology realizes automation on mass
scale, ensuring continued economic
competitiveness, high productivity, and at the
same time alleviating heavy workloads for workers.
• Industrial robots are also widely used in other
manufacturing workspaces to handle tasks such
as drilling and fastening, inspection, welding,
painting, sealing, collaborative assembly, etc.
• The application of industrial robots in the field
of home appliances is inevitably driven by
objective factors such as a significant increase in
labor costs, a gradual disappearance of China's
demographic dividend and improved
manufacturing.
Chemical
Metallurgy
Appliances
Others
Electronics
Food
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Consumers analysis: Industrial Robots – Who are the main buyers?
 Automobile and electronic (3C) companies are the two major buyers of industrial robots in China. In addition, the
product is also in demand in the field of metallurgy, chemicals & plastics, food and beverage, etc.
 While both displaying an upward consumption trend, the 3C industry in China develops more rapidly than the
automobile industry. As the second largest buyer in china, 3C industry shows an increasing demand for industrial
robots in use of electronic equipment manufacturing.
42
Main buyers of industrial robots
(2018)
36.2%
22.6%
13.1%
8.6%
2.8%
16.7%
Automobile 3C Metallurgy Chemical&Plastics Food&Drink Others
65
91
116
98
103
125
2015
2016
2017
Automobile (thousands units) 3C (thousands units)
Automobile vs. 3C on consumption of industrial
robots (thousand units, 2015-2017)
Source: Industry overview of industrial robots in 2018
https://zhuanlan.zhihu.com/p/59126738
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Consumers analysis: Industrial Robots – Where are the buyers?
 As shown below, consumers of industrial robots in China shows an uneven regional distribution.
43
1 Yangtze River Delta
Distribution of industrial robots consumption in China
(2017)
Yangtze River Delta
possesses the biggest
consumption of
industrial robots in
China
Northeast (17.5%)
Yangtze River Delta (24.9%)
Pearl River Delta (21.8%)
Beijing-Tianjin Region (13.1%)
Central areas (12.6%)
West China (10.2%)
 The region gathers both a large proportion of factories,
who are the buyers of industrial robots, and many AI
companies as suppliers.
 High expectation for productivity and product quality
have strengthened the demand for industrial robots in
the Yangtze River Delta.
2 Pearl River Delta
3 Northeast
 Consumers in Northeast are mainly from the
automotive industry, pharmaceutical industry, plastics
and rubber industry.
 There is a strong demand for industrial robots such as
spot welding robots and assembly robots.
 Pearl river delta is where the electronics industry (3C) is
most developed. Major customers include Huawei and
Foxconn.
Source: Industry overview of industrial robots in 2018
https://zhuanlan.zhihu.com/p/59126738;
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Consumers analysis: Industrial Robots – Purchasing Triggers
44
 Pricy labor cost, higher productivity, and machinery precision are the three main motives to buy industrial robots.
 The continuous improvement of the automation level of Chinese industrial enterprises accounts for the increasing
demand for industrial robots.
Higher Forex volatility the production costs have increased significantly. High labor costs
encourage factories to seek cheaper substitutions; and industrial robots are no doubt their
primary choice.
1. Labor Cost
Cooperation between industrial robots and workers can yield unprecedented productivity. High
efficiency brought by machines optimizes the manufacturing procedure, leading to an
automated production line.
2. Productivity
Modern industrial products face increasingly strict requirements for precision and quality. However,
such high expectations can be hardly met by human workers. For instance, cleaning technology
brought by industrial robots is critical to product purity for buyers in the chemical industry.
3. Precision & Quality
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Where are robotics used – Service Robots
Personal/Domestic
Home robots, also known
as domestic robots, are a
type of service robot that
is used primarily for
household chores. The
most common of these is
the robot vacuum.
Certain robots can be made
to watch, hear, monitor and
speak on demand. It takes
pictures, records videos,
makes phone calls and
protects the family home
through video surveillance.
Housekeeping Security
Assisted living
Professional/Specialized
Education is a major
application for
service robots.
Robotic toys are
readily available for
children of all ages
and can help kids
start to think about
how things work
from an early age.
Hospitals can program
robots to distribute
medication to patients.
They can also be
programmed to
interface with
intelligent elevators to
reach any floor and
return to the hospital
pharmacy for refilling.
There are robots
roaming the aisles of
grocery stores. They
are programmed to
do self check-out,
monitor inventory,
clean up spills and
other work that was
originally done by
human labor.
EducationMedicineGrocery
Another key area for
domestic robots is for social
interaction. Many of these
are designed to help the
elderly and children.
Recreation
Elderly people living in
assisted care facilities or
nursing homes also benefit
from robots.
 Service robots refer to various advanced robots other than industrial robots for non-manufacturing use. There are
two main types: personal/home service robots and professional service robots.
 Healthcare, finance, logistics, and catering are the most common industries for public service robots. Service
robots also increasingly appear in households, for example cleaning robots, accompanying robots, entertainment
robots, etc. Below are examples where service robots are intensively used.
45
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Consumer analysis: Household Service Robots (1/3)
 Post-90s and Post-80s are the main buyers of domestic service robots.
 About 80% of the consumers earns a monthly income over 5,000 RMB. People who are younger in age with a
higher income tend to show more purchase power, holding a higher price acceptance.
46
20.9%
33.1%
25.0%
21.0%
<5,000 RMB
5,000-10,000 RMB
10,000-20,000 RMB
>20,000 RMB
35.5% 36.3%
17.7%
10.4%
<30 31-40 41-50 >51
Age distribution of domestic service robot customers
(2019)
Monthly income distribution of domestic service robot
customers (2019)
Source: “User Behavior Analysis of Personal / Family Service Robot”, China Academic
Journal Electronic Publishing House”, January 2019.
http://www.cnki.com.cn/Article/CJFDTotal-JQRY201901017.htm
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12.9%
42.7%
34.7%
9.7%
High school
diploma
Bachelor’s
degree
Master degree
Doctorat degree
& above
62%
17%
18%
3%
Top cities Tier-2 cities Tier-3 cities Others
Consumer analysis: Household Service Robots (2/3)
 The majority of the domestic service robot consumers are from Tier-1 cities. There are hardly any consumers from
tier-3 cities and lower.
 Buyers of domestic service robots show relatively high levels of education. About 90% of the consumers have a
University degree.
47
Geographic distribution of household service robot
customers (2019)
Education level of household service robot customers
(2019)
Source: “User Behavior Analysis of Personal / Family Service Robot”, China
Academic Journal Electronic Publishing House”, January 2019.
http://www.cnki.com.cn/Article/CJFDTotal-JQRY201901017.htm
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Under the fast-pace urban life, machine
substitution of housework becomes the
primary purchasing reason.
 There are four main motivations to purchase domestic service robots: household service, entertainment, for
children, and for elders.
 Family types, such as whether it’s a nuclear family or childless family, impacts the choice of service robots, but the
differences are less obvious.
48
34%
23% 24%
19%
Household service Entertainment For children For elders
Main purposes of buying a household service robot
(2019)
Household service
Consumer analysis: Household Service Robots (3/3)
Educational robots and toy robots also attract
consumers as parental supplements.
For children
Chinese filial cultural tradition encourages
service robot purchase for elders.
For elders
Personal recreation also serves as an important
motive of buying service robots.
Entertainment
Source: “User Behavior Analysis of Personal / Family Service Robot”, China Academic Journal Electronic
Publishing House”, January 2019. http://www.cnki.com.cn/Article/CJFDTotal-JQRY201901017.htm
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VISION
49
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Definition
What is computer & machine vision
50
Computer vision (CV) is an interdisciplinary field that deals with how computers can be
made to gain high-level understanding from digital images or videos. From the perspective
of engineering, it seeks to automate tasks that the human visual system can do.
“Computer vision”
Source: https://en.wikipedia.org/wiki/Computer_vision#Artificial_intelligence
https://en.wikipedia.org/wiki/Machine vision
“Machine vision”
Machine vision (MV) is the technology and methods used to provide imaging-
based automatic inspection and analysis for such applications as automatic
inspection, process control, and robot guidance, usually in industry.
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Market size and consumption
51Source: http://xilinx.eetrend.com/d6-xilinx/news/2016-03/9901.html
https://gongkong.ofweek.com/2018-01/ART-310020-8420-30188673.html
 Since machine & computer vision can effectively reduce labor costs, the demands for the technology are
wider and wider in China, such as security, finance, etc.
 China is one of the largest machine vision markets in the world.
8.5
10.4
12.5
15.2
0
2
4
6
8
10
12
14
16
2017 2018 2019F 2020F
The market size of China’s machine vision industry
(billion RMB,2017-2020)
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Main players in the vision sector (1/2)
Top machine vision companies in China
52Source: http://dy.163.com/v2/article/detail/EAQHGDVB0511UEFK.html
HIKVISION Technology Co., ltd.
 The company commits to continuously
improving video processing and analysis
technologies.
 World's leading supplier of video
surveillance products and solutions.
Leader of the industry
In no particular order
Zhejiang Dahua Technology Co., ltd.
 A leading monitoring product supplier and solution
provider.
 Video storage, front end, display control, intelligent
transportation series products.
Beijing Megvii Co., Ltd.
 A company focusing on face recognition and artificial
intelligence.
 Create the industry-leading face recognition prodcuts,
leading the financing of vision technology.
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Main players in the vision sector (2/2)
Top machine vision companies in China
53Source: http://dy.163.com/v2/article/detail/EAQHGDVB0511UEFK.html
In no particular order
CloudWalk Technology Co., Ltd..
 The company focuses on developing computer & machine
vision technologies.
 Its technologies used in finance, security, transportation and
other key industries.
YITU network technology Co., Ltd
 A computer vision technology company dedicated to
building the future of machine vision.
 Provide users with information acquisition and human-
computer interaction products based on image
understanding.
Second2None Technology Co., Ltd..
 The company commits to the application development of
machine vision products, embedded machine vision system
research and development, production and sales.
ADLINK Technolog Inc.
 A leading manufacturer of high-performance, high-quality PC
based add-on cards and platform provider.
 The company provides leading edge computing solutions that
support the transition to connected Industrial IoT systems.
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Where is computer vision used
54
67.8%
18.1%
7.7%
3.8%
1.7% 0.9%
Market share of China’s computer vision applications
according to usage (2017)
Security image analysis Advertising and marketing
Pan-financial authentication Internet entertainment
Smart phones Others
Main application fields
Face recognition and video monitoring
technologies can quickly recognize people’s
identity, verify suspects, analyze the target
action route and daily behavior trajectory.
They also can be used for public security
control, traffic security, criminal investigation
and case solving
Image recognition technology helps clients
better understand products and provides
more advertising space for merchants.
Intelligent analysis of video content, the
placement of advertising in the
corresponding scene can enhance the effect
Card identification, document
identification, fingerprint identification, face
verification and iris verification
technologies can verify the identity of
customers, conduct remote business and
extract key information from documents
Security image analysis
Advertising and marketing
Financial authentication
Source: https://www.iimedia.cn/c400/60305.html
https://baijiahao.baidu.com/s?id=1617729474629803501&wfr=spider&for=pc
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Consumers analysis: Who are the main users of vision technology?
According to the market share, the government, smartphone companies and financial institutions constitute the
top 3 fields of computer vision applications.
55
Government
Financial Institutions Internet Companies
Smartphone CompaniesMedia Companies
 Search for criminals in its multifarious video surveillance system.
 Crowd analysis, prevention and early warning in crowded
transportation hubs.
 Advertisers use the technology to build various forms
of interactive scenes.
 Intelligent mining image content advertising space,
build a new marketing model.
 Smartphones use face swiping for payment, identity,
album classification, and editing.
 In the financial field, identification and intelligent
payment will improve the efficiency and quality of
security and payment.
 Open an account remotely, withdraw money without
card, transfer transaction confirmation.
Source: https://blog.csdn.net/cf2suds8x8f0v/article/details/78787750
 Image beautification, augmented reality, image and video
editing.
 Helping people more easily access products, by searching
images and buying while looking.
Main
users
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Consumers analysis: purchasing reasons (1/2)
Government
56
After the June 1 robbery in Nanjing, Nanjing police extracted nearly
2,000T of video data from more than 10,000 cameras in the city,
and mobilized more than 1,500 police officers to search for video
clues, which took more than a month.
According to Xu, co-founder of SenseTime, the two facial
recognition systems they provided identified 69 criminal suspects in
the first 40 days of operation in Chongqing last year.
With the acceleration of urbanization, a large number of migrants
are pouring into cities, the large demographic influxes make it
difficult to manage urban populations.
http://www.cqvip.com/main/export.aspx?id=7000660894&type=2&sign=a95d5bc55a069
83b0f42a6e5fc4899b5
http://dy.163.com/v2/article/detail/DMTSE9R70511PT5V.html
http://tech.hexun.com/2018-10-24/194982878.html
Changes of social
environment
Traditional ways to search
for suspects: time
consuming and laborious
A new method based on
computer vision: fast,
efficient and accurate
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Consumers analysis: purchasing reasons (2/2)
Financial institutions
57
Human eye judgment, SMS verification and bank card binding
Remote account opening, remote identity authentication and remote
payment can be verified through face recognition technology.
National policies support face recognition technology, which it firstly
used by major domestic banks for promotion and increased trading
volumes in the financial sector
http://www.cqvip.com/main/export.aspx?id=7000660894&type=2&sign=a95d5b
c55a06983b0f42a6e5fc4899b5
http://dy.163.com/v2/article/detail/DMTSE9R70511PT5V.html
http://tech.hexun.com/2018-10-24/194982878.html
The changing of social
environment
Traditional ways for real-
name authentication has low
accuracy, poor customers
experience and high costs
New methods based on
computer vision have high
speed, good customers
experience, low costs and
high accuracy
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SPEECH
58
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Definition
AI speech is the ability of a machine or program to identify words and phrases in spoken
language and convert them to a machine-readable format. It works through the process of
extracting text transcriptions or some form of information from speech imputs.
59
Input Encode Decode Output
What is AI speech?
“AI Speech”
Source: https://searchcustomerexperience.techtarget.com/definition/speech-
recognition
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Market size and consumption
 China’s AI speech market had surging growth in recent years, the main reasons are the fast developing
mobile Internet and the increasingly popular smart speakers among consumers.
60
3.0
4.2
6.2
10.6
15.0
2014 2015 2016 2017 2018
Market size of China’s AI speech industry
(billion RMB–2014-2018)
Source: http://www.askci.com/news/chanye/20190510/1528111146034.shtml
http://www.chyxx.com/industry/201904/728625.html
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Main players in the AI speech sector
61
44%
28%7%3%
18%
Market share by the main brands in China
(2018)
iFLYTEK Baidu Apple Nuance Others
Users can search for life information through voice
control and text input. Meanwhile, they can also
directly watch relevant reviews and even book
reservations and tickets. However, its biggest
feature is the human-computer interaction, which
not only has a very vivid dialogue interface, but
also responds to users’ inquiries with precise
answers.
Baidu adopts the internationally leading integrated
modeling algorithm of speech language to quickly
and accurately identify speech and text. It also
supports multiple scenarios, such as mobile phone
application speech interaction, speech content
analysis and robot dialogue.
IFYTEK is a well-known listed artificial intelligence
enterprise in the Asia-Pacific region. Since its
establishment, the company has been engaged in the
research of core technologies such as speech, natural
language understanding, machine learning and
autonomous learning for a long time. It is committed to
making machines that are able to listen, speak and
process information.
Source: Forward-The Economist
http://www.qianjia.com/html/2018-10/15_307745.html
http://www.iotworld.com.cn/html/News/201902/2ee8ca27e86ecc73.shtml
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Where is AI speech used
62
Telephone query
Automobile voice control
Dictation systems
Phonetic teaching Smart devices
Industrial control and
medical field
Intelligent toys
Household appliances
remote control
Source: https://wenku.baidu.com/view/a9ece024dd36a32d7375815d.html
http://www.elecfans.com/video/yinpinjishu/20180102610014.html
The operation of GPS, air conditioning, lighting
and audio equipment.
Speech recognition can bring efficiency which a
keyboard input can’t. The interaction between devices
and users can create household tech such as smart
speakers.
Voice recognition technology enables telephone
inquiries, automatic wiring and specialized
services.
Commands are issued to the machine by voice, then
the machine responds by voice. This is useful when
the operator‘s eyes or hands are occupied.
People can control the television, VCD, air
conditioning, fan and curtain by voice, so that
all kinds of electrical appliances can be
operated easily..
With AI speech technology, children can talk to
their toys and command them to complete some
simple tasks by voice.
In terms of education, AI speech
technology can increase students’ interests
in learning.
Chinese continuous language recognition can
greatly reduce the obstacles of computer
applications and simplify the way of information
processing.
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Consumers analysis: The main consumers of AI speech products
 The main personal consumers of AI speech products are 26-35 years old men with stable family and relatively high
income.
63
66.3% consumers
are married
61.7% consumers
are men
50.8% users’ income higher
than 8,000 RMB per month
Source: http://baijiahao.baidu.com/s?id=1603580789725748507&wfr=spider&for=pc
53% consumers are between
26 and 35 years old
Main
consumers
61.7% 38.3%
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Consumers analysis: Where are the consumers from?
 Consumers are mainly from the developed areas and cities, people living in those regions are more willing to
purchase AI speech based products in order to facilitate their daily life.
64Source: Forward-The Economist
http://www.qianjia.com/html/2018-10/15_307745.html
54.3%
45.7%
Consumers distribution by cities
(2018)
Tier-1 cities Other cities
33.3%
41.9%
15.5%
3.5%
Every day 3-4 times per week 1 time per week 1 time per half month
AI speech product consumer frequency of use
(2018)
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CASE STUDIES
65
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Mariedalgar & Unmanned Stores
 Mariedalgar is a Chinese cosmetics brand using AI technology since 2015.
 The brand launched its unmanned lipstick vending machine in 2015 and built China’s first unmanned beauty shop
named ‚TO GO‛ in 2018.
66
 After scanning the machine’s QR code, customers enter the
product page. They can browse lipstick shades and purchase a
mini lipstick for only 5 RMB. The whole shopping experience can
last less than 1 minute and 30 seconds.
 The unmanned vending machine sells high quality lipsticks in
smaller sizes, cheaper price through a much more novel
experience.
Source: http://www.hgcm.cn/cygs/2018-05-23/1427.html
https://www.yicai.com/news/100019759.html
https://baijiahao.baidu.com/s?id=1570963841887832&wfr=spider&for=pc
Unmanned vending machine
 Inside Mariedalgar’s unmanned beauty shops are self-service vending
machines, shopping guider robots, AR virtual makeup, and more. Consumers
purchase cosmetics through QR codes.
 The unmanned shops improve shopping experience and meet the young
consumers’ demands for interests and fashion.
 The brand collects consumer information and makes personalized product
recommendations.
Unmanned beauty shop
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Ratio Café’s state-of-the-art robot
67
 Ratio Café is a Chinese coffee shop with a state-of-the-art robot modeled after the arm and hand of a real bartender.
 Customers order on a WeChat mini-program or by scanning the QR code and can watch the robot prepare their orders in
front of them.
 Consumers can also customize their coffee or cocktail when ordering.
 The orders are ready in 2-3 minutes.
 By having robot bartenders, a coffee shop or bar can effectively attract customers who are keen on high tech or those
looking for a novel experience. Besides, coffee shops also can save part of costs since they have less human workers.
Scan QR code Menu on mobile phone The robot prepares coffee The coffee is made
Source: https://www.sohu.com/a/235461423_318481
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
MeiTuan’s food delivery robots
 Meituan is a Chinese food purchasing and delivery platform. It launched an autonomous food delivery system in
2018 and it is going to be rolled out gradually in 2019 starting in Beijing.
 Meituan has more than 300 million active users, 4 million suppliers, and more than 20 million daily orders.
 Meituan is working with AI companies such as Uditech and Segway-GX which have developed autonomous delivery
robots for the platform.
68
Labor costs Delivery efficiency
Delivery robots have low weather influence
and can work uninterrupted for a long time.
Thus, they usually finish every delivery task
with less time than human workers.
In China’s tier-1 and 2 cities, the labor costs
of delivery people are increasing. By using
delivery robots, Meituan can effectively
reduce costs and have a desirable
alternative in big cities.
Source: https://new.qq.com/cmsn/20180728/20180728013933.html
https://baijiahao.baidu.com/s?id=1613401807294854899&wfr=spider&for=pc
Smart enough
By using machine vision, GPS, face recognition and other AI technologies, delivery robots can
automatically avoid automobiles, pedestrians and other obstacles during the delivery. They
also have the functions of self-locking and automatic alarm to protect the products they delivery.
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
Ford Motor Company’s smart vehicles
 Chinese consumers are accustomed to high connectivity, they seek innovative in-car services and are even ready to
pay subscriptions for content.
 By working with Baidu, Ford Motor Company has built a AI system named SYNC+ to connect cars with
smartphones.
69
SYNC+ system
 After downloading the mobile app, the
system allows the driver to connect a
smartphone to the car through the app,
also the car itself can connect to Baidu’s
smart home devices (such as smart
speakers).
 Car owners can control navigation,
reservation (such as restaurant) and
entertainment systems by voice.
 Through the system, drivers also have
services such as vehicles maintenance
reservation, roadside assistant, etc.
Source: https://www.autohome.com.cn/market/201908/100240117.html
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
Ordering food by scanning your face in KFC
 In China, KFC can predict customer choices based off data. Through the intelligent software that scans the
customers’ faces and recalls the customers previous orders, KFC is able to offer a menu adapted to each customer.
 The facial recognition technology was developed in partnership with Baidu.
70
Facial recognition
 Through facial recognition, KFC can harvest
data from the Chinese consumers and
customize a menu for each diner based on
preferences, local tastes and age.
 For consumers, purchasing KFC’s food by
scanning face saves their time in queues,
especially at peak times.
 For those who are KFC’s regular guests,
their preferences will be saved as data after
they bought food with scanning faces.
Then, the system can help them improve
the efficiency of ordering with the record.
Source: http://www.sohu.com/a/123021121_473284
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
CHINESE AI COMPANIES
71
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
iFLYTEK: The leading AI brand in China
72
Main areas
covered by
iFLYTEK’s AI
products
 In 2018, the total annual revenue of iFLYTEK exceeded 7.9
billion RMB and increased 45.41% compared with 2017.
 The sales revenue of B2C products has exceeded 2.5 billion
RMB in 2018, which occupied 31.8% of the total revenue.
Source: http://sd.sina.com.cn/news/b/2019-05-06/detail-ihvhiews0072930.shtml
 iFLYTEK started its AI business in 1999, now it is one of the
leading players in China’s AI market.
 The company targets both B2B and B2C market by
developing natural language processing, machine learning,
AI speech, robotics and other AI technologies & products.
The main business of iFLYTEK
Revenue in 2018
Medical
equipmentEducation
Office equipmentDigital services
Automobile Translating/Language
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
iFLYTEK: Advanced AI speech and NPL technologies
 iFLYTEK has the most advanced AI speech and NPL technologies in China, it already occupied 44% of the AI voice &
speech market.
 The technology has been used in its B2C products, including recorders, translating machines, office equipment, etc.
73
Smart recorder Smart office
equipment
Intelligent study
equipment
Smart translator
 During the double 11 shopping day in 2018,
iFLYTEK’s translating machines reached the
highest sales (300,000 sold items) among all kinds
of similar products on Taobao/Tmall.
 During the 618 shopping day in 2019, iFLYTEK’s
6 AI products achieved the best sales among
similar products on both Tmall and JD.
Source: http://www.sohu.com/a/321576708_499573
http://sd.sina.com.cn/news/b/2019-05-06/detail-ihvhiews0072930.shtml
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
iFLYTEK: Marketing strategy in China
Two important offline marketing strategies for the company.
74
iFLYTEK built offline AI experience stores in Shanghai and
Shenzhen to promote its products. The offline experience
stores are big adjustments of its business, the brand started to
expend more efforts on B2C market.
In order to open up new market and increase its brand
awareness, iFLYTEK widely participated in the construction
of China’s smart cities. By working with local government,
the company provided technical support for public services.
Offline AI experience stores Smart cities
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
DeepBlue Technology: The world-class AI developer in China
 As one of the leading AI developers in China, DeepBlue Technology is devoted to developing AI applications,
software/systems, hardware, robots, etc.
 The brand’s core technologies are machine & computer vision, self-driving technology, biological intelligence, etc.
75
Main fields
covered by
DeepBlue
Technology
Security
New retail
Robots
Education
Transportation
AI speech
Smart cities
AI
Chips
Biological
intelligence
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
DeepBlue Technology: Main products
 Many AI products of DeepBlue Technology target B2B market, they are also involved in China’s smart
city development.
76
Service robots
Smart security
systems
AI vending
machines
Self-driving
busses
Smart sweeping
machines
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
DeepBlue Technology: Domestic and international strategy
77
Cooperating with
real estate developers
DeepBlue Technology built strategic partnership with the
Greenland Group (a large real estate developer in China) to
participate in the creation of smart communities, smart
transportation and smart cities in China.
The Belt and Road Initiative
In order to expand overseas market, DeepBlue Technology
actively worked with European countries, such as Greece
and Italy, through The Belt and Road Initiative. The
company provides AI products to support the public service
and smart cities in those countries.
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
STAY
UPDATED
ON CHINA
MARKET
INSIGHTS
78
To get weekly China
market insights,
follow our WeChat
account
https://www.linkedin.com/company/daxue-consulting
https://daxueconsulting.com/newsletter-2/
WeChat
LinkedIn
Newsletter
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
ABOUT
79
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
Responsibility at all levels
International team
collaborates to bring
new perspectives in
solving challenges
Empowerment through
comprehensive management
Loyalty to our clients
Comprehensive, scientific,
and logical reasoning
Transparency of sources
and information
Efforts are always rewarded
within the team
80
Values, principles and vision of Daxue Consulting
6 Key values emphasized throughout all our projects
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
The strengths of Daxue Consulting
6 crucial competitive advantages
81
Responsive
& Flexible
All In-house
Actionable
Recommendations
Innovative
Professional
Localized &
Creative  Working on each project
making exchange and
challenges, recruiting the
brightest talents in both local
& international (1:1), to
ensure a comprehensive &
scientific logic thinking.
 Result-oriented, regular
reports with our clients to
make sure we align the
expected objective.
 Teams & proposal are tailor-
made depending on the
project.
 One client = one team.
 Using 50+ software
 Leveraging alternative data and
open source intelligence
 Social listening
 Our methodologies are rigorous
and serious, taking information from
the best practice in the world of
consulting and research.
 Demanding on the results, detail-
oriented, respectful towards our
commitments.
 Corporate presentation.
1. Localized & Creative 2. Responsive & Flexible
5. Innovative 6. Professional
 Daxue Consulting does not
outsource its services. Deep
understanding on the
fieldwork and the context
within which data was
collected.
 Transparency of sources and
information
3. All In-house Management
 We care about results and
design our research in order
to be operational.
 We are driven by metrics
such as customer acquisition
costs, business plan KPIs, P&L
optimization.
4. Actionable recommendations
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
350+ clients with 450+ projects for the past 7 years
Examples of references
82
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
A recognized expertise on the Chinese market
Regularly featured and quoted in global publications
83
Daxue latest quotations in recent publications
(click on the logo to be redirected to the articles)
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
Using modern tools to stay ahead of the competition
A selection of tools leveraged by Daxue Consulting
84
Search engine &
E-commerce analytics
Social listening
Data mining/survey
analysis
Website/app traffic comparison
Diary study &
Community research
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
© 2019 DAXUE CONSULTING
ALL RIGHTS RESERVED
CONTACT US
dx@daxueconsulting.com
www.daxueconsulting.com
+86 (21) 5386 0380
BEIJING | SHANGHAI
END.
85

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AI technology in china by Daxue consulting

  • 1. TO ACCESS MORE INFORMATION ON THE AI INDUSTRYIN CHINA, PLEASE CONTACT DX@DAXUECONSULTING.COM dx@daxueconsulting.com +86 (21) 5386 0380 July. 2019 HONG KONG | BEIJING | SHANGHAI www.daxueconsulting.com 1 By DAXUE CONSULTING THE AI ECOSYSTEM IN CHINA
  • 2. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED OVERVIEW I. INTRODUCTION II. MACHINE LEARNING III. NATURAL LANGUAGE PROCESSING IV. EXPERT SYSTEMS V. ROBOTICS VI. VISION VII. SPEECH VIII. CASE STUDIES IX. CHINESE AI COMPANIES 2
  • 3. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED INTRODUCTION 3
  • 4. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED The history of artificial intelligence (AI) in China 4 • Along with the gradual maturity of China’s artificial intelligence (AI) technologies in recent years, many industry giants increased their investment in the market. • The applications of AI technologies also expanded. • AI has broad market prospects in China. 2011 Since the development of big data, cloud computing, Internet of things and other information technologies, AI started to enter a rapid growing stage. 2012 During this year, the security market was flooded by computer vision startups. 2018 In 2018, AI ushered in the first year of commercial applications in China. More than 1,000 AI-related companies in China. 2015 ‚Chinese Congress on Artificial Intelligence 2015‛ in Beijing gave the direction of AI-related industries in China. AI was included in the Chinese government report, as a national strategy in China. 2017 Source: http://dy.163.com/v2/article/detail/DRJEA2SB05312F1A.html http://www.js.xinhuanet.com/2019-05/20/c_1124518281.htm http://finance.sina.com.cn/chanjing/cyxw/2017-10-06/doc-ifymrqmp9427654.shtml
  • 5. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED 5 Applications Basic Technology Healthcare Intelligent robots Autonomous Drones Education Speech recognition Sensors Image recognition Mapping/Semantic analysis Others Integrated circuits Cloud, data and algorithms Comprehensive companies (companies working in all 3 sectors above) Finance Security Logistics City Retail Factories Personalized promotions Marketing Virtual assistants Others The main sectors covered by AI China’s Artificial Intelligent companies  AI covers a wide range of segments in China, including basic layer (base parts and algorithms of AI products), technology layer (technologies support AI products) and applications (AI products in different industries).
  • 6. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Market size of AI technology in China Source: https://bg.qianzhan.com/trends/detail/506/190417-a2f95525.html 6  China's artificial intelligence industry is becoming one of the most important markets in the nation. However, the market of AI in China is not mature yet, there is still a large space for development.  In 2018, the size of China‘s artificial intelligence market reached 33.9 billion RMB and the CAGR was more than 44% from 2015 to 2018. By 2020, the market size is expected to reach 71 billion RMB. 11.24 14.19 21.69 33.9 50 71 0 10 20 30 40 50 60 70 80 2015 2016 2017 2018 2019E 2020E China's artificial intelligence market size (billion RMB, 2015-2020)
  • 7. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Distribution of AI companies by industries  The AI-related companies established in 2018 mainly belong to the security, speech interaction and healthcare industries. These areas have strong market demand and mature technology applications  A large portion of China's AI market share is from speech, computer vision and natural language processing technology. 7Source: http://www.askci.com/news/chanye/20190219/1707171141931.shtml http://www.199it.com/archives/748996.html 34.90% 24.80% 21.00% 11.30% 8.00% China's AI market share by different industries (2017) Computer Vision Speech Natural Language Processing Algorithm Hardware related to AI22 4 5 5 5 7 8 8 10 10 16 Others Robotics Retail AI chip Autonomous SLAM Finance Image recognition Healthcare Speech interaction Security The number of AI-related companies established in 2018 by industries
  • 8. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Distribution of AI startups in different regions AI companies are mainly concentrated in China‘s economically developed first and second-tier cities and coastal areas. Inland provinces are trying to grasp the development boom as well. 8 Source: http://www.199it.com/archives/748996.html http://www.ccidwise.com/uploads/soft/181220/1-1Q220152528.pdf https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/inno vation/deloitte-cn-innovation-ai-whitepaper-zh-181126.pdf Top 5 cities ranked by number of AI companies. 0-10 100-20 200-100 >200 20-10 1 Beijing 395 AI companies Number of AI companies by provinces (2018) Sichuan province has the most AI companies (20) in southwest China  Beijing, Shanghai, Shenzhen and Hangzhou are ranked among the Top20 in the world for quantity of AI companies.  Beijing had the most AI companies because its workforce talent, industrial resources and capital were superior to other regions and cities. 2 Shanghai 210 AI companies 3 Shenzhen 119 AI companies 4 Hangzhou 63 AI companies 5 Guangzhou 46 AI companies
  • 9. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Investments  In 2018, the investment value in China’ s AI industry reached 131.1 billion RMB, increased by 67.7 billion RMB compared to 2017. The scale of investment ranked first in the world.  Although the growth of AI financing events slowed down in 2018, the total investment value still increased significantly. Large financing events occurred frequently and capital was more concentrated in leading companies. 9Source: https://www.iimedia.cn/c400/63429.html 5.8 9.8 26.8 37.2 63.4 131.1 25 159 345 487 518 597 0 100 200 300 400 500 600 700 0 20 40 60 80 100 120 140 2013 2014 2015 2016 2017 2018 Investment value and the number of financing events in China’s AI industry (2012-2018) Investment value (Billion RMB) Number of financing events Investmentvalue(BillionRMB) Numberoffinancingevents
  • 10. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Why China’s AI is developing so fast ? 10 The ubiquity of the mobile Internet China has a massive base of smart-phone users. Mobile internet users create large amounts of data, which is the fuel that AI technology consumes to develop. By using apps on smart-phones, individual users can easily control products, such as smart-speakers and clearing-robots. Big Data and computing power The fast-growing big data and cloud computing effectively improve machine learning and cognitive ability. In recent years, especially in specific application fields, there has been a great development in machine learning usage, which is a precondition for the creation of new AI technologies.
  • 11. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Tech parks in China In order to promote AI’s development, the Chinese government launched a series of AI industrial parks in the eastern and southern parts of the country. In 2018, China had more than 60 AI tech parks. Industrial parks usually have preferential policies to attract AI companies, such as rental subsidies and tax concessions. 11 Cities AI industrial parks Beijing Zhongguancun Software Park, Mentougou AI Park, Vpark, etc. Shanghai Qingpu District AI Park, Linggang AI Industrial Park, etc. Hangzhou Binjiang AI Industrial Park, Hangzhou AI Town, etc. Shenzhen Shenzhen Bay AI Tech Park, Longhua AI Industrial Park, etc. Guangzhou Nansha AI Industrial Park, Guangzhou International AI Study Park, etc. Nanjing AI demonstration zone, Xingang High-tech AI Base, etc. Number of China’s AI tech parks by provinces (2018) Beijing had 5 AI tech parks Guizhou Province had 6 AI tech parks Guangdong Province had 7 AI tech parks Shanghai had 6 AI tech parks Source:https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/i nnovation/deloitte-cn-innovation-ai-whitepaper-zh-181126.pdf https://doc.mbalib.com/view/9e167725daadbe6dde85f8e6b04c9ac4.html
  • 12. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED 12 On Zhihu, the most common questions and posts about AI consist of the following: • How will AI change people's lives in the future ? • Which industries will be replaced by AI in the future ? • How to protect personal privacy when using AI products ? With the rapid development of AI, what should we do about our personal privacy? With the development of AI and the Internet, many smart devices can record personal information. Especially smart voice devices, which can record anything you say. According to industry insiders, manufacturers of smart devices collect and retain as much data as possible to improve their products, but they also sell the data to advertisers for money. Zhihu Zhihu is the first Q&A website in China, and has transitioned to a social media sharing platform gathering more than 100 million answers on various topics. The platform is especially relevant to reach higher-, well-educated social classes Chinese perceptions of AI on Zhihu In which industries workers will be replaced by AI in the next 30 years? • What will AI replace • How will AI change industries • AlphaGo versus Lee Sedol • AI and art • AI and healthcare and academia
  • 13. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED 13 Positive perceptions on Weibo & Wechat: • AI can help to improve traffic conditions and reduce the occurrence of road crimes. • AI can improve the diagnosis and treatment efficiency in the healthcare industry • AI can promote the innovation of teaching methods Weibo Translation AI provides more chances for the medical industry The deep integration of artificial intelligence, big data, 5G and other technologies in the medical industry greatly improved the quality of medical service and profoundly changed the mode and concept of medical service. 12 6 55 Wechat 62 Translation AI makes traffic management smarter Intelligent road traffic control system can monitor the traffic flow in real time. It can also automate traffic lights based on traffic flow to reduce congestion. Positive perceptions of AI Wechat Wechat is the #1 social media in China and an absolute must-have for a market entry promotion. It accounts for over 1 billion active users. Weibo is China’s biggest social media network that was launched in 2009. Over the past years, it has transformed from a Chinese equivalent of Twitter to a comprehensive platform.Weibo
  • 14. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED 14 AI is the greatest threat to human civilization. It could lead to social unrest and unemployment. More forward-looking regulations are needed, instead of reacting passively. Otherwise, if one day robots kill people, we won’t know how to fix it. Fears of AI on Weibo & Wechat: • AI could cause social problems, such as mass unemployment in some industries. • AI brings challenges to personal info protection. • Autonomous driving technology cannot deal with emergencies with the same urgency as humans. Weibo Wechat Users tend to overlook the dangers to privacy and personal data posed by new technologies. Intelligent applications become an indispensable tool in people's life. They collect a lot of personal information to push accurate marketing information to users while providing life services. - China Telecommunications Trade Wechat Wechat is the #1 social media in China and an absolute must-have for a market entry promotion. It accounts for over 1 billion active users. Weibo is China’s biggest social media network that was launched in 2009. Over the past years, it has transformed from a Chinese equivalent of Twitter to a comprehensive platform.Weibo Fears of AI 293 413 198 125
  • 15. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED MACHINE LEARNING 15
  • 16. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Definition What is machine learning? 16 “Machine learning” Machine learning is an application of artificial intelligence that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. Types of algorithms Supervised learning Unsupervised learning Reinforcement learning Feature learning Sparse dictionary learning Anomaly detection Association rules 1 2 4 3 5 7 6
  • 17. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Main players (1/2) The top 4 Chinese open-source machine learning platforms 17  The 1st Chinese open source machine learning platform.  Deep learning platform that supports multi- GPU and multi-machine parallel computing.  Applications include OCR, autopilot, precise information recommendations for user, image recognition, virus detection, translation.  Applications: voice & image recognition, urban traffic computing, enterprise cloud computing, manufacturing, healthcare.  General learning frameworks will be provided and libraries of algorithms will be opened up in the future. 1. Baidu: PaddlePaddle 2. Alibaba: DTPAI
  • 18. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Main players (2/2) Chinese TOP4 open-source machine learning platforms 18  High performance computing framework for large scale data, very low barriers to use  Applications: Tencent video, Tencent social advertising, user portrait mining  Service target: enterprises with big data processing needs, rather than individual developers (which PaddlePaddle does)  The only open-source machine learning project that started in Chinese academia  Applications: automatic face recognition  Lowered hardware threshold of face recognition to a single Intel i7 3. Tencent: Angel 4. Seetatach
  • 19. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Where is machine learning used (1/2) 19 1. Online Search • Perhaps it is the most famous application of machine learning. The program observes how the user responds to the results when the latter uses a search engine. • How it works: If the user chooses the top-result, and remains on that webpage, the machine learning program assumes that the user just found what he or she was looking for. If the user chooses a result on the second page of the search engine, then, the program surmises that the search engine could not find the results the user was looking for. 2. Healthcare Machine learning algorithms can process more information and spot more patterns than their human counterparts. Additionally, machine learning can be used to understand risk factors for disease in large populations.
  • 20. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Where is machine learning used (2/2) 20 3. Smart Cars A smart car can not only integrate into the Internet of Things (IoT), but also learn about its owner and its environment. It might adjust the internal settings — temperature, audio, seat position, etc. — automatically based on the driver. In addition to autonomous driving, it can report and even fix mechanical problems, and offer real time advice about traffic and road conditions. 4. Data Security Malware is a huge and growing problem. Their learning model has only 2–10% variations, and we can predict which files are malware with great accuracy. In other situations, machine learning algorithms can look for patterns in how data in the cloud is accessed, and report anomalies that could predict security breaches.
  • 21. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Product analysis (1/2) 21 Dark factory NIO  NIO is a Chinese electric smart car producer. It uses machine learning to build its own autopilot system. In June 2019, its second generation of autonomous cars entered the market.  Machine learning is the core of the autopilot systems. After becoming a hot topic, also some of the more established Chinese car companies started to develop Autopilot technology. Autonomous car (NIO Pilot)  Foxconn, the world‘s largest foundry, used robots for production in China. It currently has 10 fully automated production lines.  At Foxconn, some smartphone-component factories produce goods without lights. They are referred to as "dark factories", as they are fully automated and require no human presence on- site. This is possible due to machine learning and AI equipment. Source: https://www.auto-testing.net/news/show-100773.html http://www.elecfans.com/d/941861.html
  • 22. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Financial institutions increasingly rely on machine learning technologies. Product analysis (2/2) 22  In 2017, the Guangxi province people's hospital started to use an esophageal cancer screening system developed by Tencent to assist the doctor's clinical diagnosis, with an accuracy as high as 90%.  The Chinese AI company iCarbonX built a big data platform specialized on health management, called MiWo (觅我). The platform can analyze users' health condition based on aspects like: physical activity, diet and skin condition.  Ant Financial is one of China's financial service agencies. Through machine learning in Micro credit and Credit Pay business, the false trading rate was reduced to 1/10th the previous rate. Alipay Document Audit System, based on machine learning, shortens document checking time from 1 day to 1 second. Esophageal cancer screening system Hospital Finding business opportunities Personalized service Preventing bank fraud The application of machine learning in financial institutions Source: https://36kr.com/coop/toutiao/5051729.html# https://www.sohu.com/a/232635161_99914564
  • 23. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED NATURAL LANGUAGE PROCESSING 23
  • 24. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Definition What is natural language processing (NLP)? 24 “Natural Language Processing” Natural language processing (NLP) is a subfield of artificial intelligence concerned with the interactions between computers and human (natural) languages, in particular how to program computers to process and analyze large amounts of natural language data. Voice recognition Natural language understanding Natural language generation Types Parsing Text categorization Information retrieval & extraction Question answering Source: https://www.sas.com/en_hk/insights/analytics/what-is-natural- language-processing-nlp.html
  • 25. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED In Nov 2018, Grand Data raised 160 million RMB in series B funding. It set a new financing record in the field of natural language processing in China By June 2017, China's total investment value for the natural language processing industry reached 12.2 billion RMB, which ranked second among all AI fields. 92 natural language processing startups were founded during 2017. Market size and investments 25 12.2 billion RMB 92 startups Over 200 million RMB Cumulative financing amount Xiaomi technology co. LTD applied Xiaoai (virtual assistant based on natural language) to its smart devices such as phones, audio equipment, television sets, etc. By October 2018, more than 100 million smart devices were activated and there were more than 34 million monthly active users. The revenue of IFLYTEK‘s B2C business based on natural language processing reached 2.52 billion RMB in 2018, up 96.54% compared with 2017. 34 million monthly active usersMI 100 million smart devices iFLYTEK 2.52 billion RBM Source: http://www.raincent.com/content-11-10287-1.html http://www.sohu.com/a/277224098_195713 Source: https://www.infoq.cn/article/BvlY5qB_pcZRMwsIRgGk http://static.cninfo.com.cn/finalpage/2019-04-19/1206054637.PDF
  • 26. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Main players Natural language processing is one of the most important technologies for AI products, many high-tech companies started to enter the field several years ago. 26 Top Companies Main business related to natural language processing Microsoft focuses on developing natural language understanding and computer vision technologies. It has great advances in those areas. Sogou Sogou built a popular search input method software by developing natural language processing technology. iFLYTEK iFLYTEK is the first listed company in China’s natural language processing industry. Its NLP technology has been applied to smart education, medicine, automobile and online services. AISpeech AISpeech mainly provides natural language processing solutions to other enterprises. Unisound Unisound is a leading player in China’s AI service market. Natural language processing is one of the company’s main technologies. Alibaba Group Alibaba built labs to develop AI technologies for its products like smart speakers. Natural language understanding and voice interaction are important directions. Data Grand Data Grand is devoted to the development of smart software (writing, searching, etc.) by natural language understanding and speech synthesis
  • 27. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Machine translation includes language- to-language translation, text-to-speech, speech-to-speech, text-to-emotion, etc. iFlytek applies MT to generate intelligent hardware voice interaction solution for 2C products. NLP, combined with concepts of machine learning, are used to build spam filter for email or SMS text messages. A question answering parses queries for natural language questions and then integrates with back-end systems to deliver direct answers rather than just a list of results containing the keyword. NLP might allow a company to garner insights that can be used to assess a creditor’s risk or gauge brand-related sentiment across the web. Three main applications: credit scoring, sentiment analysis, document search. NLP is greatly applied in both pre- sale and after-sale customer services. For example, JD’s Intelligent customer service robot and voice navigation. NLP tools and techniques help process, analyze, and understand unstructured ‚big data‛ in order to operate effectively and proactively. Applications of NLP 27 Retail Intelligent Search Machine translation Spam detection Question answeringFinance
  • 28. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Product analysis 28 Tencent Medpedia  Tencent Medpedia is a medical science information app. Based on NPL and big data technologies, its virtual assistant system can automatically answer questions about basic medicine knowledge. It also can accurately provide relevant knowledge about 600 kinds of disease. Tencent Medpedia's virtual assistant interface iFLYTEK  iFLYTEK applies NPL technology to translation devices. Its second-generation translators sold more than 200,000 units in five months. The latest generation of translation machine supports photo translation based on OCR (Optical Character Recognition) technology. It only takes two seconds to complete the translation. iFLYTEK’s translation device Source: https://intelligent.pconline.com.cn/1259/12591709.html https://vcbeat.top/MDBjYjA5NmI4YWMxNzAwMThjNmFlYTI5YjMxYzI0ZDM=
  • 29. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED EXPERT SYSTEMS 29
  • 30. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Definition What is expert system? 30 It is a computer program that is designed to emulate and mimic human intelligence, skills or behavior. It is mainly developed using artificial intelligence concepts, tools and technologies, and possesses expert knowledge in a particular field, topic or skill. “Expert System” Human Expert Knowledge Engineer Knowledge Base Inference Engine User Interface User Source: https://en.wikipedia.org/wiki/Expert_system
  • 31. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Applications of expert systems Expert systems are mainly used in these 6 areas. 31 Providing the index of yield and benefit. Infering the cause of problems and providing solutions Agricultural Military Strategic planning, forecasting, combat simulation, command and decision making Chemical Chemical synthesis design, physical property estimation model selection, equipment selection and process synthesis. Education Educational resources utilization, academic performance analysis, psychological quality assessment, online teaching, etc. Medical Explanation, prediction, diagnosis, and treatment plans. Geological Geological disaster prediction, engineering risk assessment and construction countermeasures Source: https://wenku.baidu.com/view/36483ea2998fcc22bcd10db7.html https://www.sohu.com/a/124133425_100663 https://www.docin.com/p-1398390460.html https://www.ixueshu.com/document/3f800fcf6f1aa7d0318947a18e7f9386.html http://www.doc88.com/p-0532632992288.html https://max.book118.com/html/2018/0102/146940739.shtm
  • 32. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Where are expert system used (1/2) 32 1. TCM computer-aided diagnosis and treatment system Collects data from patients tongue, pulse etc. and compares data with database to diagnose according to the principles of traditional Chinese medicine. 2. Expert systems for forecasting agricultural diseases and pests Diseases and pests are categorized based on geographical regions. Users input info about diseases and pests that their agriculture is experiencing, then the system automatically maps this information. 3. "Head start" expert system A system which uses the reverse reasoning control strategy to helps primary and secondary students to learn knowledge. Sorce: https://www.ixueshu.com/document/6eb1b43780c448f4.html http://www.wendangku.net/doc/33991761783e0912a2162ab0.html https://max.book118.com/html/2015/0318/13427986.shtm
  • 33. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Where are expert system used (2/2) 33 4. Chemical process development expert system The system not only assists chemical engineers to solve chemical process design, development, production optimization, process program evaluation and screening, but also improves work efficiency and saves a lot of labor costs. 5. CPNEES- expert system for coalfield exploration Based on geological data, the system simulates the judgment of human experts and bonds to the advantages of computer numerical processing, which makes the exploration of coal field more precise and efficient. Sorce: https://www.ixueshu.com/document/6eb1b43780c448f4.html http://www.wendangku.net/doc/33991761783e0912a2162ab0.html https://max.book118.com/html/2015/0318/13427986.shtm
  • 34. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Product analysis (1/2) ESOPP’s (Expert System for Optimizing the Production Planning) of Sinopec Group 34 Products Gasoline Kerosene Diesel Lubricating oil Fuel oil Asphalt Chemical light oil The total products Total profits (RMB) Expert system 63.1 13.5 77.5 2.7 53.3 9.9 22.3 273.1 19,909 The original plan 64.1 12.9 77.6 2.6 54.4 8.8 22.3 273.6 18,444 Source: https://www.ixueshu.com/document/542c14fcdd8e32bf318947a18e7f9386.html  Based on Sinopec’s production target and actual completion in recent years.  Uses linear programming to calculate the preliminary plan of refinery production with the goal of maximizing profit.  The crude oil distribution and product structure are adjusted according to the obtained expert knowledge and linear programming information. ESOPP  Simplifies the production process of petrochemical enterprises  There are many kinds of crude oils. The system allocates the output of crude oil and each product to maximize the economic benefits of Sinopec Group. Purpose The production plan formulated by this system was similar with the original plan from Sinopec Group (reduce the difficulty of implementation), however, the system’ s plan made with less time and provided more profits to the company. Achievement
  • 35. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Product analysis (2/2) Glaucoma diagnosis expert system based on computer image analysis 35Source: https://www.ixueshu.com/document/f7431d5a27dea97a318947a18e7f9386.html  It is a system that obtained the symptoms of glaucoma by 7 image characteristic parameters through back propagation (BP, it’s an algorithm for supervised learning of artificial neural networks using gradient descent).  The training samples of BP neural network were obtained from clinical data.  The training algorithm adopted the fast algorithm proposed by Chen Shanguang (expert of BP neural network learning algorithm). Glaucoma diagnosis system To solve problems in glaucoma diagnosis such as poor objectivity, low accuracy and fatigue in doctors. Purpose  Realized the quantitative measurement of fundus tissues  Made a clear difference between normal and abnormal tissues  Standardized the diagnosis process of glaucoma  It improved the accuracy, reliability, and consistency of the diagnosis results. Also opened up a broader application prospect. Achievement The original image Image enhancement Image segmentation Image description Image feature parameter Diagnosis of different types of glaucoma Core diagnostic process :
  • 36. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED ROBOTICS 36
  • 37. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Types and market share of robots 37  Most market demand of robots in China are for industrial robots.  Service robots show good potential in China’s market since many families accept household robots. 71% 21% 8% Market share by the main types of robots (2018) Industrial robots Service robots Specialized robots Source: http://www.sohu.com/a/249860283_436079 Industrial robots are used for manufacturing, they mainly consist of welding robots, transport robots, palletizers, packaging robots, painting robots, cutting robots, etc. Industrial robots Service robots operate semi- or fully autonomously to perform services useful to the well-being of humans, they usually include household/domestic robots, medical service robots and public service robots. Service robots Specialized robots are purpose-built for particular task, such as working in high-risk environment. They generally include military robots, emergency rescue robots, etc. Specialized robots
  • 38. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Market size and consumption  China is the largest industrial robots market in the world, making up 1/3 of global industrial robots demand  An increasing aging population feeds the demand for medical and housekeeping services 38 Source: http://www.sohu.com/a/249860283_436079 2.68 3.00 3.93 5.12 6.23 7.57 0.46 0.64 0.94 1.28 1.84 2.80 2014 2015 2016 2017 2018 2019F The sales value of industrial and service robots in China (billion USD, 2014-2019) Sales of industrial robots Sales of service robots
  • 39. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Angel, 12% Series A, 64% Series B, 10% Series C, 3% Others, 11% Financing activities in industrial robotics field by rounds (2018) Investments  In 2017, the investment value was up to 20 billion RMB, about 29 times of 2014. By June 2018, there have been 7,544 robot-related companies built in China.  Policy subsidies were important reasons for the rapid growth of investment in robotics field.  In 2018, financing activities in the field of industrial robotics were mainly concentrated in Series A round. It means most industrial robotics companies in China were still at the initial stage. 39 0.69 3.31 5.03 20 0 5 10 15 20 25 2014 2015 2016 2017 The investment value of robotics in China (billion RMB, 2014-2017) Source: https://www.roboticschina.com/news/2396.html
  • 40. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED  Step is mainly engaged in the research & development, production and sales of industrial automation control products. It has R&D centers and manufacturing centers in China and Germany. Main players in robotics 40  Siasun was the first listed robotics company in China. Its main business includes industrial robots production, logistics and warehousing automation equipment, automatic assembly machines and traffic automation systems.  Estun was founded in 1993 and listed on the Shenzhen Stock Exchange in 2015. Its main businesses include automation core components & motion control systems and industrial robots & intelligent manufacturing systems.  Topstar was founded in 2007 and its main business focuses on research & development, manufacturing and sales of industrial robots. Main players Source: http://www.elecfans.com/d/890020.html 3.53 billion RMB revenue in 2018 3.10 billion RMB revenue in 2018 1.49 billion RMB revenue in 2018 1.20 billion RMB revenue in 2018
  • 41. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED  Along with the progress of ‚industry 4.0‛ and ‚Made in China 2025‛, China is developing its manufacturing industry towards automation, integration and intelligence. Industrial robots are becoming more and more widely used. Where are robotics used – Industrial Robots 41 • In the field of electrical and electronic, industrial robots excel in a series of processes such as sorting and packing, tear film systems, laser plastic welding, and high-speed palletizing. • The application of industrial robots in food and beverage consists of: packaging, picking, palletizing, and processing. • The chemical industry is one of the main application areas of industrial robots. • Faced with the requirements of precision, high purity, high quality and miniaturization of modern industrial products, cleaning technology brought by robots is critical to product quality. • Robotic technology realizes automation on mass scale, ensuring continued economic competitiveness, high productivity, and at the same time alleviating heavy workloads for workers. • Industrial robots are also widely used in other manufacturing workspaces to handle tasks such as drilling and fastening, inspection, welding, painting, sealing, collaborative assembly, etc. • The application of industrial robots in the field of home appliances is inevitably driven by objective factors such as a significant increase in labor costs, a gradual disappearance of China's demographic dividend and improved manufacturing. Chemical Metallurgy Appliances Others Electronics Food
  • 42. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: Industrial Robots – Who are the main buyers?  Automobile and electronic (3C) companies are the two major buyers of industrial robots in China. In addition, the product is also in demand in the field of metallurgy, chemicals & plastics, food and beverage, etc.  While both displaying an upward consumption trend, the 3C industry in China develops more rapidly than the automobile industry. As the second largest buyer in china, 3C industry shows an increasing demand for industrial robots in use of electronic equipment manufacturing. 42 Main buyers of industrial robots (2018) 36.2% 22.6% 13.1% 8.6% 2.8% 16.7% Automobile 3C Metallurgy Chemical&Plastics Food&Drink Others 65 91 116 98 103 125 2015 2016 2017 Automobile (thousands units) 3C (thousands units) Automobile vs. 3C on consumption of industrial robots (thousand units, 2015-2017) Source: Industry overview of industrial robots in 2018 https://zhuanlan.zhihu.com/p/59126738
  • 43. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: Industrial Robots – Where are the buyers?  As shown below, consumers of industrial robots in China shows an uneven regional distribution. 43 1 Yangtze River Delta Distribution of industrial robots consumption in China (2017) Yangtze River Delta possesses the biggest consumption of industrial robots in China Northeast (17.5%) Yangtze River Delta (24.9%) Pearl River Delta (21.8%) Beijing-Tianjin Region (13.1%) Central areas (12.6%) West China (10.2%)  The region gathers both a large proportion of factories, who are the buyers of industrial robots, and many AI companies as suppliers.  High expectation for productivity and product quality have strengthened the demand for industrial robots in the Yangtze River Delta. 2 Pearl River Delta 3 Northeast  Consumers in Northeast are mainly from the automotive industry, pharmaceutical industry, plastics and rubber industry.  There is a strong demand for industrial robots such as spot welding robots and assembly robots.  Pearl river delta is where the electronics industry (3C) is most developed. Major customers include Huawei and Foxconn. Source: Industry overview of industrial robots in 2018 https://zhuanlan.zhihu.com/p/59126738;
  • 44. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: Industrial Robots – Purchasing Triggers 44  Pricy labor cost, higher productivity, and machinery precision are the three main motives to buy industrial robots.  The continuous improvement of the automation level of Chinese industrial enterprises accounts for the increasing demand for industrial robots. Higher Forex volatility the production costs have increased significantly. High labor costs encourage factories to seek cheaper substitutions; and industrial robots are no doubt their primary choice. 1. Labor Cost Cooperation between industrial robots and workers can yield unprecedented productivity. High efficiency brought by machines optimizes the manufacturing procedure, leading to an automated production line. 2. Productivity Modern industrial products face increasingly strict requirements for precision and quality. However, such high expectations can be hardly met by human workers. For instance, cleaning technology brought by industrial robots is critical to product purity for buyers in the chemical industry. 3. Precision & Quality
  • 45. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Where are robotics used – Service Robots Personal/Domestic Home robots, also known as domestic robots, are a type of service robot that is used primarily for household chores. The most common of these is the robot vacuum. Certain robots can be made to watch, hear, monitor and speak on demand. It takes pictures, records videos, makes phone calls and protects the family home through video surveillance. Housekeeping Security Assisted living Professional/Specialized Education is a major application for service robots. Robotic toys are readily available for children of all ages and can help kids start to think about how things work from an early age. Hospitals can program robots to distribute medication to patients. They can also be programmed to interface with intelligent elevators to reach any floor and return to the hospital pharmacy for refilling. There are robots roaming the aisles of grocery stores. They are programmed to do self check-out, monitor inventory, clean up spills and other work that was originally done by human labor. EducationMedicineGrocery Another key area for domestic robots is for social interaction. Many of these are designed to help the elderly and children. Recreation Elderly people living in assisted care facilities or nursing homes also benefit from robots.  Service robots refer to various advanced robots other than industrial robots for non-manufacturing use. There are two main types: personal/home service robots and professional service robots.  Healthcare, finance, logistics, and catering are the most common industries for public service robots. Service robots also increasingly appear in households, for example cleaning robots, accompanying robots, entertainment robots, etc. Below are examples where service robots are intensively used. 45
  • 46. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumer analysis: Household Service Robots (1/3)  Post-90s and Post-80s are the main buyers of domestic service robots.  About 80% of the consumers earns a monthly income over 5,000 RMB. People who are younger in age with a higher income tend to show more purchase power, holding a higher price acceptance. 46 20.9% 33.1% 25.0% 21.0% <5,000 RMB 5,000-10,000 RMB 10,000-20,000 RMB >20,000 RMB 35.5% 36.3% 17.7% 10.4% <30 31-40 41-50 >51 Age distribution of domestic service robot customers (2019) Monthly income distribution of domestic service robot customers (2019) Source: “User Behavior Analysis of Personal / Family Service Robot”, China Academic Journal Electronic Publishing House”, January 2019. http://www.cnki.com.cn/Article/CJFDTotal-JQRY201901017.htm
  • 47. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED 12.9% 42.7% 34.7% 9.7% High school diploma Bachelor’s degree Master degree Doctorat degree & above 62% 17% 18% 3% Top cities Tier-2 cities Tier-3 cities Others Consumer analysis: Household Service Robots (2/3)  The majority of the domestic service robot consumers are from Tier-1 cities. There are hardly any consumers from tier-3 cities and lower.  Buyers of domestic service robots show relatively high levels of education. About 90% of the consumers have a University degree. 47 Geographic distribution of household service robot customers (2019) Education level of household service robot customers (2019) Source: “User Behavior Analysis of Personal / Family Service Robot”, China Academic Journal Electronic Publishing House”, January 2019. http://www.cnki.com.cn/Article/CJFDTotal-JQRY201901017.htm
  • 48. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Under the fast-pace urban life, machine substitution of housework becomes the primary purchasing reason.  There are four main motivations to purchase domestic service robots: household service, entertainment, for children, and for elders.  Family types, such as whether it’s a nuclear family or childless family, impacts the choice of service robots, but the differences are less obvious. 48 34% 23% 24% 19% Household service Entertainment For children For elders Main purposes of buying a household service robot (2019) Household service Consumer analysis: Household Service Robots (3/3) Educational robots and toy robots also attract consumers as parental supplements. For children Chinese filial cultural tradition encourages service robot purchase for elders. For elders Personal recreation also serves as an important motive of buying service robots. Entertainment Source: “User Behavior Analysis of Personal / Family Service Robot”, China Academic Journal Electronic Publishing House”, January 2019. http://www.cnki.com.cn/Article/CJFDTotal-JQRY201901017.htm
  • 49. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED VISION 49
  • 50. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Definition What is computer & machine vision 50 Computer vision (CV) is an interdisciplinary field that deals with how computers can be made to gain high-level understanding from digital images or videos. From the perspective of engineering, it seeks to automate tasks that the human visual system can do. “Computer vision” Source: https://en.wikipedia.org/wiki/Computer_vision#Artificial_intelligence https://en.wikipedia.org/wiki/Machine vision “Machine vision” Machine vision (MV) is the technology and methods used to provide imaging- based automatic inspection and analysis for such applications as automatic inspection, process control, and robot guidance, usually in industry.
  • 51. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Market size and consumption 51Source: http://xilinx.eetrend.com/d6-xilinx/news/2016-03/9901.html https://gongkong.ofweek.com/2018-01/ART-310020-8420-30188673.html  Since machine & computer vision can effectively reduce labor costs, the demands for the technology are wider and wider in China, such as security, finance, etc.  China is one of the largest machine vision markets in the world. 8.5 10.4 12.5 15.2 0 2 4 6 8 10 12 14 16 2017 2018 2019F 2020F The market size of China’s machine vision industry (billion RMB,2017-2020)
  • 52. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Main players in the vision sector (1/2) Top machine vision companies in China 52Source: http://dy.163.com/v2/article/detail/EAQHGDVB0511UEFK.html HIKVISION Technology Co., ltd.  The company commits to continuously improving video processing and analysis technologies.  World's leading supplier of video surveillance products and solutions. Leader of the industry In no particular order Zhejiang Dahua Technology Co., ltd.  A leading monitoring product supplier and solution provider.  Video storage, front end, display control, intelligent transportation series products. Beijing Megvii Co., Ltd.  A company focusing on face recognition and artificial intelligence.  Create the industry-leading face recognition prodcuts, leading the financing of vision technology.
  • 53. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Main players in the vision sector (2/2) Top machine vision companies in China 53Source: http://dy.163.com/v2/article/detail/EAQHGDVB0511UEFK.html In no particular order CloudWalk Technology Co., Ltd..  The company focuses on developing computer & machine vision technologies.  Its technologies used in finance, security, transportation and other key industries. YITU network technology Co., Ltd  A computer vision technology company dedicated to building the future of machine vision.  Provide users with information acquisition and human- computer interaction products based on image understanding. Second2None Technology Co., Ltd..  The company commits to the application development of machine vision products, embedded machine vision system research and development, production and sales. ADLINK Technolog Inc.  A leading manufacturer of high-performance, high-quality PC based add-on cards and platform provider.  The company provides leading edge computing solutions that support the transition to connected Industrial IoT systems.
  • 54. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Where is computer vision used 54 67.8% 18.1% 7.7% 3.8% 1.7% 0.9% Market share of China’s computer vision applications according to usage (2017) Security image analysis Advertising and marketing Pan-financial authentication Internet entertainment Smart phones Others Main application fields Face recognition and video monitoring technologies can quickly recognize people’s identity, verify suspects, analyze the target action route and daily behavior trajectory. They also can be used for public security control, traffic security, criminal investigation and case solving Image recognition technology helps clients better understand products and provides more advertising space for merchants. Intelligent analysis of video content, the placement of advertising in the corresponding scene can enhance the effect Card identification, document identification, fingerprint identification, face verification and iris verification technologies can verify the identity of customers, conduct remote business and extract key information from documents Security image analysis Advertising and marketing Financial authentication Source: https://www.iimedia.cn/c400/60305.html https://baijiahao.baidu.com/s?id=1617729474629803501&wfr=spider&for=pc
  • 55. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: Who are the main users of vision technology? According to the market share, the government, smartphone companies and financial institutions constitute the top 3 fields of computer vision applications. 55 Government Financial Institutions Internet Companies Smartphone CompaniesMedia Companies  Search for criminals in its multifarious video surveillance system.  Crowd analysis, prevention and early warning in crowded transportation hubs.  Advertisers use the technology to build various forms of interactive scenes.  Intelligent mining image content advertising space, build a new marketing model.  Smartphones use face swiping for payment, identity, album classification, and editing.  In the financial field, identification and intelligent payment will improve the efficiency and quality of security and payment.  Open an account remotely, withdraw money without card, transfer transaction confirmation. Source: https://blog.csdn.net/cf2suds8x8f0v/article/details/78787750  Image beautification, augmented reality, image and video editing.  Helping people more easily access products, by searching images and buying while looking. Main users
  • 56. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: purchasing reasons (1/2) Government 56 After the June 1 robbery in Nanjing, Nanjing police extracted nearly 2,000T of video data from more than 10,000 cameras in the city, and mobilized more than 1,500 police officers to search for video clues, which took more than a month. According to Xu, co-founder of SenseTime, the two facial recognition systems they provided identified 69 criminal suspects in the first 40 days of operation in Chongqing last year. With the acceleration of urbanization, a large number of migrants are pouring into cities, the large demographic influxes make it difficult to manage urban populations. http://www.cqvip.com/main/export.aspx?id=7000660894&type=2&sign=a95d5bc55a069 83b0f42a6e5fc4899b5 http://dy.163.com/v2/article/detail/DMTSE9R70511PT5V.html http://tech.hexun.com/2018-10-24/194982878.html Changes of social environment Traditional ways to search for suspects: time consuming and laborious A new method based on computer vision: fast, efficient and accurate
  • 57. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: purchasing reasons (2/2) Financial institutions 57 Human eye judgment, SMS verification and bank card binding Remote account opening, remote identity authentication and remote payment can be verified through face recognition technology. National policies support face recognition technology, which it firstly used by major domestic banks for promotion and increased trading volumes in the financial sector http://www.cqvip.com/main/export.aspx?id=7000660894&type=2&sign=a95d5b c55a06983b0f42a6e5fc4899b5 http://dy.163.com/v2/article/detail/DMTSE9R70511PT5V.html http://tech.hexun.com/2018-10-24/194982878.html The changing of social environment Traditional ways for real- name authentication has low accuracy, poor customers experience and high costs New methods based on computer vision have high speed, good customers experience, low costs and high accuracy
  • 58. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED SPEECH 58
  • 59. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Definition AI speech is the ability of a machine or program to identify words and phrases in spoken language and convert them to a machine-readable format. It works through the process of extracting text transcriptions or some form of information from speech imputs. 59 Input Encode Decode Output What is AI speech? “AI Speech” Source: https://searchcustomerexperience.techtarget.com/definition/speech- recognition
  • 60. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Market size and consumption  China’s AI speech market had surging growth in recent years, the main reasons are the fast developing mobile Internet and the increasingly popular smart speakers among consumers. 60 3.0 4.2 6.2 10.6 15.0 2014 2015 2016 2017 2018 Market size of China’s AI speech industry (billion RMB–2014-2018) Source: http://www.askci.com/news/chanye/20190510/1528111146034.shtml http://www.chyxx.com/industry/201904/728625.html
  • 61. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Main players in the AI speech sector 61 44% 28%7%3% 18% Market share by the main brands in China (2018) iFLYTEK Baidu Apple Nuance Others Users can search for life information through voice control and text input. Meanwhile, they can also directly watch relevant reviews and even book reservations and tickets. However, its biggest feature is the human-computer interaction, which not only has a very vivid dialogue interface, but also responds to users’ inquiries with precise answers. Baidu adopts the internationally leading integrated modeling algorithm of speech language to quickly and accurately identify speech and text. It also supports multiple scenarios, such as mobile phone application speech interaction, speech content analysis and robot dialogue. IFYTEK is a well-known listed artificial intelligence enterprise in the Asia-Pacific region. Since its establishment, the company has been engaged in the research of core technologies such as speech, natural language understanding, machine learning and autonomous learning for a long time. It is committed to making machines that are able to listen, speak and process information. Source: Forward-The Economist http://www.qianjia.com/html/2018-10/15_307745.html http://www.iotworld.com.cn/html/News/201902/2ee8ca27e86ecc73.shtml
  • 62. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Where is AI speech used 62 Telephone query Automobile voice control Dictation systems Phonetic teaching Smart devices Industrial control and medical field Intelligent toys Household appliances remote control Source: https://wenku.baidu.com/view/a9ece024dd36a32d7375815d.html http://www.elecfans.com/video/yinpinjishu/20180102610014.html The operation of GPS, air conditioning, lighting and audio equipment. Speech recognition can bring efficiency which a keyboard input can’t. The interaction between devices and users can create household tech such as smart speakers. Voice recognition technology enables telephone inquiries, automatic wiring and specialized services. Commands are issued to the machine by voice, then the machine responds by voice. This is useful when the operator‘s eyes or hands are occupied. People can control the television, VCD, air conditioning, fan and curtain by voice, so that all kinds of electrical appliances can be operated easily.. With AI speech technology, children can talk to their toys and command them to complete some simple tasks by voice. In terms of education, AI speech technology can increase students’ interests in learning. Chinese continuous language recognition can greatly reduce the obstacles of computer applications and simplify the way of information processing.
  • 63. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: The main consumers of AI speech products  The main personal consumers of AI speech products are 26-35 years old men with stable family and relatively high income. 63 66.3% consumers are married 61.7% consumers are men 50.8% users’ income higher than 8,000 RMB per month Source: http://baijiahao.baidu.com/s?id=1603580789725748507&wfr=spider&for=pc 53% consumers are between 26 and 35 years old Main consumers 61.7% 38.3%
  • 64. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Consumers analysis: Where are the consumers from?  Consumers are mainly from the developed areas and cities, people living in those regions are more willing to purchase AI speech based products in order to facilitate their daily life. 64Source: Forward-The Economist http://www.qianjia.com/html/2018-10/15_307745.html 54.3% 45.7% Consumers distribution by cities (2018) Tier-1 cities Other cities 33.3% 41.9% 15.5% 3.5% Every day 3-4 times per week 1 time per week 1 time per half month AI speech product consumer frequency of use (2018)
  • 65. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED CASE STUDIES 65
  • 66. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Mariedalgar & Unmanned Stores  Mariedalgar is a Chinese cosmetics brand using AI technology since 2015.  The brand launched its unmanned lipstick vending machine in 2015 and built China’s first unmanned beauty shop named ‚TO GO‛ in 2018. 66  After scanning the machine’s QR code, customers enter the product page. They can browse lipstick shades and purchase a mini lipstick for only 5 RMB. The whole shopping experience can last less than 1 minute and 30 seconds.  The unmanned vending machine sells high quality lipsticks in smaller sizes, cheaper price through a much more novel experience. Source: http://www.hgcm.cn/cygs/2018-05-23/1427.html https://www.yicai.com/news/100019759.html https://baijiahao.baidu.com/s?id=1570963841887832&wfr=spider&for=pc Unmanned vending machine  Inside Mariedalgar’s unmanned beauty shops are self-service vending machines, shopping guider robots, AR virtual makeup, and more. Consumers purchase cosmetics through QR codes.  The unmanned shops improve shopping experience and meet the young consumers’ demands for interests and fashion.  The brand collects consumer information and makes personalized product recommendations. Unmanned beauty shop
  • 67. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Ratio Café’s state-of-the-art robot 67  Ratio Café is a Chinese coffee shop with a state-of-the-art robot modeled after the arm and hand of a real bartender.  Customers order on a WeChat mini-program or by scanning the QR code and can watch the robot prepare their orders in front of them.  Consumers can also customize their coffee or cocktail when ordering.  The orders are ready in 2-3 minutes.  By having robot bartenders, a coffee shop or bar can effectively attract customers who are keen on high tech or those looking for a novel experience. Besides, coffee shops also can save part of costs since they have less human workers. Scan QR code Menu on mobile phone The robot prepares coffee The coffee is made Source: https://www.sohu.com/a/235461423_318481
  • 68. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED MeiTuan’s food delivery robots  Meituan is a Chinese food purchasing and delivery platform. It launched an autonomous food delivery system in 2018 and it is going to be rolled out gradually in 2019 starting in Beijing.  Meituan has more than 300 million active users, 4 million suppliers, and more than 20 million daily orders.  Meituan is working with AI companies such as Uditech and Segway-GX which have developed autonomous delivery robots for the platform. 68 Labor costs Delivery efficiency Delivery robots have low weather influence and can work uninterrupted for a long time. Thus, they usually finish every delivery task with less time than human workers. In China’s tier-1 and 2 cities, the labor costs of delivery people are increasing. By using delivery robots, Meituan can effectively reduce costs and have a desirable alternative in big cities. Source: https://new.qq.com/cmsn/20180728/20180728013933.html https://baijiahao.baidu.com/s?id=1613401807294854899&wfr=spider&for=pc Smart enough By using machine vision, GPS, face recognition and other AI technologies, delivery robots can automatically avoid automobiles, pedestrians and other obstacles during the delivery. They also have the functions of self-locking and automatic alarm to protect the products they delivery.
  • 69. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Ford Motor Company’s smart vehicles  Chinese consumers are accustomed to high connectivity, they seek innovative in-car services and are even ready to pay subscriptions for content.  By working with Baidu, Ford Motor Company has built a AI system named SYNC+ to connect cars with smartphones. 69 SYNC+ system  After downloading the mobile app, the system allows the driver to connect a smartphone to the car through the app, also the car itself can connect to Baidu’s smart home devices (such as smart speakers).  Car owners can control navigation, reservation (such as restaurant) and entertainment systems by voice.  Through the system, drivers also have services such as vehicles maintenance reservation, roadside assistant, etc. Source: https://www.autohome.com.cn/market/201908/100240117.html
  • 70. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Ordering food by scanning your face in KFC  In China, KFC can predict customer choices based off data. Through the intelligent software that scans the customers’ faces and recalls the customers previous orders, KFC is able to offer a menu adapted to each customer.  The facial recognition technology was developed in partnership with Baidu. 70 Facial recognition  Through facial recognition, KFC can harvest data from the Chinese consumers and customize a menu for each diner based on preferences, local tastes and age.  For consumers, purchasing KFC’s food by scanning face saves their time in queues, especially at peak times.  For those who are KFC’s regular guests, their preferences will be saved as data after they bought food with scanning faces. Then, the system can help them improve the efficiency of ordering with the record. Source: http://www.sohu.com/a/123021121_473284
  • 71. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED CHINESE AI COMPANIES 71
  • 72. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED iFLYTEK: The leading AI brand in China 72 Main areas covered by iFLYTEK’s AI products  In 2018, the total annual revenue of iFLYTEK exceeded 7.9 billion RMB and increased 45.41% compared with 2017.  The sales revenue of B2C products has exceeded 2.5 billion RMB in 2018, which occupied 31.8% of the total revenue. Source: http://sd.sina.com.cn/news/b/2019-05-06/detail-ihvhiews0072930.shtml  iFLYTEK started its AI business in 1999, now it is one of the leading players in China’s AI market.  The company targets both B2B and B2C market by developing natural language processing, machine learning, AI speech, robotics and other AI technologies & products. The main business of iFLYTEK Revenue in 2018 Medical equipmentEducation Office equipmentDigital services Automobile Translating/Language
  • 73. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED iFLYTEK: Advanced AI speech and NPL technologies  iFLYTEK has the most advanced AI speech and NPL technologies in China, it already occupied 44% of the AI voice & speech market.  The technology has been used in its B2C products, including recorders, translating machines, office equipment, etc. 73 Smart recorder Smart office equipment Intelligent study equipment Smart translator  During the double 11 shopping day in 2018, iFLYTEK’s translating machines reached the highest sales (300,000 sold items) among all kinds of similar products on Taobao/Tmall.  During the 618 shopping day in 2019, iFLYTEK’s 6 AI products achieved the best sales among similar products on both Tmall and JD. Source: http://www.sohu.com/a/321576708_499573 http://sd.sina.com.cn/news/b/2019-05-06/detail-ihvhiews0072930.shtml
  • 74. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED iFLYTEK: Marketing strategy in China Two important offline marketing strategies for the company. 74 iFLYTEK built offline AI experience stores in Shanghai and Shenzhen to promote its products. The offline experience stores are big adjustments of its business, the brand started to expend more efforts on B2C market. In order to open up new market and increase its brand awareness, iFLYTEK widely participated in the construction of China’s smart cities. By working with local government, the company provided technical support for public services. Offline AI experience stores Smart cities
  • 75. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED DeepBlue Technology: The world-class AI developer in China  As one of the leading AI developers in China, DeepBlue Technology is devoted to developing AI applications, software/systems, hardware, robots, etc.  The brand’s core technologies are machine & computer vision, self-driving technology, biological intelligence, etc. 75 Main fields covered by DeepBlue Technology Security New retail Robots Education Transportation AI speech Smart cities AI Chips Biological intelligence
  • 76. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED DeepBlue Technology: Main products  Many AI products of DeepBlue Technology target B2B market, they are also involved in China’s smart city development. 76 Service robots Smart security systems AI vending machines Self-driving busses Smart sweeping machines
  • 77. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED DeepBlue Technology: Domestic and international strategy 77 Cooperating with real estate developers DeepBlue Technology built strategic partnership with the Greenland Group (a large real estate developer in China) to participate in the creation of smart communities, smart transportation and smart cities in China. The Belt and Road Initiative In order to expand overseas market, DeepBlue Technology actively worked with European countries, such as Greece and Italy, through The Belt and Road Initiative. The company provides AI products to support the public service and smart cities in those countries.
  • 78. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED STAY UPDATED ON CHINA MARKET INSIGHTS 78 To get weekly China market insights, follow our WeChat account https://www.linkedin.com/company/daxue-consulting https://daxueconsulting.com/newsletter-2/ WeChat LinkedIn Newsletter
  • 79. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED ABOUT 79
  • 80. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Responsibility at all levels International team collaborates to bring new perspectives in solving challenges Empowerment through comprehensive management Loyalty to our clients Comprehensive, scientific, and logical reasoning Transparency of sources and information Efforts are always rewarded within the team 80 Values, principles and vision of Daxue Consulting 6 Key values emphasized throughout all our projects
  • 81. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED The strengths of Daxue Consulting 6 crucial competitive advantages 81 Responsive & Flexible All In-house Actionable Recommendations Innovative Professional Localized & Creative  Working on each project making exchange and challenges, recruiting the brightest talents in both local & international (1:1), to ensure a comprehensive & scientific logic thinking.  Result-oriented, regular reports with our clients to make sure we align the expected objective.  Teams & proposal are tailor- made depending on the project.  One client = one team.  Using 50+ software  Leveraging alternative data and open source intelligence  Social listening  Our methodologies are rigorous and serious, taking information from the best practice in the world of consulting and research.  Demanding on the results, detail- oriented, respectful towards our commitments.  Corporate presentation. 1. Localized & Creative 2. Responsive & Flexible 5. Innovative 6. Professional  Daxue Consulting does not outsource its services. Deep understanding on the fieldwork and the context within which data was collected.  Transparency of sources and information 3. All In-house Management  We care about results and design our research in order to be operational.  We are driven by metrics such as customer acquisition costs, business plan KPIs, P&L optimization. 4. Actionable recommendations
  • 82. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED 350+ clients with 450+ projects for the past 7 years Examples of references 82
  • 83. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED A recognized expertise on the Chinese market Regularly featured and quoted in global publications 83 Daxue latest quotations in recent publications (click on the logo to be redirected to the articles)
  • 84. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED Using modern tools to stay ahead of the competition A selection of tools leveraged by Daxue Consulting 84 Search engine & E-commerce analytics Social listening Data mining/survey analysis Website/app traffic comparison Diary study & Community research
  • 85. © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED © 2019 DAXUE CONSULTING ALL RIGHTS RESERVED CONTACT US dx@daxueconsulting.com www.daxueconsulting.com +86 (21) 5386 0380 BEIJING | SHANGHAI END. 85