Artificial intelligence (AI) has been a global buzzword since November 2022, marked by the game-changing release of ChatGPT. Since then, countries worldwide have hailed AI as the future of economic growth and have started to explore ways to adopt the technology for national industrial needs. Numerous countries have released tentative legislation on its governance to guide startups working in the field.
Within this context, Southeast Asia is a prime market for AI adoption. The region hosts several developing economies with a young demographic that may significantly benefit from skilling themselves in AI use.
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The primary question on everyone’s mind now is the role that Chinese technology companies will play in AI adoption in Southeast Asia. It is increasingly likely that the region will adopt foundational models developed in China as a stopgap before exploring Indigenous development.
AI trends in Southeast Asia
Southeast Asian countries are racing to adopt AI in business processes. Singapore has recently released its AI Governance framework, which aims to clarify the government’s legal stance on GenAI. Similarly, Indonesia is looking to adopt precision farming techniques that heavily rely on this technology to help boost food security in the region.
The overall number of AI startups operating in the region has risen rapidly. Singapore leads the pack with 44% of the region’s artificial intelligence-based startups compared to 27% in Vietnam. Public and private stakeholders in ASEAN are looking towards AI solutions as a tool to unlock the next growth stage and avoid the middle-income trap.
The rise of AI in China
Chinese efforts to become a global leader in this space solidified in 2017. The country adopted the “Next Generation Artificial Intelligence Development Plan”, intending to become the leading country in the world regarding AI innovation and adoption by 2030. China is not far from realising this goal, with only the United States posing a threat to that position.
Chinese companies have released a slew of foundational AI models that demonstrate the country’s research progress. For example, one company, Alibaba, has released over 100 AI models, including some with text-to-video capabilities. Most of these models are open-source, demonstrating their commitment to helping the industry develop as a whole.
Chinese AI adoption in Southeast Asia
Considering the advancements made by the Chinese in artificial intelligence, it is unsurprising that Chinese companies are the first to make inroads in the Southeast Asian market. According to a 2023 report, China made the highest investments in Southeast Asian AI startups between 2011 and 2021.
While US investors were part of a higher number of deals, Chinese investors led the pack in terms of total capital invested. Currently, Singapore remains the most attractive country for foreign investments in the space. Besides a favourable business environment, Singapore is also home to the region’s top engineering and research talent.
Besides venture capital investments, Chinese tech companies also want to set up subsidiaries in Southeast Asia. Further, the development of data centres and research labs is boosting the region’s AI capabilities.
Lastly, it’s not just Chinese capital flowing into Southeast Asia to bolster the sector. Several Chinese AI platforms, such as Deepseek, Qwen, and Ying, are already being used by both businesses and consumers.
Adapting AI to local needs
While AI adoption is on a massive growth trajectory, it’s not without its challenges. While most artificial intelligence models have a free version, the latest cutting-edge capabilities can only be accessed through a significant monthly fee.
Since the models are foreign-made, this fee can be too high for local businesses and consumers to pay. Moreover, a trend is emerging for newer AI models to be increasingly costlier, further driving disenfranchisement.
Another challenge for local adoption is language. As the models are developed primarily for the Chinese market, they will take some time to be available in local Southeast Asian languages. Further, since it’s a diverse region which is home to a multitude of languages, several barriers exist before local consumers can truly benefit from these models.
Opportunities and risks for Southeast Asians
Businesses and consumers are pragmatically weighing their options regarding which AI models to adopt. Key user issues include cost-effectiveness, performance, privacy, and regulatory concerns.
Currently, the most popular AI models, such as ChatGPT and Gemini, are American-made. However, Chinese models are rapidly making inroads as their performance catches up to American flagbearers.
Overall, startups developing artificial intelligence models have a significant opportunity to expand in ASEAN. The region boasts a sizable tech-savvy population which is young and hungry for betterment.
With regional governments taking a favourable stance to encourage AI adoption, the use of the technology will likely reach an exponential growth curve in the near future. And, as the rest of the world is now witnessing, China will surely have a significant role to play in AI adoption in Southeast Asia.