China's artificial intelligence (AI) application Start - Up companies are showing a wide gap in revenue generation compared with U.S. rivals in the global market. Despite large user bases, they are revealing structural limits on profitability, prompting assessments that China's AI ecosystem has fallen into a "trap of quantitative growth."
On the 6th (local time), the South China Morning Post (SCMP) reported, citing a report released jointly by Uni-Research and U.S. consultancy TechBuzzChina, that as of Aug., only four Chinese developers were among the top 100 private AI apps worldwide by annual sales. The four corporations—Hangzhou-based Glority, voice memo app Plaud, ByteDance Ltd., and education platform Zuoyebang—had combined annual sales of about $447 million (about 470 billion won), accounting for just 1.23% of the total $36.4 billion. By contrast, U.S. firms OpenAI and Anthropic posted $17 billion and $7 billion, respectively, showing an overwhelming gap.
The highest-ranked Chinese corporations was Hangzhou-based Glority, the company behind the plant identification app "PictureThis." Glority ranked 20th with annual revenue of $173 million. The report excluded apps from listed conglomerates such as Alibaba and Tencent.
Rui Ma, founder of the China tech industry research firm TechBuzzChina, said, "As Chinese Start - Up companies focus on short-term revenue from public institutional sector projects, it is difficult to build a long-term revenue structure in the global market," and noted, "Targeting overseas consumers and corporations requires massive capital, but it is much harder for Start - Up companies in China to raise funds." Ma added, "Of the top 23 Chinese AI apps, 19 earn most of their revenue overseas," saying, "This shows there is greater growth potential in the global market than in China's market."
The report said it derived annual sales estimates based on each AI app's official website traffic and payment platform data. In particular, it pointed out as a limitation that even if Chinese Start - Up companies rapidly build a user base at home, low payment conversion rates mean it does not translate into substantial revenue. By contrast, U.S. Start - Up companies established paid subscription-based revenue models early, securing stable cash flows, the analysis said.
Amid such fragile revenue structures, the U.S. government's tighter tech restrictions on China in recent years are pushing many Chinese AI corporations to move their business bases overseas. Notably, video-generation AI corporations HeyGen and AI agent developer Manus have set up legal entities in the United States and are targeting the global market. Experts say this trend is not simply "de-China-fication" but a survival strategy to avoid shrinking investment and regulatory risks in China.
Ma said, "Frankly, many Chinese investors no longer even consider investing in AI software Start - Up companies," adding, "Capital is currently shifting to physical production bases such as robotics, hardware, and semiconductors." Ma added, "If AI Start - Up companies fail to secure revenue models, the gap in global competition will widen further."
China still has a domestic Generative AI user base of more than 500 million, giving it ample capacity to provide an initial stage for growth. However, the report warned, "If the AI ecosystem does not lead to tangible sales, China may remain in the 'illusion of a consumer base' (high traffic that doesn't make money) in the tech race."