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Home»Startups»Why are Chinese AI startups relocating out of China?
Startups

Why are Chinese AI startups relocating out of China?

prosperplanetpulse.comBy prosperplanetpulse.comJuly 3, 2024No Comments3 Mins Read0 Views
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Many Chinese AI companies are relocating to other countries, and Wu Kunsong and Chen Binhui have also relocated their AI startup from Hangzhou, China to Singapore. Singapore offers better investors and customers for Wu and Chen because many geopolitical tensions prevent U.S. companies from expanding into China. The U.S. restricts exports to China, which is why Chinese startups can’t buy chips and cutting-edge technology from U.S. companies. Now that Wu and Chen have moved their startup to Singapore, they will be able to buy chips and other cutting-edge technology from Nvidia Corp. Wu said in an interview that he wants to go to a place where he can easily get funding and investment.

Singapore has become a favorite city-state for many Chinese AI startups looking to go global. The US has blocked trade with China, denying AI startups access to the latest technology. Singapore is home to a large ethnic Chinese population, but many have distanced themselves from their Chinese roots through “Singaporewashing”. However, this hasn’t always worked out well, and Beijing-based ByteDance has moved TikTok’s headquarters to Singapore, but it is still caught up in US laws that seek to ban the app in the US due to safety concerns. Chinese fashion company Shein has also moved to Singapore, but this time it plans to list in London instead of New York.

Many Chinese AI startups do not want to come as Chinese companies because doing so would deny them access to cutting-edge chips used to train AI systems. The US does not sell its latest chips and other technologies to China for fear that they could be used by the Chinese military. OpenAI also limits access to its tools to China. China has very strict rules on AI generation due to Communist Party policies and propaganda. This means that AI startups cannot research or create new algorithms before registering with the government.

According to consulting firm Lincloud, 70% to 80% of Chinese AI and software startups want to target customers around the world, and many are now building communities that will help them go beyond China and tap into global markets. Chan Yiming, deputy chief executive officer of the Singapore Economic Development Board, said Singapore is a good place for many startups and can act as a bridge between entrepreneurs and multinational companies. Singapore is a hub in Southeast Asia. Singapore’s AI regulations are not strict, and by the end of 2023, there are more than 1,100 AI startups based in Singapore.

Image: DIW-Aigen

Funding has been tougher in China due to an economic slowdown and tensions with the U.S. Wu and Chen struggled to find backers in China, so they turned instead to Singapore’s Kamet Capital, from which the company raised $5.6 million last year. The Singaporean government also provides financial and technical support to startups, citing political stability.

Researchers at Linkee.ai ranked Singapore the second best AI hub in the world, with an average salary of $158,000 for AI specialists. China itself is home to many large AI and tech startups, but these companies are unable to make it global. The more successful a startup is in China, the harder it becomes to make it global. Chinese startups can only choose one of two options: stay in China by Chinese rules or go overseas. It is impossible to choose both.

Read next: Average salaries at the top 7 companies revealed


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