OpenAI's ban on Chinese access to ChatGPT to spur growth of local alternatives, experts say

OpenAI's upcoming ban on China-based developers' access to its service is set to contribute to the growth of the Chinese artificial intelligence (AI) sector rather than hinder its progress, industry insiders and analysts said.

"OpenAI halting China market access will only accelerate the Chinese large language model (LLM) industry's growth," Zhou Hongyi, founder and chief executive at cybersecurity firm Qihoo 360, said in a social media post on Wednesday.

Zhou - whose Beijing-based company has developed its own LLM, the same technology behind OpenAI's ChatGPT and other generative AI services - said the US firm's ban on China-based developers would only push away its users, forcing them to pick local AI model builders, who have been vying for a bigger slice of the market.

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OpenAI has not officially made its service available in China, including Hong Kong, which is excluded from a list of 188 countries and regions where OpenAI offers service.

China has more than 200 home-grown LLMs, of which 117 had been approved for public release as of March. Photo: Shutterstock Images alt=China has more than 200 home-grown LLMs, of which 117 had been approved for public release as of March. Photo: Shutterstock Images>

Developers in China, where local authorities have cracked down on the use of foreign AI services, have been using virtual private networks to bypass restrictions and could also gain access through OpenAI's application programming interface (API).

Chinese tech firms acted swiftly to capitalise on the ban, which will take effect from July 9, by offering migration options and free tokens to lure local customers to their services.

Beijing-based Zhipu AI, considered one of the country's best hopes to compete with OpenAI, was the first to react. It announced a "special house-moving plan" to help China-based OpenAI users "easily switch to home-grown [LLMs]", according to a post published on its official WeChat public account.

Joining Zhipu were Big Tech firms and other AI high-flyers, including South China Morning Post owner Alibaba Group Holding, search engine giant Baidu, and AI start-ups Baichuan and 01.ai, which all offered perks ranging from steep discounts to freebies, as well as technical support, boasting that their LLMs matched OpenAI in capability.

Baichuan, the new venture of Wang Xiaochuan, founder of Chinese search engine Sogou, promised it would only take as few as five minutes to make the switch from OpenAI to its platform.

A photo taken on February 26, 2024 shows the OpenAI logo on a smartphone screen (left) and the letters AI on a laptop screen. Photo: AFP alt=A photo taken on February 26, 2024 shows the OpenAI logo on a smartphone screen (left) and the letters AI on a laptop screen. Photo: AFP>

One of the ways to monetise AI models is to sell access through APIs, the use of which is measured by the consumption of tokens, which are discrete units of data that a model reads or generates.

The swift response from Chinese AI players was indicative of the mounting competition in the local industry, according to Zhang Yi, founder and chief analyst at consultancy iiMedia.

China has more than 200 home-grown LLMs, of which 117 had been approved for public release by Chinese authorities as of March.

Earlier this year, intense competition prompted some AI heavyweights to declare a price war, with some, including Baidu, offering free use of their less powerful models to entice customers.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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