AI has rapidly become a central topic of conversations around the world, and applications for the new technology are becoming integrated into nearly every aspect of modern life. In China it has reshaped and streamlined customer service, boosted new product innovation, and influencing entire industries. This impact is setting new standards for consumer expectations and experiences.
In 2023, China’s AI market exceeded USD 29.82 billion[1]. Among recent AI developments, AI-powered customer service solutions have become one of the most widely adopted applications. According to a survey by Bain & Company, over half of the top 500 online merchants reported utilising AI tools, including customer service chatbots, visual search, and voice-activated shopping [2].
AI SHOPPING
The rise of social commerce and an increasingly diverse user base has fuelled the demand for AI-powered personalisation. This preference-based marketing approach, where social media apps and online shopping platforms tailor products and services to individual interests, is particularly valuable for busy young professionals and the silver generation, who may find online navigation more challenging.
Taobao Online Marketplace in China
To better serve the growing population of elderly consumers, Taobao, one of China’s largest online retail platforms, introduced user-friendly features such as larger text, simplified navigation, and voice-assisted technology[3]. By the end of 2022, these enhancements had attracted over 3 million elderly users. Additionally, Taobao expanded its accessibility offerings by incorporating AI-powered text-reading functions for blind and partially visually impaired users, resulting in an increase of 300,000 visually impaired users on the platform[4].
Beyond reducing costs and optimising resources, AI-driven productivity significantly boosts both revenue and customer satisfaction. For instance, Alibaba users experienced a 25% improvement in customer satisfaction following the implementation of AI chatbots[iii]. These tools have proven effective in streamlining customer service, allowing businesses to allocate resources more efficiently while simultaneously enhancing user experience and fostering brand loyalty.
ED TECH
AI has also made significant advancements in China’s education technology (EdTech), sector which was valued at USD 57.3 billion in 2023[5] and is expected to grow at an annual rate of 7.44% by 2027[6]. Key innovations driving this growth include smart learning tools such as translating pens, dictionary pens, and writing pens. These can often be seen at shopping mall demonstration stores, showcasing a range of different products to parents that are eager for their children to outperform peers.
One of the leading players in this space, Toycloud, reached a total revenue of USD 140 million in the past year, with 500,000 units of their dictionary pen sold within its release year[7]. Other notable innovations include the Alpha Egg writing pen[8], which helps children practice Chinese character writing, and ByteDance’s AI-powered smart homework lamp[9], both of which are reshaping how students engage with education at home, and in the classroom. With the intense focus that parents have on high academic achievements in China, this will be an important consumer space to watch.
AUTOMOTIVE
Application if AI in the automation industry is making a strong impact and the sector is valued at USD 326 million in 2023 and projected to reach USD 1.699 billion by 2030, the sector is witnessing groundbreaking advancements[10]. Government initiatives, such as “Made in China 2025,” have helped boost the adoption and development of AI in the automotive sector.
Interior of BYD Seagull, a fully electric entry-level passenger car, Photo by GZrex
Leading brands like Baidu[11] and BYD [12] are developing new innovations in autonomous driving, such as advanced driver-assistance systems (ADAS), and in-vehicle AI assistants. These technologies are quickly becoming standard features, providing safety enhancements and improved and user experience. With flat car sales, this has been a key focus for automakers to provide better value for money with newer advanced features.
Consumers have been adapting to the rise of AI with a combination of openness and scepticism. According to a survey by PwC, Chinese consumers expressed greater concern than global peers about the ability for AI facilitate the spread of inaccurate information[13]. However, this cautious sentiment coexists with a remarkable openness to technological advancements. Notably, 87% of Chinese consumers reported feeling comfortable about the prospect of using fully automated vehicles for their daily commute[iv].
As AI continues to evolve, its role in reshaping industries, enhancing convenience, and driving innovation in China will be vital to keep track of. The intersection of technology, government policy, and consumer appetite in the China market is unique, due to China’s home-grown AI developments. For the international market, AI solutions are largely coming from Silicon Valley, and these two very separate “AI Worlds” will continue to develop in fascinating ways.
Make sure to check out the rest of our Top Trends in China for 2025.
[2] https://www.bain.com/about/media-center/press-releases/2024/chinese-retailers-invest-in-generative-ai-to-boost-performance/
[3] https://www.alizila.com/alibaba-makes-taobao-more-user-friendly-for-elderly/
[4] https://www.alizila.com/alibaba-makes-taobao-more-user-friendly-for-elderly/
[5] https://aibusiness.com/ml/the-alibaba-challenge-how-to-effectively-engage-with-a-billion-customers-
[6] https://www.china-briefing.com/news/chinas-edtech-market-growth-trajectories-and-future-prospects
[7] https://www.statista.com/outlook/dmo/app/education/china
[8] https://kr-asia.com/toycloud-the-hidden-unicorn-rewriting-the-rules-in-childrens-tech
[9] https://lahlahbanana.com/2022/10/12/alpha-egg-ai-writing-pen-parent-review/
[10] https://www.businessinsider.com/bytedance-smart-lamp-surveillance-kids-china-2021-6
[11] https://www.nextmsc.com/report/china-automotive-ai-market
[12] https://thechinaproject.com/2023/02/23/ten-chinese-autonomous-driving-companies-to-watch/
[13] https://carnewschina.com/2023/05/11/byd-to-launch-dnp-adas-to-compete-with-teslas-autopilot-chips-supplied-by-vw-backed-company
[14] https://www.pwccn.com/en/retail-and-consumer/voice-of-consumers-china-report-oct2024.pdf
[15] https://www.pwccn.com/en/retail-and-consumer/voice-of-consumers-china-report-oct2024.pdf
