‘China is Behind’: Alibaba Chairman Joe Tsai on AI Race; Gives a Peek into What’s Wrong
In an interaction with Nicolai Tangen, the CEO of Norway’s Norges Bank Investment Management, on his podcast ‘In Good Company’, Tsai said that China is at least two years behind American companies, such as Open AI, that have taken the lead in artificial intelligence.
Chinese e-commerce giant Alibaba co-founder Joe Tsai, who replaced the more popular Jack Ma as the group chairman last year as part of a leadership reshuffle, has said China is behind the Western countries in the AI race and is playing catch up.
Tsai cited the US’ restriction on export of sophisticated chips to China as part of the reason why China is lagging in the AI space.
“I think today we’re probably two years behind the top models. So, last October, the US put in very stringent restrictions on the ability of companies like Nvidia to export high-end chips to every company in China. So they’ve sort of abandoned the entity list approach and they put entire China on their list. I think we’re definitely affected by that,” Tsai said.
The Alibaba co-founder acknowledged the move had affected his company, but mentioned that China would eventually produce GPUs (Graphics Processing Units) which are critical for AI expansion. “In fact we’ve actually publicly communicated. It did affect our Cloud business and our ability to offer high-end computing services to our customers. So it is an issue in the short run and probably the medium run. But in the long run China will develop its own ability to make these high-end GPUs.”
Without giving much details on the kind of effort Alibaba is putting in AI , Tsai said: “We have some effort of doing that [developing GPUs] but we also are looking at other players. To source chips from other players.”
He suggested that most Chinese tech companies were dealing with the shortage of chips. “It’s a big issue. It’s something that everybody is trying to grapple with. In the short run though, I think prior to the restrictions coming down, people have stocked up inventory. So, currently, you know I think in the next year or 18 months, the training of large language models can still go ahead given the inventory that people have.”
“I think there’s more high computing that’s required for training as opposed to the applications that people call inference. On the inference side, there are multiple options. You don’t need to have as high power and high-end chips as the Nvidia latest model.”
Flagging the prejudice with which Chinese companies are looked at in the US, Tsai emphasised on the trade that Alibaba facilitates.
“Speaking of US-China specifically, if you look at Alibaba we do so much business on behalf of US companies. We sold over $60 billion of American products to Chinese consumers annually. That trade is two-way. In Europe, about 14 billion euros of French products to Chinese consumers, 7 billion German products to Chinese consumers.”
“These are all really great stories that people really don’t understand. Alibaba is good for the world, good for global trade. Set in that context people can understand Alibaba better, and really not say ‘oh you’re just a Chinese company that is trying to flood the market with your cheap Chinese products’. I think it’s very important for the world to know Alibaba is here to do business globally.”
He further spoke on the challenges of doing business in the US. “Just generally being a Chinese company in the US, we have to be very careful. For example we don’t have much of a consumer facing business in the United States and that’s because [there are] concerns about data privacy, cyber security and things like that. These are some of the issues that we will have to navigate in the future.”
He also touched on the global perception of China. “I think people tend to be categorical about China whereas a lot of the truth is somewhere in between. I find this talk about whether China is investable or not quite ridiculous. You’re talking about the second largest economy in the world, a very industrious labour force as I referred to before. 800 million people that are working very hard.
I don’t think it’s constructive to talk about whether to pull out from China or investable in China. I think people have to recognize that you can’t bet against the Chinese people. This is an economy that’ll be around for a long time and that’ll actually be good for the world.”
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