Future Watch: China's Digital Landscape and Rising Disruptors - Module 2.6 Artificial Intelligence

OTSIKKOALAOTSIKKO, KUUKAUSI VUOSI

CHINA’S DIGITAL LANDSCAPE AND RISING DISRUPTORSMODULE 2.6 ARTIFICIAL INTELLIGENCE

AUTHORS

Dr. Edward TseFounder and CEO

Team Finland Future Watch Report, August 20172

Mr. Bill RussoManaging Director and Auto Practice Lead

Mr. Alan ChanSenior Consultant

Artificial Intelligence

TOPICS


1. WHAT IS AI? WHY NOW?2. CHINA’S AI STATUS AND INNOVATORS3. FUTURE OPPORTUNITIES AND IMPLICATIONS FOR TEAM FINLAND


How to define “intelligence”?Can machines be “intelligent”?


WHAT IS AI? (1/2)

Source: Literature research, Gao Feng analysis

Artificial General Intelligence (Strong AI)

Human-level intelligence across the board

A machines that can perform any intellectual task that human can

Ability to reason, plan, solve problems, think abstractly, comprehend complex ideas, learn quickly, and learn from experience

Artificial Super Intelligence (ASI)

“An intellect that is much smarter than the best human brains in practically every field, including scientific creativity, general wisdom and social skills.”

Independent world view and values

Artificial Narrow Intelligence (Weak AI)

Specializes in narrow applications only

First definition of AI

By John McCarthy, Professor, Dartmouth College, 1956

“Every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it”

Modern definition

The science and engineering of "intelligent agents“ -any device that perceives its environment and takes actions that maximize its chance of success at some goal

Path to Artificial Super Intelligence

Defining AI

Singularity? What AI can/can’t do?



WHAT IS AI? (2/2)

Source: Waitbutwhy, Rapidminer, Literature research, Gao Feng analysis


Any technique which enables computers to mimic human behavior

Machine Learning

Subset of AI techniques which use statistical methods to enable machines to recognize patterns and improve with experiences

Deep Learning

Subset of ML which uses complex neural networks to make the computation of multi-layer neural networks feasible

Understanding the key terminologiesThree key layers of AI

Applications

Industrial robots, chat bots, fintech, smart healthcare, autonomous driving, smart home appliances, etc.

Core Technologies

Computer vision, speech recognition, natural language processing, machine learning, deep learning, etc.

Infrastructure

Data, sensors, biometrics, graphics processor chips, cloud computing

What does it mean to your industry?



AI IS DISRUPTING INDUSTRY BY INDUSTRY

Source: Gao Feng analysis

Go game

Texas Hold’em Poker

Automotive

Healthcare FinTech

Many more…

“AI will transform industries just as electricity transformed almost everything 100 years ago”

Andrew Ng,Former chief scientist at Baidu, founder of Courseraand Google Brain

AI is not a futuristic concept and many

practical AI applications are already available

today, such as Facebook newsfeed, Google search results, Amazon product

recommendations, LinkedIn Ads, iPhone siri, photo-editing/tagging…

etc.



AI HAS A LONG HISTORY OF BEING “THE NEXT BIG THING”…

Augmented Reality (AR)

Source: Literature review, Gao Feng analysis

1950 1956 1974 19931980 1987 Time

Birth

Inflated Hype

AI winter I

New Hopes

AI winter II

Explosive Growth

Popularity

Timeline of AI Development

1950s-1960s: First AI boom - the age of reasoning, prototype AI developed

1970s: AI winter I

1980s-1990s: Second AI boom: the age of Knowledge representation (appearance of expert systems capable of reproducing human decision-making)

1990s: AI winter II

1997: Deep Blue beats Gary Kasparov

2006: University of Toronto develops Deep Learning

2011: IBM’s Watson won Jeopardy

2016: Go software based on Deep Learning beats world’s champions



... BUT THIS TIME IS DIFFERENT


Source: Wired, Gao Feng analysis

1. Cost-effective High Performance Computing Graphics Processing Units (GPUs) (and Tensor Processing

Units): Discovery of using GPUs (originally used for generating computer graphics in video games) to build and run parallel neural networks, the primary architecture of AI software

2. Better Algorithms Breakthrough developments

in Artificial Neural Networks (ANN) – to model the network of nerve cells in a human brain on a computer

3. Abundance of Data Massive databases, self-

tracking, web cookies, online footprints, terabytes of storage, decades of search results, Wikipedia, etc. as raw materials to train learning machines



YET, THERE ARE MIXED VIEWS TOWARDS THE FUTURE OF AI


"The development of full artificial intelligence could spell the end of the human race."

-- Stephen Hawking

“I think we should be very careful about AI. If I had to guess at what our biggest existential threat is, it’s probably that.”

-- Elon Musk

“There could be a race of killer robots in the far future, but I don’t work on not turning AI evil today for the same reason I don't worry about the problem of overpopulation on the planet Mars”

-- Andrew Ng

“All new technologies present the possibility for misuse. AI is no different. And even technologies that are a clear net positive for humanity have negative side effects that should be understood and dealt with thoughtfully.”

-- Astro Teller

“It seems probable that once the machine thinking method had started, it would not take long to outstrip our feeble powers… They would be able to converse with each other to sharpen their wits. At some stage therefore, we should have to expect the machines to take control.”

-- Alan Turing

Neither hyped nor alarmed, we should carefully examine the new economic opportunities and the threats brought by AI; the development of AI must address the risk of potential misuse and widening inequalities


TOPICS





CHINA WILL BECOME A MAJOR DRIVING FORCE OF THE NEXT AIREVOLUTION


Source: 36Kr, iiMedia, Gao Feng analysis

10.2

6.3

3.72.1

1.1

63%69%

94%

108%

0

5

10

15

20

25

30

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

202220212018 2019

77%

2020

YoY Growth Rate Market Size

China AI Market Size2018E-2022E, USD BnUSD Bn %

83

132

136

160

173

228

233

366

709

2,905

Switzerland

Spain

France

UK

China

US

Germany

Israel

Canada

India

Total Number of AI companiesUnit: Thousands, 2016



CHINA HAS THREE UNIQUE ADVANTAGES TO BECOME A GLOBAL LEADER IN AI



AI-related policies: 13th Five-year Plan (March 2015), Internet Plus, Made in China 2025 (May 2016), Robotics industry Development Plan (April 2016), Three-year Guidance for Internet Plus AI Plan (May 2016)

March 2017 – China’s highest national meeting included AI in the Government Work Report for the first time

Vast data gold mine from over 730M of online population

Tencent’s WeChat has almost 940 million users worldwide and Alibaba Group has more than 420 million active buyers on Taobao

Chinese patent applications in the AI segment grew to 8,410 between 2010 and 2014, a 186% increase from the previous 5-year period between 2005 and 2009

China has a large pool of young mathematics, science and engineering graduates

Abundance of funding

Big data Innovation Ecosystem Government Push



CHINA HAS LEAPFROGGING DEVELOPMENT IN TERMS OF AI RESEARCH AND DEVELOPMENT

Source: 36Kr, SCImago Journal Rank 2015, Vertex, Washington Post, Wuzhen Institute, Gao Feng analysis

Global AI citation ranking By number of AI publications cited

2015

637 692388

424

444 200237

267199

1,487

504

UKChina

2,124

Spain

588

India

643

US

1,116

Self-citations

Other citations

Journal articles cited at least once, mentioning “deep learning” or deep neural network”

2015

The no. of academic research papers published in China in the field of deep learning exceeded the US

China is ranked first for absolute AI citations and third based on publication influence



AI DEVELOPMENT IN CHINA IS CURRENTLY FOCUSING ON A FEW MAJOR PRACTICAL APPLICATIONS


Source: 36Kr, Gao Feng analysis

Others

6%Data services

3%Vertical applications

3%E-commerce

3%Fintech4%

Smart Education 4%

Personal Assistant 4%

Smart Home 5%

Machine Learning6%

Smart Driving

6%

Smart Health

7%

Natural Language Processing

11%

Service Robotics20%

Computer Vision

21%

Distribution of China AI Start-ups, 2017 Investment received in China by segmentAccumulated sum, 2017 Jan, RMB Bn

0.60.7

0.8

1.6

2.0

2.8

Smart Driving

Smart Security

Smart Home

Computer Vision

RoboticsNatural Language Processing

China’s AI start-ups are focusing

on a few key applications

China’s AI–related investments are also very focused on a few areas of specialization



AS A DIGITAL-SAVVY SOCIETY, THERE IS A RELATIVE HIGH CONSUMER AWARENESS OF AI IN CHINA


Source: iiMedia Consumer Survey, Gao Feng analysis

47% "So-so"

"Never heard of AI"

"Know little"

6%

20%

"Know AI well"

24%

"Know AI very well"

5%

“How well do you know AI?” “Where do you get to know AI?”

4%

7%

13%

29%

41%

75%Online media

Traditional media

Literatures

Cultural products

Others

Institutional reports

Majority of Chinese consumers are aware of AIChinese consumers learn about the concepts of AI

mostly from online sources



CHINESE CONSUMERS ARE OPTIMISTIC ABOUT THE FUTURE OF AI AND ARE AWARE OF THE NEED TO NURTURE AND ATTRACT MORE AI TALENTS


Source: iiMedia Consumer Survey, Gao Feng analysis

“Do you think AI has more advantages or disadvantages?”

59% "More advantages"

"No advantages""Equal" 2%2%

"More disadvantages"31%

"No disadvantages"

18%

Chinese consumers are in general very optimistic

about the future of AI

47% "Necessary"

"Not that necessary""No need" 2%2%

"Very necessary"

31%

"No clear view"

18%

“Is it necessary to provide more education on AI?”

Chinese consumers are aware of the AI talent gap



CHINA’S AI MARKET LANDSCAPE

Source: iiMedia Research, Gao Feng analysis

Sensors

Chips

Industry Data Data Services

Biometrics Cloud Computing

InfrastructureLayer

Core Technology

Layer

Machine Learning Natural Language Processing Computer Vision

Applicationlayer

Industrial Robots Service Robots Smart Health Care Internet Finance

Personal Assistant Smart Security Smart Home Wearables

Precise Marketing Autonomous vehicle Logistics Vertical applications

NOT EXHAUSTIVE



THERE IS AN EXPANDING POOL OF AI TALENTS IN CHINA



Lu QiGroup President and COO, BaiduFormer Microsoft EVP

In general, Chinese AI scholars are more focused on the pragmatic applications and use cases of AI while their counterparts in the US focus on fundamental research

Zhang TongExecutive Director, Tencent AI labFormer head of BaiduBig Data Lab

Wang GangChief Scientist, Alibaba AI Lab

Wang JunFounder, iCarbonXFormer CEO, Beijing Genomics Institute

Li HangHuawei Noah Ark Lab

Zhao FengCTO and VP for advanced R&D and smart homeHaier

Sun JianChief Scientist, MegviiFormer Partner Research Manager, Microsoft

Yang QiangChair Professor, Dept Head of Computer Science & Engineering, HKUST

Wang HaifengHead of AI Group, Baidu

Zhou JingrenChief Scientist and Vice President of Alibaba Cloud

Ye JiepingPresident, DidiResearch

Yu KaiFounder & CEO, Horizon Robotics

NOT EXHAUSTIVE



CHINESE TECH GIANTS ARE MAKING BIG BETS TO TAKE LEAD IN THE AI RACE


Baidu Brain, an AI platform with over 60 different AI-enabled services

DuerOS: natural language-based, conversational-based human computing platform, penetrating over 100 home appliance brands

Apollo: open platform for self-driving car solutions

Deep Interest Network: Advanced personalized recommendation engine

DT PAI (Platform of Artificial Intelligence) launched in August 2015

Ali Xiaomi: a virtual personal secretary for shopping and O2O services

Alibaba City Brain: leverage Ali Cloud big data and deep-learning technologies to build 'city brains' in cooperation with Hangzhou and Macau governments

Tencent AI lab: 50 world-class AI scientists, researchers and experts

WeChat-HKUST Joint Lab for pioneering research based on WeChat data

‘Fine Art’ AI: developed by 13 Tencentengineers, defeated high-ranking Japanese Go player Ryo Ichiriki this year

Launched DiDi Labs primarily focusing on AI-based security, advanced service dispatch algorithm, intelligent driving technologies

Huawei Noah’s Ark Laboratory and Berkeley Artificial Intelligence Research (BAIR) formed partnership on development of machine learning, AI and data mining

CASE EXAMPLES



MOBVOI IS A LEADING AI START-UP FOCUSING ON VOICE RECOGNITION AND NATURAL LANGUAGE PROCESSING IN CHINESE CONTEXT

Augmented Reality (AR)CASE EXAMPLE

Company mission: To define the next generation of human-

machine interaction (HMI) through advanced AI technologies

Ticwatch(Smart Watch)

Ticmirror(In-vehicle

Robot)

Tichome(AI Speaker)

Chinese language recognition

Accurate vertical search

engine

Real-time proactive

search

Semantic analysis

Text-to-speech technology

Services(Applications)

Software(AI Technology)

Hardware(Products)

…

POI recommendation

Real-time traffic alert

Movie ticket booking

Restaurant reservation

Food deliveryHealth

monitor

Use cases Key enablers User experiences

Source: Mobvoi official website, Crunchbase, Gao Feng analysis

Business modelCompany Facts

Founded in October 2012

Raised USD 252M fromZhenFund, Sequoia Capital, SIG China, Google, and Volkswagen Group

Founded by Li Zhifei Li, former research scientist at Google and a world-class natural language processing expert

In Apr. 2017, Volkswagen Group China and Mobvoiannounced a strategic partnership and a 50:50 JVto develop AI applications for future connected cars



TOUTIAO IS A NEW UNICORN PROVIDING CURATED NEWS AND CONTENT


Source: Toutiao, Financial Times, Literature research, Gao Feng analysis

Competitive advantages in content generation, distribution and monetization

Toutiao’s exponential growth

Basic facts: By analyzing the features of content, users and users’

interaction with content, Toutiao’s AI-powered algorithm models generate a tailored feed list of content for each individual user

Now valued at USD 20Bn (from USD 500M in 2014) Launched in August 2012 based in Beijing Founder: Zhang Yiming 100M daily active users in 2017Q1 Average daily usage time: 76 mins Hired Ma Wei-Ying, former assistant managing

director of Microsoft Research Asia, to lead its AI Lab

User-generated and professional-generated content in various media forms: text, short videos, Q&As

Provide incubator and media lab services for curated content makers

AI-generated content live feed

Understand user’s emotions and behavioral characteristics through machine learning, analyze and predict user’s profile

Personalized news content – “Thousand people, thousand interfaces”

Technology barrier: Leverage big data to accumulate user understanding overtime

1146

335

107141

507

2016H22015H2

Total length of read (Billion mins)

Total no. of read (Billion)

No. of articles (Million)

Content Generation

Content Distribution

Content Monetization

Business model: Personalized newsfeed ads, re-direct traffic to E-commerce sites

Earned USD 869M in 2016 from in-app ads with the goal to reach USD 10Bn by 2020

CASE EXAMPLE



MEGVII (FACE++) IS A FAST-GROWING COMPUTER VISION START-UP THAT HAVE PENETRATED INTO A WIDE RANGE OF USE CASES

Source: Megvii official website, Gao Feng analysis

Company Background

Founded in 2011, Megvii is a computer vision firm that aims to power human with AI. It has developed leading technologies in facial recognition, body recognition, and object recognition

Megvii raised USD 147M in 4 rounds from 6 investors, including Sinovation Ventures, Qiming Venture Partners, and Foxteq Holdings

Megvii focuses on commercializing its facial recognition technology in Internet finance, banking, ride hailing sectors, and also itsbody and object recognition technologies in intelligent real state and intelligent security areas

Ranked 11th in the “50 Smartest Companies of 2017” of MIT Technology Review

CASE EXAMPLE

Face Comparing

Face Attributes

Emotion recognition

Face Detection

Face Landmarks

Gaze estimation

Face Searching

Beauty score

Body Detection Gesture Recognition

Body Attributes

Body Outlining

Key technologies Key customers (examples)

User authentication Smile to Pay

Driver verification for ride hailing service

Photo beautification with automatic makeup and beauty effect

User authentication for self banking services



IFLYTEK IS A LONG-ESTABLISHED AI COMPANY SPECIALIZED IN SPEECH AND LANGUAGE PROCESSING TECHNOLOGIES


*As of August 17 2017

Source: iFLYTEK official website, 36Kr, Gao Feng analysis

Company Background

Founded in 1999, iFLYTEK is the leader in intelligent speech and language processing technologies in China

Listed in Shenzhen Stock Exchange in 2008, and now with a market cap of ~USD 12B*

Achieved international advanced technologies in many areas including speech recognition, speech synthesis,natural language processing, oral language evaluation, voiceprint recognition, and handwriting recognition

Ranked sixth in the “50 Smartest Companies of 2017” of MIT Technology Review and first among all Chinese companies in the list including Alibaba and Baidu

easy trans 600

CASE EXAMPLE

Smart Education Smart Home Smart City

Smart Vehicle Smart Health Care

Key application industriesKey products Key customers

Voice Assistant

iFLYTEK

input

One-stop HMI solution platform

Bilingual education products



THERE IS A MYRIAD OF EMERGING CHINESE AI START-UPS FOCUSING ON HEALTHCARE, ROBOTICS, AUTONOMOUS DRIVING AND OTHERS

Source: Company official websites, Crunchbase, Gao Feng analysis

Founded in 2015 and raised USD 200M in 2 rounds from 3 investors, including Tencent and China Bridge Capital

In Feb.2017, iCarbonX was selected by Fortune as one of the “50 Companies Leading the AI Revolution”

Founded in 2014 and received USD 410M series B funding in Aug. 2017 with a valuation of USD 1.1B

Computer vision and deep learning solution provider Ranked fifth in China Money Network's China AI Top 10

Ranking in 2017

Founded in 2015, focusing on commercialized autonomous truck technology solution

Facilities in both Beijing and San Diego Received USD 20M investment from NVIDIA and Sina

Founded by Wu Gansha, former chief engineer at Intel Labs China, in 2016

Building commercialized solutions for self-driving technologies, products and services

Turing Robot is the most intelligent robot brain tailored for the Chinese language context

Building the most leading AI robot operating system in China and globally

Founded in 2007 and raised USD 45M in 3 rounds from 3 investors, including Legend Star and TusPark Ventures

AISpeech has 7 national qualifications, 25 patents, and 23 software copyrights

Digital health ecosystem Speech recognition and analysis

Deep learning AI robotics

Autonomous Driving Autonomous Driving

To compete with tech giants, AI start-ups must tailor their technologies and solutions to

focus on specific use cases and build big data capabilities as competitive advantages

CASE EXAMPLES


TOPICS





FINLAND HAS PUT AI AS ONE OF THE TOP NATIONAL STRATEGIC PRIORITIES



Prime Minister Juha Sipilä

Making Finland the world leader in artificial intelligence

Called for a common national vision to make effective use of AI in society

Using AI to boost wellbeing will require not only new competences but also novel approaches, forward-thinking decisions and frameworks, and an adaptive labor market

Minister of Economic AffairsMika Lintilä

To make Finland the best in the world in applying AI and renewing ways of working

Established an AI-focused steering group in May 2017, program ready by September

“Finnish companies and Finnish society have an excellent basis to turn the challenges and opportunities brought about by AI into accelerators of sustainable growth”

Director General National Agency for Education

Olli-Pekka Heinonen

Important to take AI into account in education

AI applications could for example be used to create more efficient ways to identify and help students at risk of dropping out


IBM opened The IBM Watson Health Center in Helsinki, Finland

A hub for the collaborative future development of data-driven cognitive and artificial intelligence applications and solutions for Finnish healthcare


THERE IS AN INCREASING AMOUNT OF AI START-UPS AND AI-ORIENTED INITIATIVES IN FINLAND


Source: Literature research, Tekes, Gao Feng analysis

Claned

Leverage AI and education psychology to enhance personal learning

Personalizes learning to each individual optimizing study motivation and improving learning results

Curious AI

Founded 2015 as a spin-off from Aalto's Deep Learning Research Group

Specialized in the fundamental research on unsupervised AI

Zen Robotics

Specialized in AI-controlled robotic systems

Next Generation Recycling – leader in robotic waste separation

IBM and Tekes

Blueprint Genetics

Addresses the main bottleneck of genetic testing through next-generation sequencing (NGS) powered by AI

Received EURO 14M in July 2017

"I am positive that Watson cognitive capabilities will further boost innovation in Finland and put us at the forefront of game-changing health transformation, at the European level and in the global marketplace.“

- Pekka Soini, Director General of Tekes

CASE EXAMPLES



TO MAXIMIZIE ITS FULL POTENTIAL IN AI, FINLAND HAS EXISTING COMPETITIVE ADVANTAGES TO LEVERAGE AS WELL AS GAPS TO CLOSE



Competitive advantages of AI in Finland

High level of technology-related education and skills

Strong collaboration between companies and universities (VTT)

Innovation ecosystem that allows a trial-and-error

Legacy in applied and fundamental AI research – with legends such as TeuvoKohonen and Erkki Oja

Gaps to close

Talent gaps – technical and business leaders who understand both sides

Getting ready for AI – businesses to begin data acquisition and investigate the future benefits of AI in driving productivity and reducing costs

National strategy – to set national priorities and leverage AI as a economic multiplier to accelerate AI transformation



FINLAND SHOULD TAKE IMMEDIATE ACTIONS TO CAPTURE THE EXPOLSIVE OPPORTUNITIES IN AI



Potential actionsEducation Offer AI-specific curriculum at the top local universities and STEM education in high schools Hold public events for mass to understand and discuss the basic concepts, benefits and risks of AI Openly engage with consumers and understand needs and pain points that can be potentially

addressed by AI technologiesR&D Call for more novel applications and research on AI Set up AI-specific funds and incubators to accelerate the development of Finnish AI ecosystemBusinesses Leverage Finland’s traditional industries including the clean energy, forestry, industrial machinery

and processes, medical and ICT, and empower their AI transformation Provide continuing education on AI-related courses for all kinds of workforces To explore new applications of AI and identify potential use cases and profit potentialsGlobal ecosystem collaboration Establish cross-border linkages to encourage global knowledge transfer and benchmark global best

practices; set up overseas AI labs to attract high-skilled talents More detailed national strategy on AI and government funding for quality AI research and start-ups

Future Watch: China's Digital Landscape and Rising Disruptors - Module 2.6 Artificial Intelligence

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Transcript of Future Watch: China's Digital Landscape and Rising Disruptors - Module 2.6 Artificial Intelligence