Brief news
Chinese AI businesses are moving to Singapore due to geopolitical concerns and easier access to global investors and clients. Singapore-based companies like Wu Cunsong and Chen Binghui have shifted their headquarters from Hangzhou to Singapore, as they have easier access to global investors and clients. This move is driven by the need to acquire cutting-edge technology from Nvidia Corp. in Singapore, which is politically neutral and has fewer export limits than China.
Singapore-washing, a practice where corporations disassociate themselves from their Chinese roots, aims to decrease consumer and regulator scrutiny in China’s political opponents, including the US. However, AI startups face risks such as data collection, software access restrictions, and strict regulations on AI-generated content. The UK became one of the first to regulate emerging technology by requiring companies to register their algorithms before launching consumer-facing services.
Many businesses and startups, including Chinese ones, choose Singapore as their Southeast Asia hub and a springboard to global markets. Singapore has lax AI restrictions and is noted for its business formation simplicity. The city-state has over 1,100 AI startups in 2023.
China’s faltering economy and increased tensions with the US are making financing harder, so global venture capital companies are reducing their exposure to the nation. Some Chinese AI startups have succeeded early in their native market and stayed there, as Beijing provides funding, low-interest loans, and tax benefits to the most promising companies.
Growing geopolitical tension forces new Chinese AI startups to choose between growing in China under Chinese norms or abroad, with Singapore making sense for branding, PR, legislation, and compliance.
Illustrated news
Bloomberg — Two years ago, Wu Cunsong and Chen Binghui started their artificial intelligence firm in Hangzhou, China, but they rapidly ran out of venture cash. They transferred Tabcut 2,500 kilometres southwest to Singapore in March, like many other Chinese AI businesses.
Wu and Chen have easier access to global investors and clients in the business-friendly country while geopolitical concerns keep many US and foreign enterprises away from China. Equally important for an AI firm is that they may acquire Nvidia Corp.’s newest processors and other cutting-edge technology in the politically neutral island country, unlike in China due to US export limits.
“We wanted to go to a place abundant with capital for financing, rather than a place where funds are rapidly diminishing,” Wu said in an interview.
Chinese AI businesses looking to expand are choosing Singapore. Chinese enterprises have always been drawn to the city-state, but AI entrepreneurs are quickening the transition due to US trade penalties on their nation, which prevent them from using cutting-edge technology.
Singapore bases allow corporations to disassociate themselves from their Chinese roots, a practice known as ‘Singapore-washing’. This is an aim to decrease consumer and regulator scrutiny in China’s political opponents, including the US.
Beijing-based ByteDance Ltd. shifted its TikTok headquarters to Singapore, but a new US legislation demanding the sale or shutdown of its American operations over security concerns damaged the popular video service. After facing US criticism, Chinese fashion powerhouse Shein, which fled to Singapore, plans to go public in London instead of New York.
AI startups risk more than perception. AI businesses collect massive quantities of data and use cutting-edge technology to train their algorithms, thus restricting access will lower product quality. To prevent China from using advanced semiconductors and other technologies for military reasons, the US has barred transactions. American generative-AI leader OpenAI is restricting China’s software access.
China also strictly regulates AI-generated content to ensure it follows Communist Party policies and propaganda. Last July, the UK became one of the first to regulate the emerging technology by requiring companies to register their algorithms before launching consumer-facing services.
AI engineers “won’t be able to engage in free explorations if they are in China,” said Linkloud creator Adam, who requested anonymity due to the sensitive topic. He estimated that 70% to 80% of Chinese software and AI businesses pursue worldwide consumers, with many currently avoiding China. Linkloud is connecting Chinese AI entrepreneurs exploring worldwide markets.
Singapore has lax AI restrictions and is noted for its business formation simplicity. With its unique position in Southeast Asia and thriving multinational company network, Singapore can connect entrepreneurs and corporations to the region and the globe, said Chan Ih-Ming, executive vice president of the Singapore Economic Development Board.
“Many businesses and startups, including Chinese ones, choose Singapore as their Southeast Asia hub and a springboard to global markets,” he added. He stated the city-state has over 1,100 AI startups in 2023. Singapore doesn’t reveal nation statistics, but China-based AI startups are establishing themselves.
Jianfeng Lu, who founded AI company Wiz Holdings Pte. in Singapore in 2019, helped initiate the trend. He designed its voice recognition AI engine from scratch and sold customer-service bots to Latin America, Southeast Asia, and northern Africa with Tiger Global, GGV Capital, and Hillhouse Capital. The founders called his decision not to sell in China insightful.
He currently advises Chinese entrepreneurs on how to start a business and move to Singapore. Lu manages a 425-member online chat group for Chinese businesspeople moving to the city-state. (Not all AI founders.)
“If you want to be a global startup, better begin as a global startup,” the 52-year-old stated. “Systems work here predictably.”
China’s faltering economy and increased tensions with the US are making financing harder, therefore global VC companies are reducing their exposure to the nation.
Wu and Chen’s Tabcut struggled to recruit Chinese sponsors who demanded financial and operating data for months, Wu claimed. Instead, Tabcut raised $5.6 million from Singapore-based Kamet Capital late last year. In March, the business launched a beta version of its AI video-making tool and moved its worldwide headquarters to the nation.
Climind, a firm that produces massive language models and productivity AI solutions for environmental, social, and governance professionals, will move from Hong Kong to Singapore in the next weeks, where its co-founder and CTO Qian Yiming is already. The 10-person firm was launched last year.
Qian stated via a video chat that Singapore’s government provides financial and technical support in addition to cultural and language affinity. He stated startup incubators and state-funded companies are common in the nation.
“Access to global markets is easy, the environment is good and politics is stable,” Qian added.
Last week, Linkee.ai rated Singapore the second-best AI cluster worldwide. There were the second-most AI employment among the listed locations, and AI experts earned $158,000, second only to Zurich’s $182,000.
Some Chinese AI startups have succeeded early in their native market and stayed there. China wants AI, robots, and other deep tech businesses to stay in the country and list on local stock exchanges. Beijing provides funding, low-interest loans, and tax benefits to the most promising.
Yiu-Ting Tsoi, founding partner of Hong Kong-based HB Ventures, which invests in Chinese and regional tech and AI businesses, said such companies may struggle to expand worldwide because their services are specialised for the Chinese audience and legal environment. The more successful an AI business is in China, the harder it is to expand abroad, said former JPMorgan banker Tsoi.
It’s a change from a decade ago, when Alibaba Group Holding Ltd. and Didi Global Inc. aggressively ventured abroad to gain clients for their consumer-friendly applications. Growing geopolitical tension forces new Chinese AI startups to choose between growing in China under Chinese norms or abroad—a combination of both is untenable.
More restrictions are coming out and negotiating all of that gets tough’, said Karen Wang, 28, Climind’s CEO. Singapore makes sense for branding, PR, legislation, and compliance.
Source : Bloomberg / Yahoo Finance
