The Impact of China’s AI Revolution: What Market Researchers Need to Know
Ray Poynter, 19 March 2025
The launch of DeepSeek—a powerful, cost-effective large language model (LLM) developed rapidly in China—has been widely described as a ‘Sputnik moment.’* Until January of this year, the prevailing assumption was that the United States and the West dominated advancements in AI and emerging technologies. However, China’s rapid success with DeepSeek has shaken that assumption, causing nervousness in Western markets and triggering notable declines in the stock values of several major tech companies. With strong backing from the Chinese government, DeepSeek is already gaining widespread adoption among businesses across China, with large cost savings being reported.
Yet, DeepSeek is merely the visible tip of a larger technological iceberg. While Hollywood’s recent writers’ and actors’ strikes have temporarily slowed AI progress in the U.S. entertainment industry, China is forging ahead with remarkable speed. Fully AI-generated films—where scripts, acting, narration, imagery, and post-production are handled by AI—are already being created. Even conventional cinema and television extensively employ advanced AI techniques such as de-aging and face-swapping, as vividly demonstrated in a recent Jackie Chan film, where the 70-year-old star convincingly appeared as his 27-year-old self.
Marketing in China is experiencing similar dramatic shifts. Hyper-personalised marketing, leveraging facial recognition originally developed for security, is becoming commonplace. Retailers now use AI-driven cameras to identify returning customers instantly and deliver customised recommendations and promotions tailored precisely to their shopping habits and preferences.
Driverless technology, having encountered setbacks in Western markets despite years of ambitious promises, appears poised to reach mass adoption in China. Companies like Baidu’s Apollo Go are already operating fully autonomous taxi fleets in 12 cities, claiming to have transported over 9 million passengers this year alone. Apollo Go plans to expand its presence to 65 cities by the end of 2025, supported explicitly by government initiatives like the “Made in China 2025” programme. Moreover, Baidu is actively negotiating with Middle Eastern countries to export this revolutionary technology abroad.
Geopolitical shifts are amplifying these developments. Policy choices by the U.S.—including withdrawal from international agreements, drastic cuts in foreign aid, and aggressive tariffs even against allies—have created significant geopolitical vacuums. China has stepped in to build global influence through initiatives like the Belt and Road Project, which integrates multiple continents economically and strategically under Chinese influence. Such geopolitical leverage could accelerate China’s global AI leadership.
For market researchers and businesses in the West, the implications are profound. China’s rapid technological advancement, vast domestic market, strong government backing, and differing regulatory frameworks could soon produce AI solutions that are faster, more powerful, and more cost-effective than Western counterparts. However, considerable concerns about data privacy and geopolitical trust are significant barriers to Western adoption of Chinese technologies.
An optimistic scenario sees intensified global competition spurring faster innovation and lower costs in AI, benefiting businesses and consumers worldwide. The fact that DeepSeek can already be deployed locally is a clear indication of China’s intention to encourage adoption beyond its borders.
Conversely, a more concerning possibility involves intensified geopolitical rivalries leading to AI isolationism—where the U.S. restricts its advanced technologies to protect its competitive edge, while China mandates data-sharing obligations, leaving the rest of the world caught in between, forced to navigate difficult choices independently.
*For younger readers, “Sputnik” was the first artificial satellite launched by the Soviet Union in 1957, marking the start of the Space Race and demonstrating unexpectedly that Russia had surpassed Western technological capabilities at the time.