As the e-commerce company looks beyond its main business for development, Alibaba Group Holding Ltd. has inked its third significant AI agreement of the year, contributing a further 5 billion yuan ($691 million) to the Chinese startup Baichuan.
The governments of Beijing, Shanghai, and Shenzhen have just provided money for Baichuan, which has a current valuation of 20 billion yuan, the firm announced in a statement on Thursday. Existing investors Tencent Holdings Ltd. and Xiaomi Corp. joined them.
Having been established in April 2023, Baichuan is a pioneer in China’s generative AI market, having been among the first Chinese companies to receive Beijing’s approval for widespread release. According to the announcement, the Beijing-based business unveiled an AI assistant in May and has since developed 12 large language models.
China may require years to catch up with the US, according to founder Wang Xiaochuan, whose firm was called after the Chinese phrase for “a hundred rivers.” Wang made this statement to News last year.
Following backing from Alibaba, MiniMax and Moonshot AI, two Chinese competitors of Baichuan, also witnessed a rise in valuation beyond $2 billion earlier this year.
The e-commerce company is betting heavily on generative AI, the technology behind ChatGPT, alongside other Silicon Valley heavyweights like Microsoft Corp. The Baichuan transaction indicated that Alibaba is increasing the rate at which it makes investments, a move that has solidified its technological and commercial supremacy and aided in the ascent of companies like Didi Global Inc. in previous years.
After Daniel Zhang stepped down as CEO in 2023, Joseph Tsai and Eddie Wu, two experienced dealmakers, took over as Alibaba’s new leaders. They are currently investigating ways to turn around a struggling business that has been under regulatory scrutiny for the past two years. The Hangzhou-based company is planning a multi-way split in addition to investing in AI with the goal of fostering autonomous business lines ranging from cloud to logistics.
It is attempting to bring back the cloud industry and incorporate AI and its proprietary model, Tongyi Qianwen, into a broad enterprise that includes the entertainment industry. According to Tsai, the cloud division currently services roughly 80% of China’s tech companies and is home to half of the nation’s generative AI startups.
Alibaba’s increasing investments in AI are also consistent with Chinese President Xi Jinping’s recurrent promises to organize the country as a whole to lessen its dependency on Western technology. Because AI has the potential to be revolutionary, Beijing and Washington are very interested in this technology, which has both military and economic uses.