While the world focuses on Silicon Valley, one investment strategist is taking heed of China’s bold moves in the artificial intelligence space.
What Happened: Derek Yan, a senior investment strategist at KraneShares, spoke to Benzinga about how China’s internet giants are laying the groundwork for massive AI adoption.
U.S. investors can access China AI opportunities through ETFs like the KraneShares Hang Seng TECH Index ETF (NYSE:KTEC). The ETF tracks Hong Kong’s 30 largest tech companies, offering exposure to high-growth, innovative sectors like cloud, e-commerce and fintech. It’s market cap-weighted with an 8% cap per stock.
One way Chinese companies are taking a lead is by training their own models or using open-source ones — particularly in industries like entertainment, marketing and health care, Yan says.
The vast pool of data gathered from over a billion internet users is advantageous to companies when training large language models, he adds.
"China’s internet companies have previously proven successful in commercializing new technologies," Yan said, citing the mobile tech boom that fueled the rise of these giants.
Why It Matters: China's pace of adoption is nothing short of impressive, the strategist said.
"Chinese consumers tend to adopt new technology quicker than global peers," Yan said, adding that this agility is evident in how quickly AI is being integrated. Companies like Kuaishou are already seeing success, with their AI model Kling rivaling OpenAI's Sora, he said.
By 2025, we'll see big Chinese enterprises adopting AI on a massive scale, Yan said.
The stage is set for generative AI to transform China's business landscape, potentially driving huge growth in earnings for internet companies, in his view.
And with AI tools improving customer experience and cost efficiency, it's clear China isn't just catching up — it's preparing to leapfrog into the future.
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