China Story Briefing: YouTube Co-founder's Advice for AI Startups: "Don't Rush to Monetize"
Hi everyone, welcome to this issue of the China Story Briefing! This week, China's AI scene witnessed an "open-source summer" with major model releases from Moonshot AI, Kunlun Tech, and others, while the evolution of DeepSeek's ecosystem revealed new trends. Meanwhile, significant progress was made in embodied AI (robotics) and brain-computer interfaces, as the US-China tech and space rivalry continues.
(Reminder: Besides this Briefing, more in-depth Deep Dives are in the works. All content is currently free.)
News
China's AI Open Source Wave & Ecosystem Evolution:
Moonshot AI Open-Sources Trillion-Parameter Kimi K2 Model: Moonshot AI (Kimi) released and open-sourced its trillion-parameter Kimi K2 model, including base and commercially-usable fine-tuned versions. Employing new techniques, K2 reportedly surpasses many existing open-source models on benchmarks and is seen as a strong open-source alternative to Claude 4 Sonnet. [Source: PMObserve]
Kunlun Tech Open-Sources Skywork-R1V 3.0 Multimodal Model, Scores 142 on Gaokao Math: Kunlun Tech open-sourced its Skywork-R1V 3.0 model, which achieved a high score on the Gaokao (China's college entrance exam) math test and surpassed some closed-source models on multimodal benchmarks, showcasing strong cross-disciplinary reasoning. [Source: DataYuan]
DeepSeek's Ecosystem Evolution: Official App Falters, Third-Party Services Surge: Third-party data shows traffic to DeepSeek's official app has significantly declined, while usage of its models on third-party hosting platforms has surged. Analysts suggest users are migrating to services offering a better user experience. [Source: SemiAnalysis]
Alibaba Open-Sources HumanOmniV2 Multimodal Model That Reads "Between the Lines": Alibaba open-sourced its HumanOmniV2 model, which it claims can accurately capture hidden information and infer complex human intentions from videos. [Source: I Love CV]
Baidu's PaddleOCR 3.1 Improves Multi-Language Text Recognition: Baidu's PaddleOCR updated to version 3.1, significantly improving recognition accuracy for over 30 languages with the help of Ernie 4.5, and now supports MCP server integration. [Source: PaddlePaddle]
Takeaway: The Chinese AI community is experiencing a massive "open-source wave," spanning from trillion-parameter foundational models to specialized math and multimodal models, constantly raising the bar. Simultaneously, the evolution of open-source ecosystems shows that technical leadership doesn't guarantee product success, leaving ample room for third-party developers and service providers.
Embodied AI & Frontier Exploration:
"Zhihui Jun's" ZHIYUAN Robot Goes Public via Reverse Merger: ZHIYUAN Robot, with prominent engineer "Zhihui Jun" (Peng Zhihui) as CTO, is set to go public on Shanghai's STAR Market by acquiring listed company SWANCOR. [Source: I Love CV]
ZHIYUAN Robot Unveils "Lingxi X2-N" Wheeled-Legged Robot: "Zhihui Jun" debuted the Lingxi X2-N, a robot that can rapidly switch between bipedal and wheeled forms, demonstrating exceptional coordination and disturbance resistance. [Source: ZHIYUAN Robot]
China Completes First In-Orbit Satellite Refueling in GEO: China's Shijian-21 and Shijian-25 satellites successfully docked and demonstrated in-orbit refueling at geosynchronous orbit. [Source: Ars Technica]
CAS Publishes Chang'e-6 Lunar Soil Findings, Revealing Far Side's History: Research on lunar samples from Chang'e-6, published in Nature, for the first time reveals two distinct volcanic periods on the Moon's far side, providing key clues to the mystery of the lunar near-far side asymmetry. [Source: Chinese Academy of Sciences]
Takeaway: China is accelerating and achieving a series of key breakthroughs in "hard tech" and frontier science, including embodied AI (humanoid robots), brain-computer interfaces, and space technology, a process aided by both open-source initiatives and innovative capital strategies.
Market Dynamics & Corporate Strategy:
Manus Reportedly Withdraws from China, Website Shows "Unavailable": AI Agent developer Manus's website is now unavailable to Chinese IPs, and its local social media accounts have been cleared. This follows reports of layoffs and moving core staff to its Singapore HQ. [Source: Sina Tech]
Microsoft's Bing Becomes #1 Market Globally in China by DAU: Microsoft announced that Bing China's daily active users have surpassed all other markets to become its global leader, with ad revenue also growing rapidly. [Source: Microsoft Technology]
Tencent Music's Market Cap Surpasses Baidu for the First Time: Tencent Music's market cap reached $30.1B, exceeding Baidu's. Analysts suggest its "copyright-payment-dividend" closed-loop model is gaining favor with investors. [Source: MyDrivers]
Chinese-Made Cars Lead in European Safety Ratings: Euro NCAP tests show that a majority of cars receiving the top five-star safety rating this year were manufactured in China (including both Chinese brands and China-produced models from Tesla, Polestar, etc.). [Source: InsideEVs]
JD.com Enters Microdrama Market with High-Paying Positions: E-commerce giant JD.com is officially entering the booming microdrama market, hiring for key roles with high salaries. [Source: Sina Tech]
Huawei & SAIC's New Brand "Shangjie" Teases First SUV: The new joint-venture brand Shangjie released a teaser for its first model, which will feature Huawei's intelligent driving system. [Source: Jiemian News]
BYD Announces L4-Grade Smart Parking with Safety Guarantee: BYD claims its "DiSus-Eye" system has achieved L4-comparable smart parking capabilities and officially promises to cover all safety liabilities for related incidents in China. [Source: BYD Auto]
Takeaway: Chinese AI startups face challenges operating in China, while some multinational companies may find new growth pockets. The valuation and business models of internet giants are being re-evaluated. China's auto industry continues to advance in safety and intelligence, seeking global brand recognition, while the microdrama content format continues to attract major players.
Noteworthy Global Developments:
Nvidia's Jensen Huang to Hold Media Briefing in Beijing on July 16: Nvidia's CEO will visit China again amidst warnings from US senators, making his trip highly anticipated. [Source: Reuters]
Top Global Influencers Plan "China Tours": MrBeast and Khaby Lame, two of the world's biggest content creators, are planning to film in or launch on Chinese social media platforms. [Source: China Newsweek]
Takeaway: The movements of top tech executives and global influencers serve as key barometers for observing globalization trends and market sentiment.
China AI Voices
Steve Chen, Co-founder of YouTube, in conversation with the Manus team
Context: Steve Chen, a legendary entrepreneur from the Web 2.0 era, held a cross-generational dialogue with the team from the new AI Agent startup, Manus, sharing his views on AI startups, product philosophy, and long-term thinking.
Key Insights:
Advice for AI Startups: Boldly Experiment & Create Compound Network Effects: Chen encourages AI startups to leverage their first-mover advantage for rapid experimentation, trying things large companies wouldn't dare due to bureaucracy or risk aversion. He believes retaining users comes from creating compound network effects, not just single features.
YouTube's Key to Success: Focus on Core Metrics, Not Early Monetization: He shared that YouTube's critical early decision was to focus relentlessly on user growth and transparent core metrics (like video uploads) rather than rushing to monetize. This dedication to long-term value laid the foundation for its later success with creator-friendly advertising models.
The Importance of a "Passive Experience" in Recommendation Systems: Chen emphasized that the magic of YouTube's recommendation system lies in creating a frictionless, "passive consumption" experience, allowing users to continuously discover content they love without active effort.
Our Take: This dialogue is incredibly valuable. As a defining figure of the last platform revolution, Steve Chen's insights provide a crucial historical perspective for today's heated AI Agent race. His emphasis on "long-termism," "core metrics," "network effects," and "passive experience" serves as an essential reminder for AI companies currently navigating the complex path of finding product-market fit and a sustainable business model. It reveals that no matter how technology changes, the underlying logic of building a successful product – deeply understanding user needs and creating indispensable value – remains constant.
Ideas
The "Arms Race" of AI Open Source and the Pragmatism of Ecosystems: This week, Moonshot AI open-sourced a trillion-parameter model, joining a powerful open-source wave from Kunlun Tech, Alibaba, and DeepSeek. This looks like a costly "arms race" to seize the technological high ground and win developer mindshare. However, the simultaneous report of DeepSeek's official app faltering while third-party services using its model thrive reveals a pragmatic counter-narrative: users ultimately flock to platforms with the best experience and utility, regardless of whether the underlying model is "official." Will the future be won by the "arms dealers" with the most powerful open-source models, or by the "systems integrators" who can best package any model (open or closed) into a superior product and service?
The "Chinese Way" of Breakthroughs in Frontier Tech: From "Zhihui Jun's" ZHIYUAN Robot using capital maneuvers for a quick public listing, to Chinese scientists achieving breakthroughs in invasive BCIs and deep space navigation, we are seeing a unique pattern for advancing "hard tech" in China. It combines the talent and charisma of top scientists, the long-term support of national research institutions, flexible and innovative capital strategies, and a focus on achieving breakthroughs in specific, targeted scenarios. Could this model help China "leapfrog" in future industries like robotics and BCIs?
That's the wrap for this China Story Briefing. From the open-source AI race to the deep sea of hard tech, technology is shaping the future in unprecedented ways. We'll keep tracking these shifts next week! And don't forget, more in-depth Deep Dives are being polished.