China leads the charge on AI while Australia lags
Artificial intelligence is a game changer, but the window for businesses to gain a competitive advantage is quickly closing.
- Deloitte report How Countries are Pursuing an AI advantage warns that Australia could miss out on many of the competitive advantages of AI.
- In Australia, 50% of corporate early adopters are using AI to play catch up with competitors, rather than for competitive advantage.
- As well as government funding, Chinese AI start-ups received 48% of global AI venture funding in 2017, outpacing the US for the first time.
By Christopher Niesche
Artificial intelligence (AI) offers myriad opportunities for businesses, not least the ability to use the transformational technology to steal a march on their competitors. Yet, in a worrying development for local businesses, Deloitte research says those opportunities are dwindling.
One statistic from the report How Countries are Pursuing an AI Advantage is particularly telling and raises concerns that Australia, unlike other nations, could miss out on many of the benefits of AI.
In China, 55% of early adopters of AI are using it to widen their lead over competitors or to leapfrog ahead. By contrast, 50% of corporate early adopters in Australia are using AI to catch up or keep up with their competitors; only 22% are using it for competitive advantage. It is only one of several data points that suggest Australian business leaders are less prepared for AI, and more pessimistic about their ability to harness it, than many advanced nations.
Various Chinese governments are spending huge sums on AI. The central government has published a national AI strategy and announced plans to invest tens of billions of dollars on AI research and development. Cities are also opening their coffers: Beijing announced a US$2.12 billion AI-centric technology park and Tianjin is set to pump US$16 billion into an AI fund.
And it’s not just government money. In 2017, Chinese AI start-ups received 48% of global AI venture funding, outpacing the US for the first time. China reportedly has the world’s second-highest number of AI companies, behind the US – and is home to the world’s most highly valued AI company, SenseTime Group.
The German government is also making a significant investment in AI. It has committed to spending €3 billion between now and 2025 in the hope that AI will expand its broader economy and improve the competitiveness of existing industries. A recent government-commissioned study estimates AI technology could add €32 billion to the country’s manufacturing output.
Window for AI advantage is closing
Concerningly for nations – like Australia – that are less prepared for AI than their global peers, Deloitte says there are indications that the window is rapidly closing for competitive differentiation with AI. “As AI technologies become easier to consume and get embedded in an increasing number of products and services, the early-mover advantage will rapidly diminish,” states the Deloitte report.
Adding to the urgency is the fact that global companies are increasing their AI spend; 51% plan to up their AI investment by 10% or more in their next financial year.
Australian organisations hold a positive view of the strategic importance of AI to their success, but the Deloitte report notes there is a mismatch between perceived levels of urgency and readiness.
While the Australian government wants to advance the country’s AI capabilities, there is no dedicated national AI strategy. The federal government committed $29.9 million over four years to boost the country’s AI capabilities, including the development of a technology road map and frameworks for standards and AI ethics.
“However, AI experts are issuing warnings that greater levels of spending will be needed for Australia to keep up with other countries that are lavishing public funds on AI initiatives,” according to Deloitte.
“Greater levels of spending will be needed for Australia to keep up with other countries that are lavishing public funds on AI initiatives.”
The report did not cover New Zealand, but a separate 2018 report by local NGO the AI Forum stated that the country has “a young ecosystem with more than 140 organisations already working with, or investing in, AI in New Zealand”.
Like Australia, however, there are questions as to how well prepared the country is. A national AI strategy is lacking and a survey revealed that while half of New Zealand companies say AI is, or will be, a game changer, only 36% of company boards have discussed AI.
Click image to enlarge. For most countries, concern about potential AI risks outweighs their confidence in being able to address them. Source: How Countries are Pursuing an AI Advantage.