Chinese Tech Companies Expand Globally, Intensifying Competition with US

As more Chinese tech companies set their sights on global users, competition with the U.S. enters a new phase.

From data centers to artificial intelligence applications, Chinese companies are expanding rapidly outside their home market, just as American firms race to do the same.

"US tech investors need to keep a very close eye on the growing competition from China tech because as we've seen, many Chinese companies first prioritize market share over profit margins," market strategist Peter Boockvar wrote on June 24.

Launching low-cost AI models with capabilities that rival American-made ones was only the first step.

Next is industrial integration. It's a sign that price and functionality will increasingly matter as economic competition expands globally — clearly illustrated by events over the past week.

The use of AI in manufacturing is going to create more jobs and opportunities "not only here in China, but also outside of China, where a lot of companies will leverage Chinese technology," Mohamed Kande, global chairman of PwC, said Wednesday during a panel at the state-organized China International Supply Chain Expo in Beijing.

Despite China's decades-old role as a global manufacturing hub, the supply chain expo itself only launched in 2023 after Chinese President Xi Jinping's call to enhance industrial security.

That same morning, Chinese Premier Li Qiang referenced the expo at the World Economic Forum's "Summer Davos" event in Dalian to emphasize how innovation can offset global economic headwinds.

He touted 10 billion downloads globally of China's open-source AI models.

"China will integrate more proactively into the global innovation and industrial chains," he said, according to an official English translation.

Chinese companies use AI for cross-industry collaboration far more than businesses elsewhere, especially U.S. firms, PwC said in a report published as the supply chain expo kicked off. Kande and PwC declined to comment further.

The U.S. isn't sitting still.

The State Department last week signed on new Europeans participants for its "Pax Silica" initiative to secure global tech supply chains, while urging countries to rally behind U.S. tech rather than developing competing systems.

Following a two-day Pax Silica summit that wrapped up on Friday in Washington, D.C., the U.S. launched an advanced manufacturing program with Stanford University.

And sharing the stage with PwC's Kande in Beijing was Boeing China President Landon Loomis, who also serves as a U.S. representative to the APEC Business Advisory Council.

Loomis highlighted APEC's upcoming "digital week" in Chengdu next month as an "important opportunity" for member economies to discuss AI governance and "technological operability."

Although the event will take place in China, U.S. tech companies are expected to attend and hold workshops promoting American AI capabilities, a U.S. official previously told CNBC.

Meanwhile, American companies in China navigate a middle road.

Honeywell China used the expo to announce a partnership integrating its manufacturing management system and AI capabilities with ByteDance's corporate software Lark. With the system, Honeywell clients can increase returns by three to five times, Honeywell China President William Yu claimed during a panel at the expo.

Nvidia's Jensen Huang sent a video message after participating in person last year, while the expo organizers said Apple's Chief Operating Officer Sabih Khan attended for the first time this year. The iPhone maker did not respond to a CNBC request for comment.

Efforts by U.S. companies to retain a foothold in China come as Chinese companies push further overseas, particularly in cloud computing infrastructure.

Earlier this month, Alibaba announced its third European data center in France, joining facilities in the U.K. and Germany.

The move "underscores Alibaba's global cloud ambitions," said Aras Poon, an analyst at S&P Global Ratings.

"The French site will likely bring data closer to local customers, reducing latency, improving reliability, and positioning Alibaba to serve more complex, time-sensitive workloads," Poon said.

Alibaba and ByteDance are also investing heavily in data centers in Asia, where Amazon, Google, Microsoft and Oracle are pursuing similar buildouts. By 2030, Asia Pacific could account for roughly 34% of global data center demand, compared with North America's projected 46% share, McKinsey said in a report last week.

The global AI race is clearly no longer just about who builds the smartest model, but about ecosystems.