Chinese AI companies are in the ER with bottomless money pit syndrome.
The bottomless money pit syndrome is easy to diagnose. The tell-tale symptom is a product that takes years of research and billions in investment but shows no promise of making money. Almost all Chinese AI companies have this illness.
When patients arrive at the ER with a painful illness - appendicitis, a highway motorcycle crash, or anything in between - one of the first treatments they receive is a shot of opioid painkillers like morphine or fentanyl. It’s effective at blocking the pain, but does not cure the illness.
Same goes for the Chinese AI companies. A shot called OpenClaw temporarily numbs their pain but won’t cure the disease. And just like humans’ relationship with opioids, if they chase the OpenClaw fad for too long, these companies risk total destruction.
Chinese AI companies build the best open weight models. But they aren’t research institutes that contribute to open source just for the love of the game. They’ve poured huge investments into AI, hinged on the hope that it will make a hefty return. Sadly for them, that prospect is nowhere in sight.
Their consumer businesses are the biggest money pits. After tens of billions of dollars spent on infrastructure, over a billion on marketing, and hundreds of millions each month serving the models - how much do the Chinese AI companies make from their chatbot apps? Zero. Zero Chinese yuan. Zero dollars. Zero monopoly money. None of the top Chinese AI apps have a paid tier because Chinese consumers don’t pay for software, and no company has yet dared to challenge that for fear of wiping out its user base. So despite having over 100 million WAU, the Chinese AI chatbots’ revenue is literally zero.
These companies are doing slightly better on the enterprise-facing side. But their revenue is still orders of magnitude less than Anthropic and OpenAI’s. Sure, the Chinese models are open source and less capable, so they are expected to make less money. But a 30x1 difference is still too much. And Anthropic’s exponential revenue takeoff only exacerbates the Chinese AI companies’ woes.
Then OpenClaw went viral. But despite the unprecedented growth, its popularity was limited to hackers and tech enthusiasts who are used to fiddling with new AI tools. Most people don’t know and don’t care about using the command line interface, setting up a development environment, managing api keys, and writing access control rules. After all, most people aren’t comfortable with the instability and risk of a new, untested open source project like this, and rightfully so. OpenClaw is not for everyone.
However, leaders in the Chinese AI companies strongly disagree. They saw their API usage spike because OpenClaw’s early users were looking for cheap tokens, and they convinced themselves that this was a godsend - more people using OpenClaw means more tokens sold, which means more revenue for the company. So they concluded that they should mobilize all marketing resources, launch an epic campaign to convince the masses to install an open source npm tool called OpenClaw.
These companies were so convinced that OpenClaw would transform the business that they started doing absurd things. First, they flooded every tech/business media outlet with OpenClaw within a few days. Soon after, it got to billboards and subway advertising screens. Then, every level of state-owned media joined. This is bizarre because these media outlets have only one canon, which is to amplify the propaganda from the party’s central committee. The reporting is always provocative and chauvinistic. The recent recurring themes are the wicked Japanese Prime Minister, the dishonorable Taiwanese separatists, China’s blooming technology sector, and the corrupt government officials. So them writing about an open-source project on Github (which is banned in China), founded by someone who just joined OpenAI, and requires technical literacy 99% of people don’t have, is something straight out of a South Park episode.
Other marketing channels were even more farcical. Because people don’t have the technical know-how to install OpenClaw, companies like Tencent went old school. They set up tents on sidewalks, where people could walk in with their computers and get OpenClaw installed for them. It’s hard to fathom what was going through the mind of whoever organized this - what kind of genius comes up with the idea of scaling AGI by lining people up on sidewalk stands?
The companies’ OpenClaw marketing fiasco mirrors how people behave in crippling pain. Rationality is gone and they frenetically grasp on to anything that might relieve the pain. But the nature of these relievers means it won’t last. After these campaigns, these companies won’t be able to keep any of these users because OpenClaw is simply not a mass market product. Setting it up for someone at a service station is like a pilot bringing someone to ten thousand feet in the air in a Cessna, telling the passenger “now I’ve set up the flight for you, good luck!” and parachuting out of the cockpit.
That’s why OpenClaw is like opioids for the Chinese AI companies. It creates a lot of buzz in the short term. People get intrigued and set up OpenClaw. They will use it for a few days, find out it’s not what they imagined, and stop. API usage will grow as the marketing campaign pulls in new users - like how people stop feeling pain when they are on morphine drips. But as soon as the drug wears off, reality kicks in. The revenue growth will be gone, and the companies end up with nothing after wasting enormous amounts of time and energy. They will be further behind on model and product development because they’ve lost focus, and eventually succumb to their diseases.