Chinese 'AI Tiger' Z.ai Jumps in Hong Kong Debut

Bloomberg

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00:00Let's start with that listing and the rationale for the IPO as well,

00:03because you're one of the first LLM startups to be listed globally on a stock exchange.

00:10What was behind the decision for going public and why now?

00:17We've had some plans for going public since quite early on.

00:21Our R&D investments in foundation models and the following commercialization strategy

00:26were essentially preparations for an IPO.

00:30We started some initial work since last year.

00:34Now we achieve the IPO this year.

00:37That's more about following the natural progression of steps.

00:41How do you plan to spend the money that you've raised through the IPO process?

00:46Where do you see it going mostly?

00:49The fundraising amount for the IPO is planned based on the company's development strategy.

00:55There's two major segments.

00:57R&D for foundation models and the following commercialization strategy.

01:03Seventy percent of the IPO funds will be allocated to R&D for foundation models,

01:09which includes the development of a universal foundation model,

01:13the currently highly anticipated intelligence agents, and multimodal systems.

01:18About 10% of the funds will be allocated to commercial infrastructure, supporting the foundation model.

01:26This includes developing inference tools and models as a service.

01:30Additionally, a portion of the funds will be allocated to ecosystem partnerships,

01:35and some funds will cover operational expenses or general corporate purposes.

01:40As a company, ZAI was initially more focused on government and SOEs, for instance.

01:47How do you see that changing, and are you looking to build up more partnerships in the private sector instead?

01:52The demand from large B2B clients is substantial, which accounts for a relatively high proportion of our current revenue.

02:02But we're also seeing that our cloud-based revenue, specifically from our mass platform, is growing rapidly,

02:09where we saw user numbers grow tenfold.

02:12However, due to its lower pricing, its contribution to total sales revenue remains relatively small.

02:18We believe that in the future, sales of standardized products, particularly those based on mass platforms,

02:25should generate larger revenue and grow at a faster pace.

02:28We anticipate that growth will exceed 50% over the next three years,

02:33with more than half of that likely coming from cloud-based clients.

02:36I think it's been said, for instance, that something that Anthropic might charge $200 for.

02:42ZAI, for instance, would be looking at 200 yuan.

02:45So it's obviously priced a lot less than what you see in the U.S.

02:49But how does that impact your margins?

02:51And also, how does that impact your path to profitability as a business?

02:56We believe that based on the overall trend, the price for mass will continue to fall gradually,

03:03because we think it should be an infrastructure for the entire society.

03:07At the same time, for AI, for example, the compute costs should also be gradually decreasing.

03:13We see this trend very clearly.

03:16For instance, in our current coding plan, the price of compute power for our coding API is about one-tenth of clouds,

03:24while our performance can reach 90%.

03:27This makes us more competitive and benefits more users.

03:32Do you think then that U.S. companies like OpenAI or Anthropic,

03:35do you think that they actually need to look at the pricing strategy of companies in China?

03:40I believe that once the market matures through full competition,

03:46more people will understand the capabilities, performance, and pricing of these models.

03:51Reaching a state of equilibrium, it is possible for U.S. companies to lower prices.

03:56But ultimately, I think that depends on their own decisions.

04:01I'm wondering also about the geopolitical angle,

04:03given that there's been a lot of discussion around H-200 chips and the access of those in China.

04:09Would you be looking to acquire those?

04:12And which chips are you using as well from the domestic companies?

04:16We maintain an open attitude regarding the use of chips,

04:20as we focus more on cost-effectiveness.

04:23We hope that the chip performance will become even better,

04:26while the chip price will be lower, so as to reduce our overall costs.

04:29We hope that the chip быстрее breeze最近 spreads!

04:34Have a great day!

04:35Please welcome it.

04:36Give the table a check and look if we step over here.

04:38Keep doing this.

04:39It's probably not dark.

04:41Some like a Finnish Imagine Rebelspeople movement.

04:46Have a great day!

04:48I love you too!

04:50Chinese I love you.

04:52Sometimes, it's a nice meeting.

04:55Some great four things,

04:56for the ability to approach 95 yearsuki.

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