JPMorgan's head of China equity research, Alex Yao, says the country's artificial intelligence sector is undergoing a decisive shift — away from a fragmented 'hundred-model' competition and toward a concentrated race to deliver measurable business value for enterprises. Speaking in a recent interview, Yao said the consolidation is accelerating, with only a smaller cohort of globally competitive players likely to emerge as dominant forces.

From model proliferation to enterprise-grade infrastructure

China's AI landscape, once characterised by hundreds of competing large language models, is rapidly narrowing, according to Yao, who also serves as JPMorgan's co-head of Asia-Pacific technology, media and telecoms research. He argued that the winners will be those capable of converting consumer-facing AI features into reliable, enterprise-grade infrastructure. The shift reflects a broader maturation of the market, where raw model benchmarks are giving way to practical deployment at scale.

Why the US-China performance gap may not matter domestically

While Chinese AI models still lag slightly behind top-tier US counterparts on certain performance metrics, Yao said this gap is not the decisive factor for domestic commercialisation. The restricted access to US models within China, combined with the growing premium placed on practical utility, has effectively levelled the competitive playing field at home. 'You don't need a model with the intellect of Einstein,' Yao said. 'Once a model reaches the capability of a strong master's-level graduate, it can start doing real work.'

Monetisation strategies take shape

Concrete revenue models are already emerging across the sector. In early May 2026, ByteDance introduced subscription tiers for its Doubao app, ranging from 68 yuan (US$10) to 500 yuan per month. The move signals growing confidence among Chinese tech firms that consumers and enterprises will pay for AI tools when the value proposition is clear and demonstrable.

Rethinking Chinese consumers' willingness to pay

Yao pushed back on the long-held assumption that Chinese consumers are historically reluctant to pay for software. He argued that adoption hinges primarily on 'clear, demonstrable value' — a threshold that leading AI products are increasingly meeting. If proven correct, this would represent a structural shift in the monetisation outlook for the entire Chinese tech sector, with companies such as ByteDance, Alibaba, Tencent, and Zhipu AI among those best positioned to benefit.

What's next

The consolidation Yao describes is still playing out, and the next phase will likely be determined by which players can lock in enterprise contracts and demonstrate repeatable, quantifiable returns on AI investment. Investors and industry observers will be watching whether ByteDance's subscription experiment with Doubao translates into sustained revenue growth — a data point that could set the template for the broader sector's monetisation playbook.