Original Source

An HSBC analyst predicts AI models will not dominate China's software market due to lack of industry know-how but will instead boost its growth through collaboration with existing firms.

Collaboration Between AI Models and Legacy Software Firms

Yiran Liu, an analyst at HSBC, projects that China's artificial intelligence (AI) model companies are unlikely to fully "eat up" the domestic software market. She notes that these firms lack the deep industry know-how and experience required to meet enterprise needs. Instead, the most probable outcome is a collaborative approach, where AI model companies and legacy software firms work in tandem to serve enterprises.

Growth Potential for China's SaaS Market

Unlike the US, China possesses a less developed Software-as-a-Service (SaaS) market. In this environment, the continuous improvement of AI models stands to benefit the SaaS market. Liu suggests that advancements in AI technology could serve as a catalyst for the growth of the SaaS market in China.

*Source: SCMP (2026-04-19)*

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