SenseTime: Should the Chinese Artificial Intelligence Software Provider Pivot toward Generative AI?

Case Code: BSTR688 Case Length: 11 Pages Period: 2024 Pub Date: 2025 Teaching Note: Available

Price: Rs.400 Organization : SenseTime Group Inc. Industry : Technology & Communications Countries : China Themes: Diversification Strategy, Globalisation Growth Strategy,Artificial Intelligence

Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case discusses the challenges Chinese Artificial Intelligence (AI) giant SenseTime Group Inc. (SenseTime) faced in the Chinese AI surveillance market which was dominated by established players such as Hikvision and Dahua. Though the company had garnered some success in the AI surveillance market with its facial recognition technology in the initial years, it later started facing competition in the market. To add to its woes, the company was added by the US to the ‘Entity list’ for having a surveillance on Uyghurs, an ethnic minority group from Xinjiang province. This restricted exports from the US to the company. The company’s problems were compounded by the fact that in December 2021, the US banned American investors from investing in the firm. According to British daily newspaper the Guardian, while the US investment ban did have some impact on the company, it was short-lived since SenseTime managed to secure US$512 million in non-US funding in 2021.

Amidst these challenges, the company’s Generative AI segment contributed 60% of SenseTime’s total revenues for the half year ended June 2024. The growth was attributed to SenseTime’s Large Language Models.

Going forward, what strategy should SenseTime adopt for growing in the intensely competitive and saturated AI-based surveillance technology market in China? Should it look beyond China as the global AI video surveillance camera market was growing? The Chinese Generative AI segment was intensely competitive with several established players such as Alibaba, Baidu, and ByteDance dominating the market. Should SenseTime focus on this market? These were the questions Xu was grappling with while mulling over the FY23 financial results.

Issues

The case is structured to achieve the following teaching objectives:

• Analyze the reasons behind a company pivoting toward a new business
• Evaluate under what circumstances a company should consider global expansion.
• Formulate strategies for a company to grow in an intensely competitive market segment.

Contents

Introduction
A Note on Sensetime
Products and Services
Partnerships
Troubling Times
Competition
The Generative AI Landscape
Looking Ahead
Exhibits

Keywords

Xu Li; Facial recognition software; Deep learning; Computer vision; Large Language Model; Machine Learning; DeepID; AI-based surveillance technology; Smart AI Epidemic Prevention Platform; Entity list; Graphics Processing Units; SenseFace; SenseTotem; Camera surveillance technology; AI video surveillance camera market;The Chinese University of Hong Kong; Hikvision; Megvii; CloudWalk; Yitu; Dahua Technology; Alibaba; Baidu; JD.com; Nvidia Corporation

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