Sam Gao and Xiaoyu Ma of Gaorong Capital: AI + Hardware, China's Opportunity in a World of Upheaval

"Waves" published A Globalization Guide for Chinese Founders last month, breaking down the past, present, and future of Chinese companies going global across specific regions: North America, Latin America, the Middle East, Japan, Southeast Asia, Europe, and Africa. If you haven't had a chance to read it yet, you can jump over and check out the sections that interest you.

In early 2024, CES — the "tech world's biggest annual gathering" — took place in Las Vegas, and nearly every China-focused VC looking at overseas markets showed up. Unitree, the humanoid robotics company, sold four exhibition units on the spot. Jesse Lyu, founder of the Chinese startup Raven Tech, unveiled his new company Rabbit, whose handheld AI hardware product sold 10,000 units on its first day. As China's manufacturing advantages expand outward, North America represents the most important testing ground for shedding the low-price label and breaking into premium markets.

By Qian Ren

At 37, Xiaoyu Ma is something of an old hand in the going-global space, having returned to China to invest in 2015.

He was among the first Chinese investors to go to India and focus specifically on purely local Indian projects. Over five years, he visited more than a dozen countries across Southeast Asia, the Middle East, and Africa to research markets. After joining Gaorong in 2018, he proved his judgment with fast decisions and execution on investments like Opay and Advance.ai — grounded not only in his read of founders, but in his accumulated on-the-ground experience in Africa and Southeast Asia and his understanding of local opportunities and competitive dynamics. His other representative deals include Grab, Dianxiaomi, Aventon, Style3D, Wiz.ai, and YOU Beauty. Ma's next stop is North America — he previously spent five years at BlackRock's headquarters in the U.S. He told "Waves" that AI + hardware could become the next wave of opportunity for domestic players expanding overseas.

Below are excerpts from Ma's views:

1. This year's CES made it impossible to miss the "AI" saturation — major players from the U.S., Europe, Japan, and Korea are all in on AI, exploring every possible integration point. Of course, Chinese brands remain a force to be reckoned with. Beyond traditional strengths in 3C accessories, there's clear dominance in areas like yard robots, e-bikes, energy storage, and AR. Compared to the giant-dominated markets of Japan and Korea, Chinese manufacturers have a healthy gradient — a solid, thick middle layer.

2. That said, genuine internationalization for overseas-bound brands still has a long way to go. We're seeing more companies shift from cost-advantage entry points toward product innovation and brand definition, but there's still a significant gap in cultural core and forward-looking strategic positioning. In short, while the emphasis on AI is palpable, there aren't yet standout AI-native hardware products. As peers have remarked, this transitional phase — neither fully ripe nor barren — suggests we're in the early stages of the AI + hardware innovation cycle. The bigger opportunities ahead are something to look forward to.

3. For Chinese investors and companies, "AI + hardware" could represent a new wave of opportunity in 2024 and beyond. AI takes the leading role, hardware plays supporting parts, solving new problems in new scenarios. Take AI Pin as an example — future hardware, built on true intelligence, will perceive the world from a human perspective through robots, wearables, and everything familiar to us, continuously spawning entirely new product forms that in turn feed back into AI.

4. Betting on the AGI wave is never the wrong move. But how to avoid false trends? Still comes down to first-principles thinking: Is the product or service creating value? What user or enterprise problem is it actually solving? Is it unprecedented new value, or a 10x efficiency improvement? This is also a core starting point for our investments.

5. The biggest shift these past two years is that going global — whether actively or passively — is no longer an option requiring prolonged deliberation. It's a must. When the dimensions of going global become all-encompassing, enormous opportunities emerge within. Before, it was just business globalization; now it requires genuine company-level internationalization.

6. Corporate overseas expansion is becoming increasingly self-driven — some to survive, some to diversify risk, others to seize incremental opportunities abroad. I clearly sense that more companies aren't just putting on a show for investors, but are earnestly out to make money — more of the business-savvy attitude that commerce should have always had.

7. The old playbook for app going-global was to land in an emerging market, build up DAU first — low mobile penetration, cheap traffic, easy user acquisition, go for big growth. Today, with traffic and capital dividends gone, the more typical PMF (Product-Market Fit) is in high-ARPU countries — launch a good product, charge users directly through subscriptions. Compared to the growth-first approach of the mobile internet era — scale up, monetize later — companies now integrate monetization thinking and profit models into product form from day one.

8. In the AGI era, we want founders with strong technical understanding, whose product capabilities can leverage technical leverage, while also making case-by-case judgments based on company type and region — local conditions matter, one-size-fits-all approaches are tough.

9. In the mobile internet era, product capability was the first principle. In the AGI era, technical capability is the first principle. Today requires a stronger supply-side perspective — every new model release, every rapid iteration of underlying technology, can overwrite much of what came before. The model is the product; you can't just carve ornamental details on the giants' extensions.

Image source: IC photo