Small Chinese firms leap ahead of big ones in AI adoption, experts say

Smaller, family-run businesses in mainland China are adopting advanced artificial intelligence more quickly than their larger counterparts, industry leaders said Friday at the inaugural Nusa Dua Forum in Bali, organized by the South China Morning Post and Danantara Indonesia. The trend highlights a reversal of conventional wisdom, as agile mom-and-pop shops leverage AI agents for practical gains while big enterprises remain bogged down by internal risk assessment processes.

Mom-and-pop shops lead the charge

Zhou Yuxiang, founder and CEO of Black Lake Technologies — a Shanghai-based industrial software firm — noted during a panel discussion that his company has shifted its focus from large corporations to small and medium-sized enterprises and family-owned businesses due to rising demand from the latter. “It’s an interesting trend that I feel mom-and-pop shops are more open to agentic technology,” Zhou said. His company develops cloud-based solutions that help factories digitize operations, including tools to measure the return on investment when replacing human workers with AI agents. “Actually smaller companies are benefiting from it already, but the bigger ones are still talking about it,” he added.

Risk aversion slows big firms

Zhou explained that when his team approaches large enterprises about AI, the conversation often stalls at the chief risk officer’s desk. “Everyone will have a voice,” he said, implying that multiple layers of oversight and compliance slow decision-making. In contrast, smaller firms can make immediate, practical decisions without bureaucratic hurdles. This agility allows them to deploy AI where it delivers measurable productivity gains, such as automating routine tasks in manufacturing or optimizing supply chains.

Power and data as competitive edges

Panelists at the forum also emphasized that market agility, steady power supplies, and robust data exchanges will be critical for companies and countries aiming to dominate the AI sector. The discussion touched on how reliable electricity and efficient data flows underpin AI’s operational requirements — factors that play to China’s strengths in infrastructure and industrial digitization. Experts argued that even advanced algorithms are useless without the energy and connectivity to run them at scale.

The forum — the first of its kind focusing on the AI economy and digital factory transformation — brought together tech leaders, investors, and policymakers. The setting in Bali underscored the international interest in how China’s AI adoption patterns could shape global competition.

Insights for global tech strategy

Zhou’s observations suggest that the next wave of AI deployment may not come from Fortune 500 headquarters but from nimble family workshops in Zhejiang or Guangdong. For technology vendors, this means tailoring products for lower cost, ease of use, and quick ROI demonstrations — attributes that appeal to small-business owners who may lack technical expertise but crave tangible results.

Governments and investors watching China’s AI landscape should note that large state-owned enterprises and multinationals, while powerful, are not always the early adopters. Instead, the grassroots embrace of AI among small firms could accelerate China’s overall digital transformation, creating a broad base of AI-literate enterprises that outpace their larger counterparts in real-world implementation.

Implications for the AI race

The findings from Bali challenge the narrative that big companies with deep pockets lead AI innovation. If small Chinese firms continue to outpace large ones in adoption, the global AI race could be determined by which ecosystems best support small-business experimentation. “The winner will not just be the one with the best technology,” a panelist summarized, “but the one that can deploy it fastest where it matters.” For now, that may well be the family-run factory on the outskirts of Shanghai, rather than the headquarters of a corporate giant.