In an era where facial recognition technology is increasingly embedded in daily life, from unlocking smartphones to streamlining payments, China has introduced robust regulations to ensure its responsible use. On March 21, 2025, the Cyberspace Administration of China (CAC) and the Ministry of Public Security (MPS) released the Security Management Measures for the Application of Facial Recognition Technology, effective from June 1, 2025. These measures, supplemented by a clarifying notice from the CAC on March 30, 2025, mandate registration for companies processing facial data of over 100,000 individuals and provide a clear framework for compliance. For British businesses operating in or entering the Chinese market, understanding and adhering to these rules is essential to safeguard operations and protect personal data.

The New Regulatory Landscape

China’s facial recognition regulations are part of a broader effort to strengthen data protection under the Personal Information Protection Law (PIPL), enacted in 2021. The Security Management Measures aim to balance innovation with the protection of individual privacy, addressing concerns about the misuse of sensitive biometric data. The rules apply to any organisation, domestic or foreign, processing facial recognition data in China, with a particular focus on those handling large datasets. According to the CAC, companies storing facial data of more than 100,000 individuals must register with their provincial-level cyberspace administration within 30 working days of reaching this threshold.

Recognising the compliance burden, the CAC introduced a grace period for companies that hit this threshold before June 1, 2025, allowing them until July 14, 2025, to complete registration. This transitional measure reflects China’s pragmatic approach to implementation, ensuring businesses have time to adapt without immediate disruption. Additionally, the CAC issued detailed ‘Instructions for Filling in the Facial Recognition Technology Application Filing System (First Edition)’, accessible via the Personal Information Protection Business System or the National Cyberspace Administration Government Affairs Hall on the CAC’s website. These guidelines outline the registration process, required documentation, and compliance expectations, making it easier for companies to navigate the system.

Why Compliance Matters

Facial recognition technology is widely used in China across sectors like retail, finance and security, but its rapid adoption has raised concerns about privacy and data security. China’s facial recognition market is projected to reach £7.2 billion by 2027, driven by applications in smart cities and public safety. However, high-profile cases, such as the 2021 fine imposed on a Hangzhou zoo for collecting facial data without consent, underscore the risks of non-compliance. The zoo was ordered to delete the data and issue a public apology, highlighting China’s growing emphasis on enforcement.

For British businesses, compliance is not just about avoiding penalties; it’s about building trust in a market where data protection is increasingly scrutinised. Robust cybersecurity measures, including compliance with data laws, are critical for protecting investments in China. Failure to register or properly handle facial data could result in fines, operational restrictions, or reputational damage, particularly for companies in sectors like technology, retail, or hospitality that rely on facial recognition for customer engagement.

How to Register: A Step-by-Step Guide

The registration process is designed to be straightforward, with all steps completed online via the Personal Information Protection Business System. Companies must first create an account on the platform before uploading the required documents, which include:

• A Basic Information Form of Personal Information Processor, detailing the company’s operations and data processing activities.
• A Facial Recognition Technology Application Record Form, outlining the scope and purpose of facial data use.
• A Personal Information Protection Impact Assessment (PIPIA), assessing the legality, necessity, and risks of data processing.
• Scanned copies of the Unified Social Credit Code Certificate, legal representative’s ID, agent’s ID, Power of Attorney, and Letter of Commitment, all stamped with the company’s official seal.

The CAC reviews submissions within 15 working days, updating the application status to “Filing Completed,” “Returned for Improvement,” or “Review Failed.” If supplementary materials are required, companies have 10 working days to provide them, or the process is terminated. The CBBC advises seeking professional support, such as from its Information Systems team, to ensure compliance with China’s data laws and to localise global systems effectively.

Conducting a Personal Information Protection Impact Assessment (PIPIA)

A cornerstone of the new regulations is the requirement to conduct a PIPIA, as mandated by the PIPL. This assessment evaluates the legality, legitimacy, and necessity of facial data processing, alongside the potential impact on individual rights and the effectiveness of protective measures. The Filing Instructions provide a tailored template for facial recognition, requiring companies to disclose technical specifications, data collection and storage methods, standard operating procedures, and the ethical basis for data use. For example, companies must clarify whether facial data is used for automated decision-making, such as targeted advertising, and detail the infrastructure and technology providers involved.

The PIPIA process encourages transparency and accountability, aligning with international best practices. The PIPIA requirement has driven companies to adopt more robust data governance frameworks, enhancing trust among consumers and regulators alike.

Easing the Transition

The CAC’s notice reflects a pragmatic approach to regulation, balancing enforcement with flexibility. The grace period for pre-June 2025 data processors and the detailed Filing Instructions demonstrate China’s commitment to supporting businesses during this transition. For British companies, this is an opportunity to align with China’s evolving data protection regime while leveraging tools like the CBBC’s Business Guides, which offer insights into regulatory compliance and market navigation.

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A few days ago, Unitree Robotics captivated audiences with the world’s first robot boxing tournament, a spectacle that showcased the fusion of engineering precision and creative design. This event exemplifies the dynamic innovation landscape in China, where design and technology converge to push boundaries. It also underscores the opportunities available for UK innovators to engage with China’s burgeoning tech ecosystem.

The Design Intelligence Award (DIA), now in its 10th edition, stands as a testament to this spirit of innovation.  As one of the world’s most prestigious award programmes, the DIA offers a platform for designers, entrepreneurs and innovators to gain recognition and access to the Chinese market. This year marks the fifth consecutive partnership between the China-Britain Business Council (CBBC) and the DIA, reflecting our commitment to fostering UK-China collaboration in design and innovation.

The DIA is inviting participants to explore how design can drive sustainable development, technological advancement, and societal well-being. With a total award fund of 5 million RMB (approximately £600,000), the DIA not only recognises outstanding design but also facilitates the commercialisation of innovative ideas.

The significance of engaging with China’s market cannot be overstated. According to the UK Department for Business and Trade’s “Trade and Investment Factsheet” published in May 2025, total trade in goods and services between the UK and China remained close to £100 billion mark in the four quarters to the end of Q4 2024.  China kept its position as the UK’s fifth-largest trading partner, accounting for 5.5% of total UK trade.

Peter Burnett, CEO of CBBC, emphasises the role of design in this context: “Design is a powerful enabler of innovation and a key strength of the UK’s global offer.  As China deepens its focus on high-quality growth, there is clear potential for British businesses to co-create solutions across priority sectors, from sustainable products to next-generation health technologies, and beyond,” he said.

New for 2025, the DIA introduces two entry routes: the established Product Group and the newly launched Innovation Incubation Group. The latter offers participants the opportunity to co-create solutions to real-world challenges with leading enterprises such as Alibaba, Unitree Robotics, Rokid, Fourier Intelligence, Deep Robotics, and BrainCo, unlocking unparalleled opportunities for collaboration and market entry.  For those eager to chart their own course, the X Track within the same group provides the freedom to develop and showcase independent innovations, making space for bold and original ideas.

It is worth noting that UK institutions have already established partnerships with these companies:

• Alibaba Cloud has collaborated with the University of Reading’s Henley Business School to launch a Skills Centre in the UK, focusing on cloud computing, big data, and AI.
• Fourier Intelligence has signed a Memorandum of Understanding with the UK’s National Robotarium to advance rehabilitation robotics.
• Unitree Robotics has engaged with the UK Atomic Energy Authority’s RACE team, showcasing their humanoid and quadruped robots.

These collaborations highlight the mutual interest and potential for UK innovators to contribute to and benefit from China’s innovation landscape.

As CBBC’s sector lead for tech and innovation, healthcare and life sciences, I encourage UK entrepreneurs, designers, and innovators to seize this opportunity. Participating in the DIA can open doors to new markets, partnerships, and avenues for growth.  With China’s emphasis on high-quality development and the UK’s strengths in design and innovation, the synergy between our nations has never been more promising.

The free submission deadline for this year’s DIA is 20^th June 2025. Late submissions will be accepted until 20^th September 2025, and by quoting the invitation code UK2025-1VCVSKF, applicants can waive the standard late fee. This opportunity for CBBC Focus readers reflects our shared mission to support UK innovators in accessing growth markets like China. If you’re not yet a CBBC member, now is the perfect time to explore our services and join a community committed to helping UK organisations succeed in China.

Click here to start the application process for the 2025 Design Intelligence Award

Elinor Greenhouse is CBBC’s Senior Adviser for Tech and Innovation, Healthcare & Life Sciences.  For inquiries, contact Elinor at Elinor.Greenhouse@cbbc.org.

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China’s semiconductor sector has emerged as a cornerstone of its technological ambition, propelled by significant government investment and a strategic push for self-sufficiency. In 2024, the industry was valued at £134.2 billion, with projections indicating a compound annual growth rate (CAGR) of 7.8% from 2025 to 2034, potentially reaching £283.7 billion by 2034. This growth reflects China’s determination to reduce reliance on foreign chips, which accounted for 83% of its £185.5 billion chip consumption in 2020, and to establish itself as a global leader in semiconductor innovation. The sector’s rapid development, driven by advancements in artificial intelligence (AI), 5G, and electric vehicles (EVs), positions China at the forefront of the global tech race, though geopolitical tensions and technological gaps present significant challenges.

China’s semiconductor industry began in earnest during the 1980s, with early efforts like Project 908 and Project 909 aimed at building domestic capabilities. These initiatives, including partnerships with foreign firms like NEC, faced setbacks due to outdated technologies and global market downturns. A pivotal shift occurred in 2014 with the National Integrated Circuit (IC) Industry Investment Fund, or “Big Fund,” which injected £17.6 billion initially, followed by £23.3 billion in 2019 and £36.8 billion in 2023. The “Made in China 2025” strategy set ambitious targets of 40% self-sufficiency by 2020 and 70% by 2025, though the actual figure reached only 30% by 2025, underscoring the complexity of achieving technological autonomy. Despite this, China’s 53.7% share of global chip consumption in 2020 highlights its position as the world’s largest semiconductor market.

Key players dominate China’s semiconductor landscape. Semiconductor Manufacturing International Corporation (SMIC), the country’s largest foundry, reported £9.77 billion in revenue in Q1 2024, a 19.7% year-on-year increase, making it the world’s second-largest pure-play foundry behind Taiwan’s TSMC. SMIC’s production of 7-nanometer chips, such as the Kirin 9000S for Huawei’s Mate 60 Pro, demonstrates its ability to innovate despite U.S. export controls. “SMIC is at most only a few years behind Intel and Samsung,” noted industry analyst Dylan Patel, highlighting its progress in advanced node manufacturing. Hua Hong Semiconductor, the second-largest Chinese chipmaker, holds a 2.6% global market share, focusing on mature node chips. HiSilicon, a Huawei subsidiary, designs advanced chips like the Kirin series, while Yangtze Memory Technologies Corporation (YMTC) has achieved a 5% global market share in NAND flash memory, with plans to surpass 10% by 2027. Other notable firms include Hygon Information Technology, producing x86-based CPUs, and Loongson Technology, developing MIPS-compatible microprocessors for domestic applications.

Opportunities for partnerships are abundant, particularly in mature node manufacturing and emerging technologies. China’s dominance in EVs, with 35 million vehicles projected for 2025, drives demand for power management and sensor chips, creating openings for collaboration with foreign firms. For instance, joint ventures like Vanguard International Semiconductor’s partnership with NXP to form VisionPower Semiconductor Manufacturing Company in Singapore highlight the potential for cross-border cooperation. The rise of 5G, with China projected to have 430 million users by 2025, further fuels demand for advanced chips, offering opportunities for firms specialising in AI and IoT applications. China’s focus on RISC-V architecture, supported by companies like Alibaba’s T-Head, presents a pathway for partnerships in open-source chip design, reducing reliance on Western intellectual property like Arm.

However, the sector faces significant risks. U.S.-led export controls, tightened in October 2023, restrict access to advanced lithography equipment, particularly extreme ultraviolet (EUV) machines critical for sub-5nm chips. ASML, a Dutch firm with a monopoly on EUV technology, remains a chokepoint, as noted by the Federal Reserve: “A single Dutch company, ASML, has 100% market share for the most advanced lithography machines.” China’s Shanghai Micro Electronics Equipment (SMEE) has developed a 28nm lithography machine, but closing the gap to 5nm or below remains a challenge. Geopolitical tensions, including U.S. tariffs and sanctions on firms like Huawei, exacerbate supply chain vulnerabilities. “U.S. trade restrictions on China can hamper its global position as a manufacturing hub,” warned Fortune Business Insights. Overcapacity in legacy chips, driven by aggressive subsidies, risks price wars that could destabilise global markets. Additionally, a talent shortage and high capital costs (SMIC’s 2023 budget rose 18% to £5.82 billion) pose internal challenges.

Growth projections remain optimistic despite these hurdles. The global semiconductor market is expected to grow at a 15% CAGR from 2025 to 2030, reaching £777.7 billion by 2030, with China’s share projected to increase significantly. The memory segment, led by firms like YMTC, is anticipated to surge by 24% in 2025, driven by high-bandwidth memory (HBM) for AI applications. China’s focus on mature nodes (28nm and above), which account for 40% of the global market by 2030, aligns with its strengths in automotive and industrial applications. “Chinese foundry players are performing well in 2024, with a high utilisation rate of around 87% expected in 2025, thanks to the ‘Design by China + Manufacturing in China’ policy,” stated a Wikipedia analysis. Investments in 110 new fab projects since 2014, totalling £151.9 billion, underscore China’s commitment to expanding capacity, with 40 fabs operational and 38 under construction.

The integration of AI and 5G technologies is a key driver of growth. China’s leadership in 5G, with over one million base stations and 80% year-on-year growth in 5G smartphone shipments in 2021, creates a robust domestic market for semiconductors. The automotive sector, particularly EVs and autonomous driving, demands sophisticated chips for battery management and sensors, further boosting demand. “The semiconductor supply chain, spanning design, manufacturing, testing, and advanced packaging, will create a new wave of growth opportunities,” said Galen Zeng, Senior Research Manager at IDC Asia/Pacific. However, the industry’s reliance on government subsidies, estimated at £116.3 billion over the past decade, raises concerns about sustainability and market distortions, as noted by the Semiconductor Industry Association.

China’s semiconductor sector stands at a crossroads, balancing remarkable progress with formidable challenges. Breakthroughs like SMIC’s 7nm chips and YMTC’s 200+ layer NAND flash demonstrate innovation, yet the lack of EUV technology and geopolitical headwinds limit cutting-edge advancements. “It is entirely possible that five or ten years from now there is a far more developed indigenous ecosystem for Chinese chip equipment suppliers,” suggested Feldgoise in a CKGSB Knowledge article, pointing to long-term potential. As China continues to invest heavily and foster partnerships, its semiconductor industry is poised to reshape global supply chains, offering both opportunities and risks for international stakeholders.

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For British businesses eyeing opportunities in this vibrant sector, understanding its scale, key players, and strategic undercurrents is not just useful, it’s essential. From the sprawling factories of Shenzhen to the R&D labs of Beijing, this industry is a complex tapestry of ambition, policy, and relentless growth. Here, we unpack the intricacies of China’s technology and electronics industry, spotlighting opportunities, challenges, and the forces shaping its future, with an eye on what this means for UK firms.

China’s technology and electronics industry: A sector of unrivalled scale

The sheer magnitude of China’s technology and electronics industry is staggering. In 2024, the sector’s revenue surpassed £2.7 trillion, cementing its position as the world’s largest. It accounts for roughly 70% of global smartphone production, 60% of laptops, and an ever-growing share of high-tech components like semiconductors and electric vehicle (EV) systems. Exports drive a significant portion of this, but the domestic market is equally voracious, demanding everything from AI-powered devices to IoT-enabled appliances. This dual engine of production and consumption makes China not just a manufacturing hub but a crucible for technological trends that ripple globally.

At the heart of this ecosystem are titans like Huawei, Xiaomi, Oppo, and Lenovo, which dominate consumer electronics with sleek smartphones, laptops, and wearables. In semiconductors, the Semiconductor Manufacturing International Corporation (SMIC) leads the charge, while tech giants Tencent and Alibaba push boundaries in software, cloud computing, and AI. These companies don’t just compete, they set the pace. Shenzhen is the epicentre, home to global supply chain giants like Foxconn and innovators like DJI, the world’s leading drone manufacturer. Meanwhile, Beijing and Shanghai anchor R&D, excelling in AI, quantum computing, and 5G infrastructure. The Greater Bay Area (GBA), linking Guangdong, Hong Kong, and Macau, has emerged as a unified innovation corridor, amplifying cross-border collaboration and investment.

Special economic zones and regional hubs

China’s tech prowess owes much to its strategic geography. Special Economic Zones (SEZs) like Shenzhen, Zhuhai, and Xiamen, established decades ago, were designed to attract foreign capital and foster technological advancement. Shenzhen, in particular, has transformed from a fishing village into a global tech metropolis, hosting thousands of factories and startups. The GBA initiative has supercharged this, creating a seamless innovation ecosystem that integrates nine mainland cities with Hong Kong and Macau. This region alone generates over £1.2 trillion in GDP, much of it tied to tech and electronics. Beyond the south, Beijing’s Zhongguancun district thrives as an R&D hub, while Shanghai’s Pudong area draws multinationals and startups alike. These clusters aren’t just geographic—they’re policy-driven engines of growth, offering tax incentives, streamlined regulations, and access to vast talent pools.

Growth sectors fueling China’s technology and electronics industry

China’s tech and electronics industry doesn’t operate in isolation; it’s propelled by adjacent sectors that amplify its reach. The renewable energy boom, particularly in solar panels and battery storage, aligns with China’s carbon neutrality goals and powers the electronics supply chain. The electric vehicle market, led by BYD and Nio, is a major driver, demanding advanced electronics for power management, autonomous driving sensors, and infotainment systems. Artificial intelligence is another cornerstone, with China investing heavily to lead in AI adoption by 2030. The rollout of 5G infrastructure, spearheaded by Huawei and ZTE, is transforming connectivity, enabling smart cities and IoT ecosystems. These industries don’t just support tech, they’re symbiotic, creating demand for cutting-edge components and software that keep China’s factories humming.

Government policies and strategic ambition

The Chinese government has made technology and electronics a linchpin of its economic vision, embedding them in successive Five-Year Plans. The 14th Five-Year Plan (2021–2025) places a laser focus on self-reliance, particularly in semiconductors, spurred by global supply chain disruptions and US trade restrictions. The “Big Fund,” a multi-billion-pound initiative, channels investment into domestic chip production, aiming to reduce reliance on foreign suppliers. The “Made in China 2025” strategy, though less publicised now, continues to drive upgrades in smart manufacturing, robotics, and high-tech self-sufficiency. These policies aren’t mere rhetoric—they’re backed by vast subsidies, state-led R&D, and incentives for private firms, creating a formidable ecosystem that’s both competitive and insular.

The shadow of US trade tariffs

US trade tariffs, particularly those intensified under recent administrations, cast a long shadow over China’s tech and electronics industry. In 2024, tariffs on Chinese semiconductors, EVs, and critical components like lithium-ion batteries reached punitive levels, with rates as high as 50% on some goods. These measures, aimed at curbing China’s dominance and protecting US interests, have disrupted supply chains and raised costs. For Chinese firms, the impact is twofold: restricted access to advanced US chips and technology, and pressure to accelerate domestic alternatives, a process that’s costly and technically daunting. SMIC, for instance, has made strides in 7nm chip production but lags behind global leaders like TSMC and Samsung.

For US companies, the tariffs create a double-edged sword. While they shield domestic industries, they inflate costs for American firms reliant on Chinese manufacturing, from Apple to Tesla. UK businesses, meanwhile, face a more nuanced landscape. Unaffected by US tariffs, British firms can position themselves as neutral partners, offering high-quality components, software, or R&D expertise to Chinese companies seeking alternatives to US suppliers. However, navigating this terrain requires caution—geopolitical tensions could spill over, and UK firms must comply with export controls to avoid regulatory pitfalls. The tariffs underscore a broader reality: China’s push for self-reliance will reshape global supply chains, forcing both US and UK companies to adapt.

Challenges and future threats

Beyond tariffs, China’s tech and electronics industry faces significant hurdles. Geopolitical tensions, particularly with the US and its allies, have tightened export controls on advanced chips and equipment, slowing China’s progress in high-end semiconductor manufacturing. Intellectual property disputes remain a sticking point, with foreign firms wary of technology transfer risks. Domestic challenges include rising labour costs, which erode China’s cost advantage, and competition from Southeast Asia, where countries like Vietnam and Malaysia are luring manufacturers with lower wages and fewer trade barriers. Regulatory crackdowns on tech giants, seen in recent years, have also spooked investors, creating uncertainty about the sector’s governance. Looking ahead, these pressures could force China to pivot from volume-driven manufacturing to high-value innovation, a transition that’s far from guaranteed.

Opportunities for British businesses

For British businesses, China’s tech and electronics industry is a land of opportunity, ripe with potential for collaboration and growth. The UK’s strengths in fintech, AI, and green technology dovetail neatly with China’s priorities, opening doors for joint ventures and R&D partnerships. British firms specialising in high-quality components—think sensors for EVs or energy-efficient chips—can tap into China’s voracious demand. The shift towards sustainable tech, driven by China’s net-zero ambitions, creates a niche for UK companies offering circular economy solutions or low-carbon electronics. For example, a British startup developing AI-driven energy management systems could find eager partners in China’s smart city projects.

Navigating this market requires finesse. Building local partnerships, understanding regulatory nuances, and leveraging SEZ incentives are critical. The rewards, however, are substantial. By marrying China’s manufacturing might with Britain’s design and innovation expertise, UK firms can carve out a foothold in a market that’s not just lucrative but pivotal to global tech trends. The China Britain Business Council (CBBC) can be a vital ally here, offering insights and networks to bridge the gap.

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On 1 April 2025, a tragic accident involving Xiaomi’s SU7 sedan, operating in semi-autonomous mode, claimed three lives in Tongling, Anhui province, when the vehicle crashed into a concrete barrier and caught fire. The incident, which occurred seconds after the driver took manual control from the advanced driver assistance system (ADAS), has prompted swift regulatory action from the Chinese government. According to Reuters, as part of China’s autonomous driving crackdown, the Ministry of Industry and Information Technology (MIIT) has banned automakers from using terms like “smart driving” and “autonomous driving” in advertisements and tightened rules on over-the-air software updates for ADAS, requiring government approval before implementation. This move, following widespread safety concerns, raises questions about the future of autonomous vehicles in China and beyond.

China’s autonomous driving market: Growth and value

China is the world’s largest automotive market, and its self-driving car sector has been a key driver of innovation. According to industry estimates, the global autonomous vehicle market is projected to reach USD 42.87 billion in 2025, with China playing a significant role due to its aggressive push for intelligent connected vehicles (ICVs). The city of Shenzhen, for instance, aims to generate 200 billion yuan (approximately £25 billion) in revenue from its ICV industry by 2025, supported by 944 km of public roads opened for autonomous vehicle testing. Nationwide, over 1,160 km of roads are available for trials, with companies like Baidu, Pony.ai, and WeRide operating autonomous taxis and shuttles in cities such as Wuhan, Guangzhou, and Beijing.

The Chinese government’s support, including policies like the 2020 strategy for autonomous vehicle development, has fuelled this growth. By 2025, China aims to achieve large-scale production of Level 3 (conditional automation) vehicles and market launches of Level 4 (high automation) vehicles in select scenarios. The market’s competitiveness is evident in the rapid adoption of ADAS, with companies like BYD integrating features such as lane-keeping and adaptive cruise control into affordable models priced as low as USD 9,555. However, the recent Xiaomi crash has exposed vulnerabilities in these systems, prompting regulators to prioritise safety over marketing hype.

A wake-up call for the industry

Markus Levin, Co-Founder of XYO, a decentralised data network for location-based technologies, views China’s regulatory crackdown as a pivotal moment for the global autonomous driving industry. “China’s move is a wake-up call for the entire industry. It shows that the industry desperately needs smarter infrastructure,” Levin explains. He argues that current self-driving systems, reliant on individual vehicle sensors, often fail to capture the broader context of the environment, such as real-time weather patterns, road hazards or traffic conditions.

XYO’s technology aims to address these limitations by providing a decentralised network of over 8 million nodes, primarily from smartphones and other IoT devices, that collect verified, real-time data. “Instead of just knowing how an individual car relates to the world around it, XYO allows a much larger amount of information,” Levin says. XYO’s infrastructure could enable vehicles to share verified information anonymously in the future, to enable vehicles to dynamically adapt to road conditions, potentially preventing accidents like the Xiaomi crash by filling in the blind.

Implications of China’s autonomous driving crackdown for ADAS development globally

The Xiaomi incident has sparked debate about whether China’s stringent regulations will influence ADAS development in the US, Europe, and elsewhere. Levin believes the impact will be significant but not necessarily negative. “Most self-driving systems today can’t yet ‘see’ the world as well as we do. They interpret the world through sensors but can miss the bigger picture humans can perceive,” he notes. By highlighting the risks of overhyping ADAS capabilities, China’s actions may push global manufacturers to invest in more robust systems.

In the US, companies like Waymo and Cruise are advancing Level 4 autonomous vehicles, with Waymo reporting 100,000 weekly paid robotaxi rides by August 2024. Europe, meanwhile, is seeing increased adoption of Level 2+ systems, which offer partial automation but require driver supervision. However, both regions face challenges similar to China’s, including public scepticism and regulatory scrutiny following high-profile incidents. For instance, Tesla’s “Full Self-Driving” system has been criticised for misleading marketing, with the National Highway Traffic Safety Administration (NHTSA) linking it to hundreds of crashes. Levin suggests that technologies like XYO, which provide a “live, trusted map of the road,” could help bridge these gaps by enhancing ADAS reliability across markets. Primary Source: Interview with Markus Levin.

The role of XYO in accelerating autonomous driving

Progress in ADAS is undeniable, but Levin argues that the pace of advancement is constrained by the limitations of current data infrastructure. “ADAS are improving, but progress has limits without better data,” he says. XYO’s network, which has collected billions of data points through its smartphone app and other nodes, offers a solution by enabling vehicles to share verified information anonymously. This could include critical details like tire pressure, vehicle speed, or the location of roadblocks, creating a comprehensive, real-time picture of the driving environment.

Levin envisions XYO as a catalyst for safer autonomous driving. “Pairing this network with vehicle speed sensors could fill the blind spots in current ‘self-driving’ systems to prevent accidents before they occur,” he explains. By integrating XYO’s data into ADAS, manufacturers could enhance system reliability, potentially accelerating the transition to higher levels of autonomy. This is particularly relevant in China, where the government’s focus on safety could create opportunities for technologies that address current shortcomings. Primary Source: Interview with Markus Levin.

The future of autonomous driving in China and beyond

China’s ban on terms like “autonomous driving” reflects a broader effort to align marketing with the actual capabilities of ADAS, ensuring drivers understand the systems’ limitations. While this may slow the pace of marketing-driven innovation, it could foster more rigorous testing and development. The global autonomous vehicle market is expected to grow at a compound annual growth rate (CAGR) of 23.27%, reaching USD 122.04 billion by 2030, with China remaining a key player despite its regulatory tightening.

For the US and Europe, China’s actions serve as a reminder of the importance of safety and transparency in ADAS development. Technologies like XYO’s decentralised data network could play a critical role in addressing these challenges, offering a scalable solution to enhance situational awareness for self-driving systems. As Levin concludes, “To truly move toward safe autonomous driving, vehicles need access to reliable, real-time location data beyond what their own sensors can see.” The Xiaomi crash may have exposed the industry’s vulnerabilities, but it also underscores the potential for innovative solutions to drive the future of mobility.

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For tech companies, especially, where a strong digital foundation is required, there are not only complex rules and regulations to get to grips with, but also risks around control of sensitive data and commercial information.

Moreover, companies aiming to establish an IT presence in the region could find themselves behind China’s Great Firewall (GFW). The GFW heavily regulates and censors the internet, blocks access to many ubiquitous Western websites like Google and Facebook and slows down cross-border internet traffic. Foreign companies are required to adapt to these regulations if they want to do business in China.

China’s cybersecurity environment

China’s regulatory framework now includes several key pieces of legislation. The Cybersecurity Law (CSL), which took effect in June 2017, provides foundational rules focusing on protecting critical information infrastructure and enforcing data localisation requirements. Building on this foundation, the Data Security Law (DSL), implemented in September 2021, introduces a structured approach to data classification, requiring businesses to adopt varying protection measures depending on the data’s sensitivity and its importance to national security. Additionally, the Personal Information Protection Law (PIPL), effective from November 2021, aligns closely with principles seen in the EU’s General Data Protection Regulation (GDPR), emphasising user consent, data minimisation, and granting individuals specific rights, including data access and deletion.

Cross-border data transfers are subject to stringent controls under these laws. Companies wishing to transfer data out of China must now utilise specific mechanisms authorised by the Cyberspace Administration of China (CAC). These include undergoing security assessments administered by CAC, obtaining certifications from accredited institutions, or entering into standardised contractual agreements with international data recipients. Non-compliance can lead to severe repercussions, including fines, operational suspensions, or business disruptions.

On 9 April 2025, the CAC released the “Q&A on Data Cross-Border Security Management Policies”, giving some more practical insights into how companies can comply with this complex framework.

For example, the Q&A states that “general data that does not involve personal information or important data can flow freely across borders”. This is an important development considering that the handling of general data has not been explicitly stipulated in the CSL, the DSL or the PIPL. Dezan Shira and Associates’s China Briefing has produced a detailed guide to the Q&A, which can be accessed here.

Considerations for UK businesses

For UK businesses, particularly those in the technology sector, this regulatory environment necessitates a comprehensive reassessment of data management strategies. Companies may need to implement local data storage solutions to meet localisation requirements fully. Establishing dedicated compliance programs and appointing responsible personnel to manage data protection matters is now essential. Additionally, engaging legal advisors with expertise in Chinese data regulations can significantly mitigate risks associated with non-compliance.

Moreover, increased regulatory enforcement activity by the CAC highlights the necessity for businesses to adopt proactive compliance measures. Regular compliance audits, training programs, and maintaining clear communication channels with regulatory authorities are critical practices for companies operating in China.

Operating digitally within China brings additional challenges, notably the Great Firewall, which restricts access to numerous Western online services. Businesses must plan for alternative digital infrastructure solutions and adapt to mandatory real-name user registrations required for online services. Furthermore, stringent content monitoring rules mean that companies must rigorously review and tailor their digital content to comply with local regulations to avoid censorship or penalties.

To navigate these complexities effectively, UK businesses are advised to conduct thorough compliance audits regularly, establish strong local partnerships for better market integration, invest in staff training on local data protection obligations, closely monitor regulatory changes, and actively engage with local regulatory bodies.

By proactively addressing cybersecurity and data protection risks and adapting swiftly to China’s evolving legal landscape, UK companies can enhance their prospects for successful and sustainable business operations in this critical global market.

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In Guangzhou in 2014, a company emerged with a vision to redefine the driving experience. XPeng Motors, or Xiaopeng to its Chinese audience, set out not just to craft electric vehicles, but to embed artificial intelligence at their core, creating cars that anticipate and adapt to their drivers. Founded by He Xiaopeng, a former Alibaba executive with a passion for digital innovation, XPeng has grown from a determined startup into a global force, challenging industry titans and capturing imaginations – including, now, in the United Kingdom.

The story begins with He Xiaopeng, a tech trailblazer who saw cars as the next frontier for software. Having built UCWeb, a mobile browser acquired by Alibaba in 2014, he pivoted to automotive, inspired by the global surge in sustainable transport. He was joined by Henry Xia and He Tao, both veterans of China’s car industry. Xia brought years of expertise from Guangzhou Automobile Group, a cornerstone of Chinese manufacturing, while Tao’s research and development skills ensured XPeng’s vehicles could meet exacting standards. They rooted their headquarters in Guangzhou, a hub of industry, and established a second base in Mountain View, California, strategically nestled in Silicon Valley, near the likes of Tesla.

Those early days were fraught with challenges. China’s electric vehicle market was already fiercely competitive, with domestic giants including BYD, a Shenzhen-based leader in affordable EVs and battery technology, and NIO, a Shanghai-headquartered maker of premium electric cars known for its luxurious designs and innovative services, dominating headlines. Globally, Tesla’s sleek models set a high bar. XPeng grappled with supply chain constraints and the need to build a reputation from scratch. Yet its founders focused relentlessly on research, particularly in autonomous driving and AI, believing that intelligence would distinguish them. By 2018, they unveiled the G3, a compact electric SUV blending affordability with smart features, announcing XPeng’s arrival with confidence.

He Xiaopeng remains the heartbeat of XPeng’s mission. His tech roots shape the company’s emphasis on user-focused innovation, from seamless voice controls to intuitive interfaces. “We’re building intelligent mobility for all,” he told Reuters in 2024, his conviction clear. His leadership is bolstered by a formidable team. Henry Xia’s manufacturing know-how ensures reliability, while He Tao drives technical breakthroughs. Brian Gu, vice chairman and president, brings financial sharpness from his J.P. Morgan days, guiding XPeng’s global strategy. The team includes former executives from Ford, BMW and Tesla, lending a worldly perspective vital for markets like the UK.

Funding has powered XPeng’s ascent, blending Chinese and international capital. In 2018, Alibaba and Foxconn, the Taiwanese electronics manufacturing giant, led a £260 million round, captivated by XPeng’s tech-forward vision. Alibaba’s support extended beyond cash, integrating XPeng into its digital ecosystem for sharper software. By 2020, global investors such as Qatar’s sovereign wealth fund and US and Asian funds added £230 million, followed by £380 million more. XPeng’s 2020 New York Stock Exchange listing raised £1.1 billion, affirming its global appeal. About 60% of its funds come from Chinese investors, including IDG Capital and Xiaomi, with 40% from international sources, enabling XPeng to navigate both Eastern and Western markets adeptly.

XPeng’s defining trait is its pursuit of intelligence. Unlike BYD, which excels in volume and battery prowess, or NIO, with its focus on luxury and customer-centric services such as battery-swapping, XPeng crafts vehicles that feel alive with technology. Its cars boast advanced driver-assistance systems (ADAS), voice-activated controls and software updates that evolve over time. “No Chinese carmaker matches our AI scale,” He Xiaopeng proclaimed in a 2024 social media post, spotlighting his company’s in-house work on autonomous driving, leveraging techniques like reinforcement learning.

The current lineup showcases this approach. The P7+ sedan, priced from £27,000 to £35,000, delivers a 400-mile range and ADAS that competes with pricier rivals, appealing to professionals seeking sophistication. The G6 SUV, going for £23,000 to £31,000, draws younger drivers with its sleek design and smart cockpit, featuring real-time navigation and voice interaction. Launched in 2024, the MONA M03, a £15,000 compact EV, targets urban commuters, its affordability and tech driving thousands of monthly sales in China. The X9, a £38,000 MPV, caters to families with luxury and space, recently exported to markets including Thailand. XPeng is also pushing boundaries with its AeroHT division, developing eVTOL (electric vertical take-off and landing) flying cars. While still in prototype – showcased at events like the 2024 Beijing Auto Show – these hint at a future where XPeng’s ambitions soar beyond roads. By late 2025, XPeng aims to roll out Level 3 autonomous driving across its range, a step toward hands-free travel.

XPeng’s pricing is strategic, undercutting Tesla’s Model 3 (£27,000-plus) and BYD’s Han EV (£23,000-plus). Its premium models rival NIO’s ES6 (£35,000) and Li Auto’s L9 (£38,000), a Chinese brand known for hybrid SUVs. In China, XPeng faces intense rivalry – BYD’s scale and battery expertise dominate the mass market, while NIO’s high-end focus and lifestyle offerings like battery-swapping stations carve a unique space. XPeng’s AI emphasis, however, resonates with tech-hungry buyers, giving it an edge both at home and abroad.

Globally, XPeng is on the move. Since 2020, it has entered Europe, starting with Norway, a leader in EV adoption, then Sweden, Germany and France, navigating EU tariffs of up to 35.3%. “We’ll be in 60 countries by late 2024,” He Xiaopeng vowed in a press release, undeterred by trade challenges. In February 2025, XPeng shipped 300 right-hand drive X9s to Thailand, capitalising on Southeast Asia’s EV growth. Co-president Gu Hongdi told Bloomberg, “ASEAN’s low EV penetration and fast adoption are ideal for us.” XPeng aims for 50% of sales to come from overseas by 2033, backed by local charging infrastructure and tailored software.

The UK marks a pivotal chapter. In 2025, XPeng launched here with the G6 SUV and the X2, a concept car with gullwing doors that Wallpaper magazine called “a bold vision of tomorrow”. Showrooms in London and Manchester have drawn curious crowds, with the G6’s £23,000 starting price and 350-mile range appealing to families and commuters alike. The X2, while not yet in production, has sparked buzz for its futuristic design, hinting at XPeng’s flair for innovation. In a market where EVs like the Nissan Leaf (£26,000) and MG4 EV (£21,000), from Chinese-owned MG, compete fiercely, XPeng’s AI-driven features – such as predictive navigation and voice controls – could win over tech-savvy Britons. However, tariffs and brand unfamiliarity pose hurdles. “The UK loves innovation, but trust takes time,” an XPeng spokesperson told Autocar in March 2025. With plans to expand dealerships and partner with UK charging networks, XPeng is betting on its intelligent design to carve a niche.

Looking forward, XPeng’s plans are bold. In his 2024 letter shared widely online titled “2025 New Journey, Through the Storm, Keep Running!” He Xiaopeng set a goal of one million annual sales, up from 30,000 monthly in 2024, and Level 3 autonomy in all models by 2025. He’s investing in talent via the “Thousand Generals Plan” to train leaders and the “Explorer Plan” to inspire engineers. Globally, XPeng targets Asia, Europe, and potentially North America, despite trade barriers. AeroHT’s eVTOL work, while speculative, keeps XPeng forward-looking, with He Xiaopeng teasing “sky-bound mobility” at a 2024 tech summit.

From Guangzhou’s streets to Britain’s motorways, XPeng’s journey reflects China’s rise as an innovation hub. He Xiaopeng’s vision, backed by a stellar team and robust funding, has made XPeng a challenger to BYD, NIO, and Tesla. As it accelerates into a competitive future – on roads and, perhaps, in the air – XPeng’s blend of intelligence and accessibility signals a brand not just keeping up but leading the charge.

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Founded in 2023 by Liang Wenfeng and headquartered in Hangzhou, DeepSeek specialises in developing open-source large language models (LLMs) – advanced AI models trained on vast amounts of data to understand and generate everything from poetry to Java code. Its flagship model, DeepSeek-R1, has garnered significant attention for its performance and cost-efficiency, challenging established Western AIs like OpenAI’s ChatGPT and Google Gemini.

A new AI contender

DeepSeek’s chatbot offers capabilities comparable to leading platforms like ChatGPT but distinguishes itself through its development efficiency. The company claims the model was trained at a cost of approximately $6 million, a stark contrast to the estimated $100 million expenditure for OpenAI’s GPT-4 in 2023. Moreover, DeepSeek-R1 requires only a tenth of the computing power of similar models, highlighting its resource efficiency.

Early users have found that the model performs as well as ChatGPT and Gemini, although many have raised questions about censorship (which will be explored further below). Performance and news headlines have brought a lot of attention as a result, and DeepSeek’s first free chatbot app for iOS and Android platforms surpassed ChatGPT as the most-downloaded free application on the US iOS App Store on 27 January.

Market disruption and economic implications

The swift rise of DeepSeek has had profound effects on global markets. DeepSeek’s open source model and lower development and computing costs undercut a common belief in Silicon Valley that AI can only advance with the input of huge budgets and top-tier chips.

As a result, shares of major technology companies, particularly those heavily invested in AI infrastructure, experienced sharp declines when markets opened on Monday, 27 January. For example, chip manufacturer Nvidia saw its stock price drop by 18% over concerns that DeepSeek’s efficient models could reduce the demand for chips, thereby impacting Nvidia’s future revenue streams.

Strategic implications for countries looking for AI supremacy

DeepSeek’s emergence underscores China’s rapid progress in AI. This has raised concerns about the effectiveness of bans on advanced chip and technology exports to China and prompted discussions about the need for strategic investments to maintain a competitive edge.

The company’s success also challenges long-held stereotypes about Chinese innovation, demonstrating that China is capable of being a leader rather than a follower and producing high-performance, cost-effective AI solutions. Chinese media have widely praised DeepSeek for its small yet formidable team, primarily comprised of young graduates from China’s top universities who have been deeply immersed in the tech field from a young age.

And it is not the only Chinese company purporting to be breaking new ground in the AI field. On 29 January, Alibaba (owner of Taobao, Tmall and Alipay, among others) announced a new version of its Qwen 2.5 AI model that it claims surpasses DeepSeek, OpenAI and Meta’s latest models.

Ethical and regulatory considerations

Despite its achievements, DeepSeek has faced scrutiny over data privacy and censorship concerns. The company’s models reportedly adhere to Chinese censorship laws, avoiding politically sensitive topics, which has raised questions about the ethical implications of such restrictions.

Moreover, there have been allegations that DeepSeek illicitly used OpenAI’s models to train its own through a technique called “distillation”, potentially infringing on intellectual property rights. This has caused some to question DeepSeek’s claims about how it produced its model so cheaply, although it should be noted that models like ChatGPT have also been criticised for infringing on intellectual property rights.

Finally, in the wake of the US Supreme Court upholding a law that could ban TikTok in the US over national security concerns (since being pushed back by an executive order from Trump), some have raised similar questions about DeepSeek’s collection, use and storage of data. As The Guardian reports, DeepSeek’s privacy policy states that the personal information it collects is held on secure servers in China.

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With the US Supreme Court seeming increasingly likely to uphold a law banning TikTok over national security concerns unless parent company ByteDance sells the platform to a non China based company by 19 January 2025, many of TikTok’s 170 million US users have been preemptively downloading Xiaohongshu.

In a twist no one saw coming, content creators say they are checking out the platform as a potential alternative to share their content and maintain their communities, while others have done it to point out the irony of being able to download and use other Chinese apps just days before TikTok could be removed from US app stores.

What is Xiaohongshu?

Xiaohongshu, also known as Red or Rednote in English, began life in 2013 as an online overseas travel guide for Chinese shoppers. Often compared to Instagram (but more realistically a blend of Instagram, Pinterest, Amazon and TripAdvisor), today, the platform incorporates a range of functions, including text and image posts, videos, live streaming, and social commerce. Targeting 18-to-35-year-old Chinese urban females, the platform is known for its strong interest-based communities and high-quality, trustworthy user-generated content. It has around 300 million monthly users.

Will Xiaohongshu become more popular than TikTok?

While Xiaohongshu’s current surge in US popularity is significant, with the number of posts on the app tagged ‘#tiktokrefugee’ now well over 60,000, it is likely to be relatively short-lived. The platform was not designed with English speakers in mind (although many bilingual Chinese users have shared guides for new US users), and it will take time for creators to build up the kind of communities that they had on TikTok. Moreover, the law banning TikTok states that any “foreign adversary controlled application”, like Xiaohongshu, faces a similar ban in future. Nonetheless, the trend underscores a growing user desire for diverse social media experiences and the resilience of online communities in the face of regulatory challenges.

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Social commerce combines social interaction with online shopping, leveraging platforms where users can share, discuss, and directly purchase products. This seamless integration has created an engaging and influential ecosystem that appeals to the digitally savvy Chinese consumer. As a result, social commerce has seen exponential growth in recent years, reaching a gross merchandise volume (GMV) of RMB 3.42 trillion (£373.5 billion) in 2023, and expected to exceed RMB 4.8 trillion (£524.2 billion) in 2025.

This article explores what social commerce is, examines the platforms leading the trend, and uncovers why it has become a cultural and economic phenomenon in China.

What is social commerce?

Social commerce allows users to shop directly within social media platforms or through community-driven e-commerce platforms. Unlike traditional e-commerce, which primarily focuses on transactions, social commerce thrives on interaction, personalisation, and trust. It integrates elements such as live streaming, short videos, influencer endorsements, and group buying into the shopping experience.

Compared to traditional e-commerce platforms like Taobao/Tmall, which depend on consumers actively seeking out products through search queries (as you would on Amazon), algorithms on social commerce platforms serve content and product listings to users tailored to their preferences and behaviours.

For example, if a male user browses several exercise-related videos every day, Douyin can display product listings for protein powder, athletic apparel, or other supplements, and when the user sees those products offered to him for purchase, he can make the purchase instantly within the app. Once they are converted on one purchase, Douyin will expose that user to additional fitness, sports, and healthcare content and products. 

In China, this dynamic approach resonates strongly with consumers who value authenticity, convenience and social connection. Social commerce platforms empower buyers to discover new products through peer recommendations, influencer campaigns and interactive experiences, all while completing their purchases without leaving the app.

What are the main social commerce platforms in China?

China’s social commerce landscape is diverse, with various platforms driving the trend. Here are some of the most prominent players:

WeChat
WeChat, owned by Tencent, is China’s ubiquitous super-app. Its WeChat Mini Programs enable businesses to create e-commerce stores directly within the app. Social sharing, user reviews and group-buy features make it a powerful social commerce tool. Many brands use WeChat to launch flash sales and engage their communities.

Xiaohongshu
Xiaohongshu (pronounced “shao-hong-shoo”) allows users to share product recommendations through photos and short videos. With its focus on beauty, fashion, and lifestyle, Xiaohongshu has become a trusted platform for millennials and Gen Z users seeking authentic reviews before making purchases. During the 618 shopping festival in 2024, the order volumes from the platform’s livestreaming sessions increased 5.4-fold, and GMV from in-store broadcasts grew by five times.

Pinduoduo
Pinduoduo (“pin-door-door”) epitomises social commerce in China with its innovative group-buying model. It encourages users to team up with friends to secure discounts on products, creating a communal shopping experience. Pinduoduo also leverages gamification to engage users and drive purchases.

Douyin
Douyin (“dough-yin”), China’s version of TikTok, merges entertainment with shopping. Through live-streaming e-commerce, influencers and brands showcase products in real-time, interacting with viewers and offering exclusive discounts. Douyin’s short video format also facilitates product discovery and impulse buying. During 618 in 2024, Douyin short videos featuring shopping cart links garnered 115.1 billion views.

Why is social commerce thriving in China?

Social commerce has found fertile ground in China for several reasons:

High smartphone penetration and digital adoption
China boasts one of the world’s largest smartphone user bases, with over 1.2 billion active internet users. The ubiquity of smartphones, combined with affordable mobile data, ensures that social commerce platforms are accessible to a vast audience.

Integrated digital ecosystem
Chinese consumers are accustomed to using multifunctional apps. Platforms like WeChat and Alipay eliminate friction in the shopping process by allowing users to discover, interact, and purchase without switching apps.

Cultural emphasis on community and trust
The Chinese consumer market values trust and authenticity, often seeking recommendations from friends, family, or influencers. Social commerce taps into this cultural tendency by fostering a sense of community and relying on user-generated content to promote products.

Rapid growth of live streaming
Live streaming has become a cornerstone of China’s social commerce. Consumers are drawn to the immediacy and interactivity of live stream sessions, where they can ask questions and receive real-time feedback. Influencers and celebrities often host these sessions, further enhancing their appeal.

Conclusion

Social commerce is transforming the way people shop in China, blending the social and transactional aspects of digital life into a cohesive experience. Platforms like WeChat, Xiaohongshu, and Pinduoduo are at the forefront of this evolution, leveraging China’s unique digital ecosystem and consumer behaviour to redefine e-commerce.

As social commerce continues to grow, it is setting a benchmark for other markets worldwide, demonstrating the power of integrating social interaction with online shopping. For brands looking to enter China, understanding and leveraging social commerce is no longer optional – it is essential for success in one of the world’s most dynamic retail markets.

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