DeepSeek Cuts Fees 75% 🧠 Tesla FSD Enters China 🚗 Delivery Drones Expand 🚁

2025-05-25 | subscribe | homepage

Welcome back to China Insights Weekly. Here are some of the key highlights for this week’s edition:

• China becomes Germany’s top investor, with 228 projects led by electronics, logistics and energy

• Hukou rules start shifting, as public services move toward residency-based access

• Chinese DDR5 makers close the gap, with CXMT and suppliers pushing higher-speed memory

• Global brands chase China debuts, as subsidies reshape first-store and launch strategies

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🚀 Headlines

Chinese AI Large Language Models seize 42.1% market share, DeepSeek makes 75% price cut on V4 flagship (link, link)

China’s dominance in global LLMs is no longer a forecast but a hard reality. According to OpenRouter’s latest rankings, Chinese providers now command 42.1% of the market, largely driven by DeepSeek's 24.1% share and Tencent's 11.5%. The country’s ascendancy is vividly illustrated in the top-ten leaderboard: six models are Chinese. DeepSeek holds spot one with its V4 Flash (3.43T tokens, up 66%), while Hy3 preview (Tencent) sits at number two (3.07T). DeepSeek's V4 Pro and V3.2, alongside Stepfun's Step 3.5 Flash and MoonshotAI’s Kimi K2.6, complete the pack. With Qwen (3.9%) and Minimax (2.6%) also in the top providers, China’s AI ecosystem isn't just competing, it is setting the global pace.

DeepSeek has made a permanent 75% price cut on its V4 Pro model, elevating it to the global frontier for intelligence per dollar. The model now ranks among the world’s best for cost‑efficiency, far surpassing OpenAI and Anthropic. DeepSeek’s API price is as low as USD 0.0036 per 1 million cached input tokens and USD 0.87 per 1 million output tokens. Running Artificial Analysis’ Intelligence Index on V4 Pro costs USD 268. The move reflects a different competitive strategy among Chinese AI firms: offering cutting‑edge capabilities at dramatically lower prices than US counterparts that charge premiums. DeepSeek released the V4 generation (flagship V4 Pro and lighter V4 Flash) a month ago and has now made the promotional price cut permanent.

China overtakes US as Germany's main foreign investor for first time in eight years (link)

For the first time since 2017, China has overtaken America as Germany’s biggest foreign investor by project count. Chinese firms launched 228 greenfield and expansion projects in 2025, a 15% rise from 2024, while American projects fell 10% to 206 and Swiss ones dropped 14% to 174. Overall, foreign investment in Germany slid 9.3% to 1,564 projects. Chinese money is flowing into electronics (30% of projects), transport and logistics (22%), and energy and raw materials (15%). Unlike the merger spree of 2015‑18, today’s investments are mostly greenfield, focusing on electric vehicles, autonomous driving, and industrial robots. Despite Germany’s sluggish economy and tighter foreign‑investment rules, Chinese firms are betting on the country’s industrial transformation.

Tesla's FSD Supervised autonomous driving system available in China, BYD’s system lowered incidence rate by 83% (link, link)

Tesla has officially announced that its Full Self‑Driving (FSD) Supervised feature is now available in China, marking the first time the advanced driver‑assistance system has entered the world’s largest auto market. The announcement came a week after Donald Trump’s state visit to Beijing, which Elon Musk attended as part of a business delegation. Tesla previously allowed Chinese customers to purchase FSD for a one‑time fee of RMB 64,000 (USD 9,420), but has since shifted to a subscription‑only model globally, though the Chinese website still displays the one‑time option. The rollout faces stiff competition from local rivals like Xiaomi and Huawei, which already offer sophisticated urban smart‑driving features.

BYD’s assisted-driving system, now on nearly 3 million vehicles across more than 60 models, has cut severe-accident rates to one‑sixth (by 83%) of human levels (measured by airbag‑triggered incidents per 10m km). Parking scratches fell to one‑fiftieth. Navigation assistance activates on over half of trips; parking aid on 86%. The carmaker’s Xuanji architecture and cloud‑based world models digest 190m km of daily driving data, enabling algorithm updates every three days. In April BYD sold 314,100 electrified vehicles, up 6.2% from March but 15.7% lower than a year earlier.

US fashion brand Guess to relaunch in China with local partner Ruisi Haishang (link)

US fashion brand Guess is relaunching in China with local partner Ruisi Haishang, about two months after closing all its stores in the country. Authentic Brands Group, Guess’s parent, announced the shift toward a more localized, partner‑led strategy on May 21, 2026. Ruisi Haishang, a Hangzhou‑based joint venture founded in March 2026 between Quanshang Technology (owner of Duibai and One Moment, and agent for MMLG and Vera Wang) and Yinian Huasheng (operator of MLB, Hunter, and Salomon), will handle development, production, distribution, and sales of Guess’s womenswear, menswear, and childrenswear lines. ABG said Guess will no longer apply a global universal model in China but will adjust product, marketing, retail, and user interactions to better align with local consumer needs.

The new debut economy policy brings global brands to launch in China first (link)

China has launched a two‑year pilot “debut economy” program across 50 cities, allocating up to RMB 400 million (USD 58 million) per mega-city to subsidize first‑to‑market brand launches, new consumption models, and cross‑sector IP collaborations. In the first two months of 2026, Shanghai welcomed 128 first stores and offered up to RMB 1 million (USD 147,000) in support to malls that attract them. During the 2026 Lunar New Year holiday, Alibaba’s Qwen AI model generated over 120 million consumer orders, including 10 million beverage orders in nine hours. A major German multinational recently relocated 248 of its 250 R&D engineers from Europe to Shanghai. The policy reflects a structural shift: China rewards brands that launch first, and treating it as a secondary market means forfeiting subsidies, premium retail incentives, and AI‑driven consumer attention.