Alibaba leads $293M bet on ShengShu as China's AI video race heats up
What's the deal? Alibaba Cloud has led a 2 billion yuan ($293 million) funding round into ShengShu Technology, a Beijing-based AI startup founded in 2023 and best known for its Vidu AI video generation tool.
Baidu VenturesDealroom has a profile for this one. Try Dealroom → and Luminous Ventures also participated. The round follows a roughly $88 million Series A that ShengShu closed in February 2026, bringing its total raised to over $380 million in just a few months. No valuation was disclosed.
ShengShu says the capital will support the development of a "general world model" — a system trained on multimodal data including video, audio, and touch, aimed at deeper machine understanding of the physical world.
Why now? The AI video generation space in China is intensifying rapidly, and ShengShu is racing to establish itself as a leading player. Its Vidu Q3 Pro model, launched in January 2026, currently ranks seventh on the Artificial Analysis text-to-video leaderboard — competitive but not at the top.
Rivals include ByteDance's Seedance 2.0, Kuaishou's KlingAI, and now Alibaba's own HappyHorse 1.0, which debuted anonymously earlier in April 2026 before Alibaba claimed ownership, shooting straight to the top of the same leaderboard.
The gap left by OpenAI — which shut down its Sora video model in March 2026 — has added urgency to the race, with Chinese models increasingly filling the top leaderboard positions.
What could go wrong? Alibaba is simultaneously investing in ShengShu and competing against it with HappyHorse — a tension that is common in Chinese tech but still worth noting. If Alibaba's own video AI ambitions accelerate, its incentive to keep backing a rival could diminish. ShengShu is also operating in a field where model performance rankings shift rapidly; a leaderboard position today is no guarantee of relevance in six months.
More broadly, China's AI sector faces ongoing uncertainty around access to advanced semiconductors due to US export restrictions, which could constrain the compute available to train the next generation of models.
The signal: The ShengShu raise is the latest data point in a clear pattern: Chinese AI companies are raising at pace and closing the gap with Western counterparts in specific modalities. Video generation, in particular, has become a Chinese strength — and with Sora gone, that advantage is more visible.
Alibaba's dual strategy of investing in the ecosystem while building its own models reflects a broader playbook among Chinese tech giants, who are betting that AI video will be as commercially significant as search or e-commerce. The race to build general world models — systems that understand and simulate physical reality — represents the next frontier beyond text and image, and Beijing-based startups are among the best-funded contenders.
Sources:
CNBC
Reuters
Silicon Republic
Tech in Asia
Intellectia.AI
Bloomberg
J.V.
