French industrial software company Dassault Systemes is looking to strengthen its industrial artificial intelligence ecosystem in China, as the country steps up ongoing efforts to foster new quality productive forces and advance the integration of AI with manufacturing, its chief executive said.

China's dynamic innovation ecosystem has made the country not only a major market, but also a key driver of industrial transformation, Pascal Daloz, chairman and CEO of Dassault Systemes, said in an interview with China Daily.

"We are not in China simply to serve the local market. We are here because China has become one of the places where innovation is moving fastest," Daloz said. "For global companies, being part of this ecosystem is becoming essential to staying competitive over the long term."

Daloz recently embarked on a three-day tour of China covering six cities. He said the visit gave him a close look at how Chinese companies are moving beyond catching up in technology and organizational capabilities, and are increasingly seeking to become global leaders.

Xpeng Motors, a Chinese new energy vehicle maker, is a case in point. Daloz said he is impressed by the company's rapid product development and its push into emerging areas such as humanoid robots and electric vertical takeoff and landing aircraft.

Such changes have further reinforced China's importance to Dassault Systemes, especially as AI moves from experimentation to large-scale industrial deployment.

"AI is not something we put on top; it is something we put inside," Daloz said.

Unlike large language models that are mainly powerful in handling text, Dassault Systemes is developing AI models designed for industrial scenarios, where accuracy, physics and production processes are critical.

"Industrial AI must understand not only the laws of physics, but also how those laws are translated into production," he said.

Known as the industry world model, the new category combines physical AI with industrial AI and is being integrated into Dassault Systemes' latest industrial software solutions, according to Daloz.

To advance this vision, Dassault Systemes announced an expanded partnership with US-based semiconductor company Nvidia earlier this year to jointly develop an industrial AI platform.

The partnership is aimed at building a common architecture for industrial AI by combining AI with modeling and simulation, he said, so that industrial applications can remain scientifically accurate while being deployed at scale.

China will also play an important role in Dassault Systemes' industrial AI push. The company is open to working with Chinese AI companies and integrating local AI technologies to better meet the needs of China's industrial sector, according to Daloz.

"We have tested more than 80 foundation models worldwide, including around 20 from China," he said. While some models remain more language-oriented than physics-oriented, the company has identified Chinese players with capabilities in industrial and physical AI.

As part of its broader industrial AI push in China, Dassault Systemes has also established a digital industrial fund in the country. The fund has already received 750 million yuan ($110.25 million), with another 750 million yuan expected in May, Daloz said.

The fund will focus on industrial AI, including physical AI companies and businesses applying such technologies in robotics, humanoid robots, eVTOL aircraft and smart manufacturing, while also helping local companies expand internationally, he said.

Looking ahead, Daloz said he is confident in China's next generation of entrepreneurs and industrial companies.

In addition, China's accelerating industrial upgrading is creating a more favorable environment for the wider application of AI in manufacturing.

In late 2025, eight Chinese government departments, including the Ministry of Industry and Information Technology, jointly issued an action plan to accelerate the application of AI across the manufacturing sector. Under the plan, China aims to develop 1,000 high-level industrial intelligent agents and promote 500 typical application scenarios by 2027.

zhangchenxu@chinadaily.com.cn