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"In the early stages, for five straight years, we were losing money hand over fist, and I felt like I was slowly being cooked in a frying pan," Liu says.

Even the company's top people were forced to live on a shoestring salary, he says, and he, as CEO, was paid 3,000 yuan a month for the first couple of years, and sometimes employees were paid with borrowed money.

In the second year, the founders took stock of where the company stood, and several decided to pull out, but most remained convinced that if they could only hold on, their speech recognition software had a great future. Even as investors' doubts grew, those left in the company pressed on with their research.

Last year the company reaped net profit of 385 million yuan, 38 percent higher than in the previous year. Now, free of money worries, Liu and his team are working on a program called Super Brain, something they hope can match or even better IBM's Watson and Google Brain.

On March 4, iFlytec and Jingdong, a major Chinese online retailer, announced that they are collaborating in developing intelligent home appliances. The two pioneers in their fields will set up a firm with investment of 150 million yuan and make products that can understand human speech.

"In the next few years people are going to be able to control home appliances such as their TVs, microwaves and airconditioning simply by talking to them," Liu says.

Liu, a deputy in the National People's Congress, sees a bright future for the intelligent technology industry in China and urged the annual session of the congress to make plans for the industry comparable to those of the Brain Initiative in the US and the Human Brain Program of the Europe Union.

"As China loses its competitive advantage in producing low-end products, the success of its economic transformation will largely depend on the growth of businesses rich in technology. Intelligent technology is one industry that can help the country maintain continuous economic growth."