Foreign Companies Confront Intense Competition in China as AI Poses Risks to Knowledge Platform Zhihu
Challenges for Foreign Companies: Foreign businesses in China are facing intense competition from local firms, characterized by aggressive price cuts and improved product quality, leading to a decline in foreign direct investment and a shift in consumer preference towards domestic brands.
Existential Crisis for Zhihu: The knowledge-sharing platform Zhihu is struggling as users increasingly turn to AI-driven search engines for information, resulting in a significant revenue drop and questioning its future viability in the market.
Involution Phenomenon: The competitive landscape in China is described as "involution," where companies engage in destructive price wars, making it difficult for both foreign and domestic firms to maintain profitability.
Regulatory Risks for Content Providers: Zhihu faces ongoing regulatory scrutiny as a content provider, which adds to its challenges in adapting to the changing market dynamics and competing against AI technologies.
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