Foreign Companies Confront Intense Competition in China as AI Poses Risks to Knowledge Platform Zhihu
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 17 2025
0mins
Source: Benzinga
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.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy ZH?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on ZH
About ZH
Zhihu Inc is a company principally engaged in the operation of the online content community and providing paid membership services, marketing services and vocational training. The Company’s paid membership services mainly provide subscription members’ access right to premium content, such as audio books and radio plays. The Company’s marketing services include advertising services and content-commerce solution services. The Company’s vocational training includes practical training courses focusing on acquisition of specific skills, professional qualification exam preparation courses, vocational language exam preparation courses, and other vocational training courses. The Company mainly conducts its business in the domestic market.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Planet Labs PBC Secures Nine-Figure Deal with Swedish Armed Forces, Shares Surge 7%
- Stock Surge: Planet Labs PBC's announcement of a multi-year nine-figure agreement with the Swedish Armed Forces led to a 7% increase in share price to $24.29 on Monday, reflecting strong market confidence in the company's long-term contracts.
- Revenue Outlook Boost: Day One Biopharmaceuticals Inc reported preliminary 2025 OJEMDA net product revenue of $155.4 million, up 172% year-over-year, indicating robust growth potential in the biopharmaceutical sector that may attract more investor interest.
- Market Dynamics: Amid a broader decline in U.S. stocks, Wheels Up Experience Inc saw its shares jump 30.2% to $0.89, suggesting a market reassessment of its business model, potentially providing support for future financing and expansion.
- Increased Demand for Safe Assets: Growing concerns about Federal Reserve independence have led investors to shift towards safe-haven assets like gold, driving up precious metals stocks, which reflects market sensitivity to economic uncertainties and a preference for secure investments.
Continue Reading
X Financial and Zhihu Shares Drop 4.4% and 4%, Impacting ETF Performance
- ETF Underperformance: The ActivePassive International Equity ETF fell approximately 3.2% in Tuesday afternoon trading, indicating signs of overall market weakness that could impact investor confidence.
- Individual Stock Performance: Shares of X Financial dropped about 4.4%, while Zhihu shares fell around 4%, with the poor performance of these stocks directly dragging down the ETF, reflecting market concerns about these companies.
- Market Reaction: The overall decline in the ETF may prompt investors to reassess their portfolios, particularly in the international equity space, potentially leading to capital outflows.
- Industry Impact: This downward trend may trigger a broader examination of related sectors, especially in the current economic climate, where investor confidence in tech and financial stocks may be adversely affected.
Continue Reading