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Next-generation China: Taking a look ahead into the future of a giant market

”Knowledge as a convenience store commodity:” Towards a generation where knowledge is valued for its ”utility” rather than as ”property”

March 28, 2019

”Buying knowledge” (”knowledge payment”)” has become a commonly heard phrase in China for the past few years. The trend for individuals to obtain ”knowledge” through the Internet and to use that knowledge to solve their own problems and achieve personal growth is increasingly becoming common in Chinese society.

This trend has been brought about by two factors. On the supply side, the delivery of “knowledge” has become easier due to the progress in digitalization. On the demand side, the growth of the white-collar class with higher academic qualifications has led to intensified competition between individuals, bringing about a sense of anxiety among businesspersons to more proactively acquire knowledge and educate themselves, otherwise they would be left out.

At the root of this trend, of course, is the rapidly advancing digitalization of society as a whole. Even the methods for obtaining “knowledge” are starting to change in a radical way. This article looks into the changes in Chinese society surrounding the rise of the ”buying knowledge” movement taking place in China today.

What is ”knowledge payment”?

The Chinese phrase ”knowledge payment” (知識付費) first appeared around 2012 to 2013, and became widely known around 2015 to 2016. It is thus a very new term. It was quite difficult to think of an equivalent expression in Japanese. For this article, I chose ”buying knowledge” for the sake of comprehensibility, but the direct translation would sound like ”paying money for knowledge” or ”knowledge for a fee.” The word refers to ”individuals willfully paying money to acquire the needed knowledge.”

If you think about it, we actually pay money to obtain ”knowledge” through newspapers, television, or books; so the concept of buying knowledge with money is not new. Behind the recent focus on this activity of ”buying knowledge” are the widespread uptake of smartphones, wherein almost every person in China now owns a mobile phone, the wide distribution of ”knowledge,” and the dramatic increase of convenience in billing.

The widespread popularity of the word ”knowledge payment” is directly traced to the birth of the smartphone app and website service called ”Dedao.” The service, which is based on selling instantly useful knowledge, become widely popular and quickly gained millions of subscribers after it was launched. Its founder, Luo Zhenyu, rose to become the charismatic symbol of the ”buying knowledge” movement. As of June 2018, the service has 3.73 million active users, with the total number of uses reaching 90 million for the second quarter of the same year.

Top page of Dedao, the popular platform for ”buying knowledge”

Before Dedao, there were paid websites and apps, such as Himalaya, Audiobooks for Lazybones, etc., which offered on-demand audio streaming services for books and lectures of famous persons. And of course, there were Internet-based e-learning services for elementary students, test-takers, and businesspersons.

Prior to these services is the Internet-based knowledge-sharing platform, Zhihu, a question-and-answer service that was launched in 2011 and was a pioneer in the exchange of “knowledge” between private individuals. Zhihu is founded on voluntary participation, wherein knowledge was shared for free. Due to the participation of many highly educated and qualified users, however, the service has gained a reputation for reliability. Recently, the provider is thinking of ways to shift to a paid service scheme, and is on its way to joining the “knowledge payment” bandwagon. Although some users have raised concerns about a decrease in quality, there are many meaningful and relevant discussions found in the platform, from which users can learn by just reading them.

Summaries and descriptions of famous books at a fixed price of 4.99 yuan

Amidst these developments, what has made Dedao’s new concept of ”buying knowledge” highly popular? The reason for Dedao’s popularity is that it was able to veer away from with the conventional images associated with ”knowledge,” such as ”education,” ”study,” or ”common sense,” highlighting its utility aspect and completely repackaging it as a commodity. The service offered ”knowledge” as a commodity that can be easily, quickly, and affordably acquired anywhere, anytime, in conveniently sized portions, in what can be called as an initiative to ”offer knowledge as a convenience store commodity.” In other words, the service is unique in its having restructured ”knowledge” from the demand side perspective rather than from the supply side perspective, from which it had been traditionally viewed, and offer it in a convenient format.

Section offering audio book summaries for a fixed price of 4.99 yuan (Dedao app)

When you open the Dedao app, the first thing that appears is the audio streaming section (for listening to books), where users can listen to summaries and descriptions given by experts about a wide array of famous books that are useful for business. All for a fixed price of 4.99 yuan, which is equivalent to around 80 yen. One listen lasts for around 20 to 30 minutes, within which users can gain an overview of the book and grasp the key issues presented in it. Although most of the books are in Chinese, the service also includes books by famous foreign authors, such as Jared Diamond’s ”Guns, Germs, and Steel,” Okakura Kakuzo’s ”The Book of Tea,” and Samuel Huntington’s ”The Clash of Civilizations.”

A few minutes of lecture session for less than 100 yen

Contents mainly include lectures by famous scholars, managers, journalists, etc., and are divided into six areas: ”Science Academy,” ”Commerce Academy,” ”Vision Academy,” ”Social Science Academy,” ”Humanities Academy,” and ”Competence Academy.”

Dedao has six Academies. (From Dedao website)

The ”Vision Academy,” offers lectures on ”major issues” from ”different perspectives for viewing the future and the world.” ”Social Science Academy” offers lectures in the social sciences, while ”Competence Academy” offers lectures on concrete skills and techniques that are instantly useful for business.

Users of the Dedao smartphone app can choose from a wide array of lectures.

As of January 2019, each ”Academy” offers a total of 107 ”Courses,” and each course is composed of at most several hundreds of lecture sessions. One lecture session lasts for a few minutes to at most around 20 minutes, for a few yuan each lecture, or equivalent to less than 100 yen. Its convenience and affordability are the major reasons the platform has attracted so many users.

For example, under its ”Commerce Academy, Xue Zhaofeng’s economics course currently has the most number of paid subscribers at 367,730. The lecturer, Xue Zhaofeng, obtained his Ph.D. in economics in the U.S. and then worked as a professor at the National School of Development at Peking University. The course has 366 lectures that last from 7 to 15 minutes each. He uses only words to explain the main concepts in economics, without the aid of mathematical formulas or diagrams.

Widely popular economics course by economist Xue Zhaofeng (From Dedao website)

In his lectures, he uses plain language to explain topics such as ”Adam Smith’s view of man,” ”sunk cost concept,” ”can the Chinese style of crossing the road be justified?” and ”why it is alright to sell Lunar New Year train tickets at higher prices.” He uses familiar examples and speaks with a sense of humor, in a way that makes it easier for listeners to acquire ”knowledge” through his lectures.

For a total of 366 lectures, the course costs 199 yuan, which is around 3200 to 3300 yen based on the current conversion rate. The lectures are sold as a set of 366 lectures and cannot be bought separately, but one lecture session costs less than 10 yen each. And, without any listening limits, users can repeatedly listen to the lectures anytime. Being able to listen to lectures of a famous economist at this price is indeed very attractive for users.

Lectures by a core person from Google

The course by Wu Jun, a former Google search engineer, is also very popular.

”Vision Academy” features a course on ”Google Methodologies” by Wu Jun, who had led the development of Google’s Japanese, Chinese, and Korean search engines. The course includes a total of 364 lectures, with each lecture lasting around 7 to 12 minutes, at the same price of 199 yuan. Wu Jun is not well known in Japan, but he had worked at Google from 2002 to 2010 to develop its Japanese-Chinese-Korean search system, and after returning to China, became Vice President at Tencent, which is famous for the WeChat app.

His lectures begin with the basic concepts about Google, and include vivid and interesting topics, such as principles of human resource development, recent trends, applications for your own business, future of humanity, etc. At around 3000 yen, the course is very cheap. For an equivalent course in Japan, it would be like paying for the entire course for the price of only one or two lectures.

The courses on practical skills are even more affordable. For example, the ”Competence Academy” course on ”How to become an excellent speaker” (by Wang Yuhao), which has more than 160,000 subscribers, costs only 19 yuan, or around 300 yen, for 11 lectures. Likewise, the course on ”How to quickly improve your English conversational skills” (by Ma Xu Jun) includes 7 lectures for the same price of 19 yuan.

Other than the audio, the lectures also include text, which allows users to check the contents while listening. Listeners can also directly send their questions, suggestions, and impressions about the course to the lecturer. Although not all questions can be answered, most of the lecturers do take time to answer the questions and requests from their listeners. Some lecturers actually revise and improve the contents of their lectures based on the comments received from listeners.

75 million active users, 1.35 billion uses per quarter

In contrast to Dedao, which is geared more towards businesspersons, Himalaya, which is now becoming a massive ”knowledge delivery platform,” has a wider range of contents. Himalaya was originally mainly an audio book streaming service, but its content has broadened along with the increase in the number of users. The service has grown into a giant platform with 75.52 million active users as of June 2018, and a total of 1.35 billion uses for the first quarter of the same year.

The app not only offers business-related content, such as IT, entrepreneurship, Internet, management, e-commerce, etc., but also content related to contemporary literature, history, romance, children’s literature, as well as different types of educational materials for children to high school students, and even entertainment contents, such as music, comedy duos and skits, etc. It has also recently begun to offer the latest news, traffic information, and other ”knowledge” similar to what radio stations provide.

Other than dating and work-related skills, the app also offers comedy and other entertainment contents.

Although contents can be bought individually, most users take advantage of the flat-rate system, which is the same billing system as that of Netflix and Amazon Music. A one-month subscription costs 20 yuan (1 yuan = 16.5 yen), 58 yuan for 3 months, and 238 yuan for 1 year.

For the past few years, I have also become an avid user of the app, which has clearly resulted in the lesser time I now spend on actually reading Chinese books. My friends also seem to be in the same situation; many of them now think of books as something to be ”listened to” rather than ”read”. Some of my friends listen to audio content before sleeping, while on the train to work, while jogging, or eating breakfast every day.

The power of the 1.4 billion Chinese-speaking population

When we think about it, the ”buying knowledge” (knowledge payment) movement that has come to have great influence in Chinese society, did not actually result from the discovery of a revolutionary technology, nor is it based on particularly powerful contents. It is only a completely different version, so to speak, of already existing services, such as audiobooks and e-learning. But why did knowledge payment platforms become such a large industry in China? I think this can be traced to the peculiarities of the Chinese society.

First is the immensity of the Chinese-speaking market. There are billions of Chinese language (standard Chinese) speakers that can be targeted for ”thin-but-broad” marketing. Taking this logic to the extreme, we can say that one can run a successful business in China by charging one-tenth of the price of a service in Japan. The tremendous impact of the sheer size of the white-collar market, which alone includes a few hundred million people, is undeniable.

Intensified competition between individuals and a growing sense of anxiety

As I have pointed out in a previous article in this series, the Chinese society is a society that is based on the ”individual” as the main social unit. A company, practically speaking, is created in a way so that only the owners and the stockholders make profits, and for as long as you work for somebody, you remain as a mere ”provider of labor.” ”Lifetime employment” is not the generally accepted employment pattern, and managers have a superficial concept of ”social responsibility.” It is thus a harsh society for the working class, wherein the only way to survive is to ”improve yourself.” It is often said that “China is a society based on connections,” but other than for blood relations, ”connections” only hold good when one has the power or influence to wield.

In such a fiercely competitive society, China’s knowledge workers are constantly in the pursuit of things that will ”make them stronger,” ”give them confidence,” or ”inspire them.” The norm, therefore, is to be always on the lookout for any ”chance to make a profit” in every situation, to act resourcefully, and to seize every opportunity for personal gain. They are driven to always have a grasp of the trends around them, continually searching for the niche that would give them a fighting advantage. They know that they will lose their competitiveness if they fail to keep up with the changes.

Despite some criticisms against its ease and affordability, the widespread acceptance for the act of ”buying knowledge that are processed for convenience” can be traced to the underlying sense of anxiety among businesspersons in China. This phenomenon cannot be interpreted simply in terms of education or common sense.

Offering knowledge as a convenience store commodity

The platforms for selling ”knowledge” introduced in this article combine all the ”knowledge” previously sold through different media—television, radio, newspapers, books, magazines, educational establishments, cram schools, courses, seminars, and lectures—restructuring them into user-friendly formats and offering them in affordable, easy-to-use, and conveniently sized packages. These platforms have therefore performed the role of ”offering knowledge as a convenience store commodity.”

If you go to a convenience store, you can have a glimpse of what products are selling. There is no room for having doubts on which product to buy, and there is no need to ”back-order” the knowledge you want to buy. You can buy it anytime and for as much you need. The business model for China’s ”knowledge payment” industry can therefore be likened to a convenience store. And there is no need for any other equipment but the smartphone.

Supported by payment infrastructures such as Alipay, WeChat Pay, and other online payment systems, the sharing of all sorts of commodities throughout society through the use of digital technology is rapidly advancing, as can be seen in the rapid uptake of bike-sharing, electric-car-sharing, or the Chinese version of Uber-like car-dispatch apps and services. This leads to a phenomenon where apps or services that are found to be ”convenient” spread very quickly and radically overturn existing approaches and methods.

People are leveraging digital technology to be able to easily buy and share the knowledge they need—knowledge that before took hard work and study to acquire. People are now walking around carrying a convenient ”drawer” from which to quickly obtain knowledge. I think we are seeing a new way of using ”knowledge” gradually spreading today—a phenomenon that is unique in this Internet era where there is an overflow of information in society.

Nobuhiko Tanaka

Partner, Brighton Human Capital Consulting Co, Ltd. Beijing (BHCC)
Part-time Lecturer, Graduate School of Asian and International Business Strategy, Asia University (MBA)
Former Visiting Researcher at Recruit Works Institute

Mr. Tanaka currently resides in Shanghai, China. He graduated from Waseda University School of Political Science and Economics. After working for a newspaper company, in the early 1990’s he moved to China to work as a contributor and consultant on human resource management. His involvements include projects with RGF Human Resource Consulting, and business of a major casual wear chain in China. He also works as a consultant and adviser for major corporations both in Shanghai and Tokyo.

Recently he published ”Sukkiri Chugoku Ron: Suji No Nippon, Ryo no Chugoko” (Nikkei BP). (”Fresh insights on China: Japan’s emphasis on reason, China’s emphasis on quantity”) [in Japanese]

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