There are early signs of salary cuts and layoffs. One year after CNKI's monopoly investigation, internal adjustments continue to shine. | CNKI | premonition

Entering "CNKI" on a search platform will result in a series of keywords: borrowing chicken to lay eggs, the suspension of the Chinese Academy of Sciences, suspected monopoly, and a sky high fine of 87.6 million yuan... Most of which are related to the turmoil experienced by CNKI in the past year.

Entering 2023, CNKI has rarely appeared on the hot search list, and it was not until the recent news of "salary cuts and layoffs" that CNKI was once again pushed into the spotlight.

A week ago, several CNKI employees reported to the Red Star Capital Bureau that CNKI is currently undergoing salary cuts and disguised layoffs, with nearly 400 employees leaving in the past four months. Employees stated that CNKI has not only changed its salary structure, but also launched a model of full staff competition for positions. "It's like a game of drawing chairs, where when everyone leaves the chairs, some of them are moved away and the rest go to grab a few chairs," said employee Mr. Chen, explaining the "full staff competition".

The news made it to the hot search, and a netizen left a comment: CNKI runs out of money? In fact, in the previous public opinion turmoil, CNKI has always been linked to "windfall profits". Whether it's "Zhao Dexin, an 89 year old retired professor, suing CNKI" or "the Chinese Academy of Sciences cannot bear to stop CNKI", CNKI's high gross profit margin and high profits far exceed those of its peers have been brought up for discussion, and it is even referred to as the cash cow of Tongfang Shares.

Salary cuts and layoffs may not directly prove that CNKI has no money, but they also send an important signal that CNKI is undergoing changes.

CNKI changes leadership and founder leaves office

Succession of Chairman of CNNC Background

Red Star Capital Bureau noticed that less than a month after the investigation into the monopoly case was filed, CNKI experienced significant personnel changes.

On June 1, 2022, the National Enterprise Credit Information Publicity System showed that Tongfang CNKI Technology Co., Ltd. underwent industrial and commercial changes, with the legal representative, chairman, and manager changed from Wang Mingliang to Liu Changxin. At the same time, Wang Mingliang also stepped down as the legal representative, chairman, and manager of another affiliated company of CNKI - Tongfang CNKI Digital Publishing Technology Co., Ltd., all of which were succeeded by Liu Changxin.

Image from Tianyancha APP

Regarding Wang Mingliang's resume, Tongfang Co., Ltd. mentioned in a statement that he graduated from Tsinghua University. Since 1998, he has served as the Vice President and President of the Electronic Journal of China Academic Journal, Vice General Manager and Assistant to the President of Tongfang Optical Disc Co., Ltd., and Director and General Manager of Tongfang Zhiwang Technology Co., Ltd.

It can be seen that Wang Mingliang has served in the "CNKI Department" for 25 years. Red Star Capital Bureau noticed that a report from China News Network released on the official website of Tsinghua University in 2017 showed that Wang Mingliang was also the founder of CNKI. The report mentioned that more than 20 years ago, Wang Mingliang, who went overseas, decided to return to Tsinghua University and start a business together with his physics teachers and classmates.

CNKI has not made a public statement regarding the reasons for Wang Mingliang's departure and his whereabouts after leaving. The only publicly available information now is the record of business changes. According to the Tianyancha app, as of now, Wang Mingliang has worked in four companies and remains the legal representative and chairman of China Academic Journal Electronic Magazine Co., Ltd.

Wang Mingliang's successor is Liu Changxin. Red Star Capital Bureau noted that prior to this, Liu Changxin had not appeared in any public reports related to CNKI.

Mr. Chen, an employee of CNKI, told the Red Star Capital Bureau that Liu Changxin comes from China National Nuclear Corporation (CNNC) and has previously served as the Deputy Director of the Industrial Development and International Cooperation Department of CNNC. According to China Energy News, in December 2021, Liu Changxin, Deputy Director of the Industrial Development and International Cooperation Department of China National Nuclear Corporation, attended the 3rd China Russia Energy Business Forum. Besides, there is no further public information on Liu Changxin's employment experience at CNNC.

At the end of 2019, the controlling shareholder of CNKI's parent company Tongfang Shares was changed to CNNC Capital. As of March 2023, CNNC Capital holds 30.11% equity of Tongfang Shares.

Continuous internal adjustments

There are early signs of salary cuts and layoffs

The changes on CNKI are still ongoing. On June 24, 2022, the Cybersecurity Review Office initiated a cybersecurity review of CNKI. According to CNKI employees, at the same time, CNNC also joined CNKI for rectification.

Mr. Chen, an employee of CNKI, told Red Star Capital Bureau that due to last year's turmoil, CNNC has joined CNKI for rectification, including organizational business adjustments, personnel adjustments, etc. Some business unit general managers have been reduced from managing a hundred people to ordinary market managers.

The adjustment quickly spread from the management to ordinary employees. Red Star Capital Bureau learned from another CNKI employee, Mr. He, that in January 2023, Tongfang CNKI issued an internal notice to replace the Deputy Director of Human Resources. In February, Tongfang CNKI released a new salary standard and launched a full staff competitive employment model.

Next came the news of "salary cuts and layoffs", and CNKI was once again pushed into the spotlight.

Several CNKI employees reported to the Red Star Capital Bureau in late June that CNKI is undergoing salary cuts and disguised layoffs, with nearly 400 employees leaving in just four months. "It's similar to a stool drawing game, where when everyone leaves the chairs, some of them are moved away, and the remaining people go to grab a few chairs," explained employee Mr. Chen when explaining "all staff competition.".

Layoffs may have had early signs. On May 4th, the electronic procurement platform of China National Nuclear Corporation (CNNC) released a notice on the procurement of human resources legal services from China National Knowledge Infrastructure (CNKI). A week later, a labor consulting firm limited in Beijing was selected, and its official website description stated: "Help companies prevent and handle crisis employee relationships.". The above-mentioned CNKI employees stated that the colleagues who were laid off were negotiating with this legal institution.

Image from China National Nuclear Corporation's electronic procurement platform

Difficulty in transformation

Cut off over 170 products in half a year

In the eyes of CNKI employees, CNKI is essentially a resource industry, highly dependent on database products and plagiarism detection services, and slightly lacking in innovation.

Mr. Chen, an employee of CNKI, told the Red Star Capital Bureau that CNKI has been wanting to develop into a software company for many years, but has not produced many products. I worked on software products for a year last year, but stopped this year. At the end of March, Tongfang CNKI issued a notice to shut down and merge nearly 70 projects.

Another CNKI employee, Mr. Huang, also mentioned that not only in March this year, but also in December last year, Tongfang CNKI released the first batch of delisted product lists internally.

The first batch of product delisting notices obtained by Red Star Capital Bureau from Mr. Huang show that in order to implement the requirements of China National Nuclear Corporation's "refined management" and the demonstration enterprise of Tongfang Science and Technology Reform, as well as the instructions from higher authorities on cost reduction and efficiency increase, and to promote the continuous development of high-quality products by the company's product department, a batch of inefficient and ineffective products with no sales revenue, no users, and no market potential are now being delisted.

↑ Figures provided by respondents

There are 103 products in this batch, including software products, industry platforms, thematic databases, etc. The business direction is very complex, such as youth development knowledge service platform, diabetes hospital knowledge resource database, etc. The second batch of nearly 70 products that were shut down and merged in March this year are also similar.

Mr. Huang stated that currently, CNKI's only successful products are plagiarism checks and databases, and many other products are not profitable, even in the form of loss making transactions.

"The entire project process is for sales personnel to design new products based on the company's existing products and customer needs, but the projects I have been involved in have not truly utilized the company's data." In Mr. Huang's view, cutting these projects is not a good thing from the perspective of employees, which means that employees have nothing to do and there is a risk of being laid off; But from the company's perspective, it's a good thing because it really doesn't have much practical use.

How effective is the rectification after half a year?

There are university procurement database price drop 90000.

On December 26, 2022, the State Administration for Market Regulation determined that CNKI had abused its dominant market position and imposed a fine of 87.6 million yuan. CNKI subsequently issued 15 rectification measures in 5 major areas.

The first item to be rectified is "complete rectification and exclusive cooperation with journals and universities". Regarding the previously criticized exclusive cooperation model, CNKI stated that firstly, it promotes the non exclusive cooperation model in the industry, actively advocating and actively promoting the industry to abandon exclusive authorization rights. The second is to terminate the exclusive cooperation agreement, stop new and renewed exclusive cooperation agreements, and actively negotiate with journals and universities to terminate existing exclusive cooperation agreements as soon as possible.

Half a year has passed, how has the effect been? On June 27th, the Red Star Capital Bureau contacted the staff of a university library responsible for purchasing the CNKI database. Two days ago, the university had just announced the information on purchasing CNKI database services. The staff member stated that during the procurement process, they did not hear of any exclusive cooperation agreements mentioned by CNKI.

The breaking of the exclusive cooperation agreement model has also brought significant impact to CNKI. Mr. Wang, an employee of CNKI, revealed to the Red Star Capital Bureau that CNKI's database business has been taken away by peers such as Chaoxing, Wanfang, and VIP. Another obvious change is that many sales personnel of CNKI databases have resigned on their own.

Regarding the above statement, Red Star Capital Bureau sent an interview email to CNKI for verification, but as of the time of publication, no response has been received.

The second item of rectification is to significantly reduce the price of database services. The Red Star Capital Bureau has reported that the usage fees of CNKI have been increasing year after year, and many universities have publicly stated that they cannot bear the burden, including Peking University and the Chinese Academy of Sciences.

CNKI stated that it will lower the sales price, and the actual transaction price of users' academic literature database services will be reduced by more than 30% within three years.

The Red Star Capital Bureau has found that based on current university procurement announcements, some universities have seen a decrease in the price of their procurement databases. According to the transaction announcement of the Dalian Minzu University China National Knowledge Infrastructure database procurement project, the winning bid price in June 2023 was 960000 yuan, while in 2022, this price was 1.05 million yuan, a decrease of 90000 yuan.

But there are also universities whose procurement prices have not changed, such as the People's Police University of China, where the procurement prices for CNKI databases in 2023 and 2024 were both 440000 yuan.

In addition to database business, CNKI has also made improvements to another core business of plagiarism checking. In June 2022, CNKI provided plagiarism checking services to individuals at a price of 1.5 yuan per thousand words, stating that the pricing was not higher than mainstream products in the market. Among the 15 rectification measures in December 2022, CNKI reiterated this point.

Before opening up personal plagiarism checks, some university students stated that the school required a 10% plagiarism rate for humanities master's theses, and they spent nearly 1000 yuan on four plagiarism checks. On the one hand, the school requires the plagiarism rate to meet the standard, and on the other hand, CNKI does not open plagiarism detection services, and there is no reliable and formal plagiarism detection platform. No one can guarantee that a paper written in one go meets the standard, and can only purchase it through various third-party channels.

Has this situation changed after opening up personal plagiarism checks? On June 26, 2023, Ms. Chen, a graduate of the class of 2023, told the Red Star Capital Bureau that when checking for plagiarism in her graduation thesis, the school stipulated that students can use CNKI to check for plagiarism at a rate of 1.5 yuan per thousand words, which can be purchased on the official website of CNKI's personal plagiarism check service. Compared to previous graduates, the cost of plagiarism check has been much lower.

↑ CNKI Personal plagiarism detection service website

However, for students, plagiarism detection is still a significant cost. Ms. Chen said that she and her classmates still prefer a free plagiarism detection software, and the user experience is not bad.

The gross profit margin has decreased, below the level of 2005

Experts call on CNKI to return to its original intention and move towards public welfare

From financial data, it can also be seen that CNKI, which was previously linked to "windfall profits," is quietly changing.

According to the annual report of Tongfang Shares, the main business revenue of Tongfang Knowledge Network in 2022 was approximately 1.25 billion yuan, with a gross profit margin of 43.83% and a net profit attributable to the parent company of 60.69 million yuan. In 2021, the main business revenue of Tongfang Knowledge Network was approximately 1.289 billion yuan, with a gross profit margin of 53.35% and a net profit attributable to the parent company of 193 million yuan.

In 2022, while the main business revenue of Tongfang Knowledge Network decreased by 2.9% year-on-year, the net profit attributable to the parent company decreased by 68.6% year-on-year, and the gross profit margin also decreased by 9.52 percentage points year-on-year. By comparison, from 2007 to 2021, CNKI's gross profit margin remained stable at over 50%. But in 2022, the gross profit margin of CNKI was even lower than the level of 2005.

Image from Tongfang Group's 2022 Annual Report

According to Mr. Wang, an employee of CNKI, CNKI's database business has been taken away by peers such as Chaoxing, Wanfang, and VIP. However, as of now, there is no publicly available data showing whether CNKI's specific market share in the domestic Chinese academic literature network database service market has declined.

But Red Star Capital Bureau found on the China Government Procurement Network platform that about 30 universities or institutions have purchased the CNKI database in the past six months; Three companies have purchased Wanfang database; Three companies have purchased the Superstar database; There are 0 companies purchasing the VIP database. It can be seen that CNKI databases still have an absolute advantage.

Guangming Daily once pointed out that how to break the monopoly position of CNKI is a long-term, complex, but also urgent issue. In the era of shared everything, academic literature, as the most concentrated knowledge, has been shelved by enterprise platforms and become a valuable commodity, which undoubtedly leads to the opposite of the information age. At present, while lowering prices, perhaps CNKI can also establish a revenue sharing mechanism with authors and provide an appropriate proportion of payment sharing. In this way, it can not only solve the authorization problem, but also stimulate the creative passion of researchers, thereby generating richer and higher quality content increment.

Hu Gang, deputy secretary-general of the Law Working Committee of China Internet Association and lawyer of China Consumer Association, told Red Star Capital Bureau that in the long run, HowNet should return to its original intention, move towards public welfare, gradually peel off the current highly commercialized projects, and fulfill its corporate social responsibility.

Li Shijie, President of Hainan Open Economy Research Institute, and Cai Guoguo, Assistant Researcher, have also mentioned that the China National Knowledge Infrastructure (CNKI) platform should lower its fee standards for institutional users, accelerate the dissemination and popularization of Chinese academic research results, play an important public welfare role, gradually return to the status of a non-profit organization, and make due contributions to Chinese academic research and knowledge dissemination.