Source: Byte Source

A wave of immense prosperity is heading towards Kingsoft.

On October 9th, the Ministry of Commerce issued Announcement No. 61 of 2025, implementing export controls on certain overseas rare earth-related items containing Chinese components. Besides the control rules, the WPS format was used for the annexes, and the requirement that relevant application documents must be submitted in Chinese has sparked heated discussions. It is reported that the files for the two most recent announcements before October 9th were in Word or PDF formats.

Subsequently, the event gradually gained traction and made it to the Weibo hot search list on October 13th under the hashtag 'Ministry of Commerce Announcement Annex Changed to WPS Format for the First Time'.

Screenshot sourced from Weibo

Industry analysts point out that the use of WPS for government document annexes is far more than just choosing an office software. Particularly in this announcement by the Ministry of Commerce, it reflects the country's commitment to promoting independent control of key technologies and ensuring information security.

Influenced by this news, by the close of trading on October 13th, Kingsoft Office's stock on the A-share market soared by 8.32%, while Kingsoft Software's stock on the Hong Kong Stock Exchange surged by 13.82%.

However, if Kingsoft, caught in the intense AI competition, truly wants to seize this wave of immense prosperity, it must first present convincing products.

01

Software Radiation

The localization of office software has become an inevitable trend.

On June 5th, JD.com released the '2025 Enterprise Office Procurement Trend Report,' indicating that with the increasing emphasis on information security and independent control by the state, the demand for localization has escalated, leading governments and enterprises to increase their procurement of domestic office equipment and software. Data shows that from 2022 to 2025, the proportion of domestic equipment in the office procurement market rose from 35% to 58%.

However, previous efforts were more inclined towards the hardware level.

Especially in government procurement, Huawei's hardware products often emerged as the biggest winners. In May of this year, Huawei successfully won the fourth package of the '2025 Central Government Agencies Desktop Computer Bulk Centralized Procurement Project,' capturing market attention with a transaction amount of approximately 7.83 million yuan. Entering June, Huawei continued its success, securing two more victories. According to the latest disclosure by the Central Government Procurement Website, Huawei Kunpeng won a significant order worth 8.60013 million yuan in the June bid announcement.

The wind of localization has finally blown to the software level.

Influenced by the Ministry of Commerce's announcement, on October 13th, the domestic software sector showed resilient activity, with 108 stocks rising and multiple stocks, including China Software, hitting their daily limits. Amidst global technological competition, the localization process of Chinese software is expected to accelerate. Orient Securities pointed out that 'key software' includes foundational and industrial software.

From a revenue perspective, WPS's personal business contributes the majority of revenue to Kingsoft Office.

In 2024, WPS's personal business contributed approximately 3.283 billion yuan in revenue to Kingsoft Office, accounting for 64.11% of the total revenue; WPS's software business contributed approximately 1.268 billion yuan, accounting for 24.76% of the total revenue; WPS 365 business contributed approximately 437 million yuan, accounting for 8.53% of the total revenue.

In the first half of this year, Kingsoft Office's revenue was approximately 2.657 billion yuan, a year-on-year increase of 10.12%; net profit was approximately 747 million yuan, a year-on-year increase of 3.57%.

However, Kingsoft Office is actively participating in bids for domestic office software from central and local government and enterprise users. In the first half of this year, Kingsoft Office's products continued to maintain a leading market share in the streaming and formatting document markets.

At the August investor exchange meeting, Kingsoft Office's management revealed that for its B-end business, the company has split its government and enterprise division into separate government and enterprise departments. Currently, the sales team has mastered the sales service model for user demand-driven products, and the team is gradually maturing.

Not long ago, Kingsoft Office stated on an interactive platform that its WPS-related products and AI functions are compatible and adapted to mainstream domestic chips.

02

Lei Jun's Windfall

When discussing Kingsoft, Lei Jun is an unavoidable figure.

Public information shows that Lei Jun, the founder of Xiaomi Group, serves as a director and honorary chairman of Kingsoft Office and is the company's actual controller. As of June 30, 2025, Lei Jun holds 42.2477 million shares of Kingsoft Office.

Lei Jun stated that from an initial team of several hundred people to nearly 4,000 R&D personnel at Kingsoft's Wuhan headquarters, the total number of employees at Xiaomi and Kingsoft now exceeds 9,000, with an expected workforce of nearly 10,000 by the end of 2025.

But Lei Jun doesn't have much time to celebrate.

Just as Kingsoft Office was soaring on the secondary market, Xiaomi Automobile encountered another incident.

Around 3:16 AM on October 13th, a severe traffic accident involving a Xiaomi SU7 occurred on the Shishigao section of Tianfu Avenue in Chengdu, Sichuan.

According to the police bulletin released by the Chengdu Municipal Public Security Bureau Traffic Management Bureau, the involved party, Deng XX (male, 31 years old), was driving a small passenger car with the license plate number Chuan AC9, traveling southward along Tianfu Avenue. After passing through the intersection of Tianfu 5th Street and entering the southern section of Tianfu Avenue, the vehicle collided with a small passenger car driven by Li XX with the license plate number Chuan AA3, which was traveling in the same direction ahead. Subsequently, the vehicle crossed the central greenbelt of the road and caught fire. The accident resulted in the death of the driver, Deng XX, and varying degrees of damage to the two vehicles involved.

Videos circulating online show that after the vehicle caught fire, multiple rescuers attempted to open the doors by taking turns pulling, but failed. They then resorted to 'punching and kicking' the vehicle's doors and windows, but ultimately could not open them.

In this accident, the inability to open the doors of the Xiaomi SU7 raised external doubts about the safety design of hidden (or semi-hidden) door handles in new energy vehicles.

The door handles of the Xiaomi SU7 adopt a semi-hidden design. To open the door, one must reach into the recessed area and press the internal microswitch with the front end of their fingers to unlock it. At the same time, this switch is also an electronic switch, and after a collision-induced power outage, the door cannot be opened mechanically by flipping it outward.

Since the March 29th collision on the De Shang Expressway that resulted in a vehicle fire, Xiaomi has been plagued by safety concerns regarding new energy vehicles.

Before the March 29th incident, Douyin (the Chinese version of TikTok) was Xiaomi Automobile's 'home turf' and a traffic amplifier for Lei Jun's personal IP. After the incident, those ubiquitous review videos of the Xiaomi SU7 and passionate shouts of 'Lei Zong YYDS' (Lei Jun is the greatest) almost instantly disappeared.

Subsequently, Xiaomi found itself in a passive position in public opinion due to incidents such as benchmarking against Apple and the 'large-print promotion, small-print disclaimer' controversy.

Just after Lei Jun's annual speech, Xiaomi's stock price had been falling for four consecutive days. The market seemed to be voting with real money, expressing concerns about Xiaomi.

For Lei Jun personally, the high-profile performance of Kingsoft Office provides some solace amidst the renewed crisis faced by Xiaomi Automobile.

03

WPS Has Gone Astray

Once known for its free use and powerful features, WPS has been highly praised, especially when compared to the expensive fees charged by OFFICE, earning it the title of 'Domestic Software Light.'

Relevant data shows that WPS's market share in the domestic mobile office software market has exceeded 90%, making it the industry leader.

However, Kingsoft Office has not achieved effective breakthroughs at the government and enterprise level. In the first half of 2025, among Kingsoft Office's various businesses, the revenue from WPS software business related to government and enterprise business was 542 million yuan, a year-on-year decrease of 2.08%.

As a result, the revenue pressure has shifted to the personal business level.

WPS once made it to the hot search list due to its 'nested doll-style' payment model.

Members, Super Members, Super Members Pro, AI Members, Grand Members—the variety of confusing membership names and benefit standards have led to dissatisfaction among long-time WPS platform members, who claim that membership levels are arbitrarily modified and forced automatic deductions occur.

What users find even more unacceptable is that WPS has also set up several 'independent packages' under the Super Member tier, such as the 'PDF Package' for editing PDFs and the 'Cloud Disk Package' for multi-device synchronization of cloud documents. Large packages contain smaller packages, which are then charged separately, surpassing even the nested doll operations of video websites with their VIP, SVIP, and advance screening packages.

To this day, complaints on the Heimao Complaint Platform have not subsided.

Screenshot sourced from the Heimao Complaint Platform

When Byte Source opened WPS's membership fee system, it found that it was still complex and layered, making it difficult for non-professionals to fully distinguish the differences in functions enjoyed by members at each level.

Screenshot sourced from WPS

However, in actual operation, Kingsoft faces its own pressures.

At the investor exchange meeting, Kingsoft Office's management quantified the cost pressure of its AI strategy for the first time. Since the release of WPS AI 3.0, token consumption has shown 'exponential growth,' currently reaching trillions per day. This figure reflects the high computational costs required to support the operation of AI functions. The management stated that products with high token consumption, such as knowledge bases, are one of the main factors contributing to increased costs.

Currently, Kingsoft Software diverts traffic from large models to its self-developed small models, primarily collaborating with large models from Baidu, MiniMax, Zhipu AI, Alibaba, and iFLYTEK, paying vendors based on token usage. This means that every time a user utilizes the service, significant token costs are incurred.

In reality, large model products such as Doubao, DeepSeek, and Yuanbao, which are commonly used by people, all bear substantial token costs. However, internet giants like ByteDance and Tencent are financially capable and willing to invest in cultivating the market. For a company of Kingsoft's scale, such consumption is unsustainable.

During the earnings briefing, Tencent President Liu Chiping responded to the issue of AI cost control, stating, 'We are currently relatively precise in controlling the costs of AI services. In many scenarios, if a small model can be used, we will opt for it, as the cost is much lower than that of a large model. In scenarios where small models can be used and through continuous software efficiency upgrades, the overall inference cost remains controllable.'

However, in the current industry narrative, the AI story is an unavoidable aspect for any internet company.

According to the 'China AI+Office Software Industry Development Status Research and Investment Prospect Prediction Report (2025-2032)' released by Guanyan Research Institute, there are a total of 117 AI+office software products in China, with AI+word processing software accounting for 39% of them.

On April 18th last year, Kingsoft Office officially released a generative artificial intelligence application with large language model capabilities, tentatively codenamed 'WPS AI.' In July of the same year, Kingsoft Office officially launched WPS AI and synchronized it on its official website.

Continuing to compete means facing enormous cost expenditures, while not competing may result in missing out on the AI dividends of the era. In such a dilemma, Kingsoft has no choice but to present exceed expectations (unexpectedly excellent) AI products to convince users to pay.

Government-level actions can serve as a leading example, but the transmission of signals requires time to ferment, making it difficult to truly alleviate Kingsoft's AI anxiety in the short term.

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