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How China is silencing its biggest influencers

Three of China’s most powerful influencers have lost their high status almost overnight. The incident shows that Beijing wants to gain more control over the social media industry in the future, even if that could destroy a billion-dollar business.

Austin Li example: The 30-year-old live streamer with over 60 million followers passed away from the scene this month. On June 3, on Alibaba-owned e-commerce platform Taobao, it abruptly cut off a flow after a tank-shaped frozen dessert appeared on the screen. Although Li later claimed that the outage was due to a “technical problem,” most observers immediately assumed the Chinese government intervention was behind it. Because the censors probably saw the tank as a symbol for the anniversary of the Tiananmen Square massacre on June 4th, which is a big taboo.

It is not known that Li was arrested. His account is still visible, but he hasn’t streamed or posted on Chinese social media since that day. Fans and observers suspect he may not have been able to stream since then.

In China, e-commerce coupled with live streaming is a huge industry, with over $ 180 billion in annual sales. By combining commercial channel-style television marketing with opportunities for live user interaction with their respective influencer, these streams attracted an estimated 388 million Chinese viewers in 2020 alone. It took the industry only half a decade to reach this peak and people. how Li achieved A-list popularity in China. So far, Beijing has classified them as engines of innovation and job creators. Because in one evening they generate billions of online purchases. Their status as the leader of the shopping masses has given them immense power over product suppliers, even the multinationals seem to tremble before them. They influence what is interesting and what it costs.

However, in Lis and at least two other cases, these online empires collapsed overnight. These are apparently effects of measures the CPC had already addressed in 2021. As the final year draws to a close, Taobao’s two most followed live streaming influencers, Huang Wei (known as “Viya online”) and Zhu Chenhui (known such as “Cherie”), were suddenly fined by the Hangzhou local financial authority for allegedly millions of tax evasion. Even after they publicly apologized, their Taobao accounts and other social media appearances disappeared. They have not been live streams since.

Previously, influencers were considered too big and important at their level for technology platforms and the commerce industry itself to turn against them. The harsh reaction of the authorities now suggests otherwise. The industry is still busy processing the fallout. Austin Li, who was unaffected by the tax crackdown (he’s rumored to be clean), was initially a big beneficiary of Huang and Zhu’s departures. He managed to attract attention (and contracts) from his peers. But now it’s over.

The downfall of these mega-influencers means a redistribution of market power within the industry. Smaller players seem to take advantage of this. Taobao, the platform that hosts the majority of e-commerce live streaming activity, also launched a campaign in January 2022 to push small and medium-sized influencers with cash rewards and traffic support.

The disappearance of the “big three” among live streamers has changed the overall dynamic between influencers and brands. For one, the big discounts customers used to get through big influencers are unlikely to stop being granted. Smaller streamers get less and ultimately buy less. Also, instead of relying on the broad reach of large independent influencers, many brands are building their own live streaming channels. “This could be good news for brands, as customers could then go to the shopping sessions they manage,” says Jialu Shan, a researcher at the Global Center for Digital Business Transformation and an expert on the subject. But it’s “definitely bad news for customers because they don’t enjoy the cheap offers.” Only the big influencers would have them.

The fate of major influencers is also a clear signal that live streaming e-commerce cannot escape government control. “KOL celebrities (” Key Opinion Leaders “) have become a huge business and an integral part of e-commerce. But with salary payments in the millions and high visibility there is a risk that [unter den Einfluss der Regierung] and they suffer backlash on social media, ”comments Franklin Chu, US executive director of marketing firm Azoya International, who has worked with Austin Li in the past.

In addition to tax obligations and content censorship, live streaming influencers also have to contend with a growing number of regulations. They have long been held accountable for things like checking the quality of their products, correctly transmitting sales data, or protecting minors. Since 2020, Beijing has enacted a set of rules that address various aspects of the business and subject the industry to much stricter scrutiny. The wild west seems over.



More from MIT Technology Review


More from MIT Technology Review

More from MIT Technology Review

While influencers like Huang and Zhu have disappeared from the internet, their teams of marketing and business professionals are struggling to stay in the industry. Some of their assistants have become influencers themselves and now claim they have nothing to do with their employers anymore. But the Chinese media reported that they are essentially always the same teams.

If Panzer ice cream actually ended Li’s career, it could also spell the end of his Meione company. But so far neither his team nor the platforms or supervisors have commented on this. Millions of fans are wondering what’s going on. They are looking forward to seeing if and when it will start again. Product vendors and marketing agencies that have exploited its popularity are also in a state of nervousness. “We have worked successfully with him in the past and would probably do it again provided there is no dramatic drop in his marketing effectiveness,” says Azyoa International’s Franklin Chu.


(Jle)

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