Live streaming has become an essential way to create buzz and drive sales for companies operating in China across a wide range of industries. Companies that get it right can benefit greatly from the fast-paced live streaming content ecosystem to engage with consumers in an authentic way on the most popular platforms that they are using every day.

In the early days of live streaming, using influencers was seen as a way for brands to promote products and drive traffic to e-commerce platforms where they could further cultivate and sell products to consumers.

However, the unprecedented consumer demand for live streaming has led to a much more integrated approach, with mainstream e-commerce platforms opening live streaming channels or social media platforms embedding e-commerce into their offer. The trend has seen particular growth around platforms driven by user-generated video content, such as Douyin (the Chinese version of TikTok).

What are the new rules and regulations for live streaming?

With the increased use of live streaming, there has also been an increase in concern for the misuse of the new format, especially since live streams are not a permanent form of content. Examples of these concerns include vulgar or illegal content, fraudulent activity, and misrepresentation of products or services sold through live streaming, which could include false promotions and poor quality of products.

On 22 July 2022, the National Radio and Television Administration and the Ministry of Culture and Tourism jointly published a new 18-point guideline (which can be read in full in Chinese here) for the live streaming industry, which lists 31 banned behaviours and sets expected standards of quality and content for both live stream hosts and platforms. Notably, the guidelines also apply to virtual and AI-powered live stream hosts.

Banned content/behaviours include:

• Publishing content that subverts state power, weakens, distorts or denies the leadership of the Communist Party of China or “denigrates the fine cultural traditions of the nation”
• Using deep fake technology to forge or alter the image of party leaders, heroes and martyrs or historical party events
• Fabricating and spreading false information about a range of topics, including natural disasters and the Covid-19 pandemic, or deliberately hyping up public opinion “hot spots”
• Sexually suggestive clothing, makeup, language or behaviour
• Excessive food consumption or waste, such as so-called ‘mukbang’ videos
• Showing off extravagant lifestyles, such as displaying large amounts of luxury bags, jewellery or cash

The guidelines also state that influencers who live stream on technical or professional subjects such as law, finance and education are required to hold relevant qualifications, presumably university-level degrees or similar.

The guidelines are an extension of a similar previous Code of Conduct for Online Live Marketing released by the China Advertising Association (CAA), a non-profit organization that represents the Chinese advertising industry and promotes best practice, on 1 July 2020.

There has been an increased push to regulate the live streaming industry since a number of scandals featuring high-profile live streaming hosts in 2021. Popular host Viya (real name Huang Wei) was fined a record RMB 1.3 billion (£165.7 million) for tax evasion by the authorities in e-commerce hub Hangzhou in December 2021. Indeed, Article 11 of the new guidelines states that hosts should “truthfully declare their income and fulfil their tax obligations in accordance with the law.”

While the new regulations seem strict and there is a lot of scrutiny on live streaming activity in China, they are unlikely to impact the popularity of live streamed e-commerce. Conversely, it may become even become more popular due to the additional trust that viewers will have for the information about the products and services they are being sold.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can further help you identify the best live streaming e-commerce platform for your brand and target market in China.

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How has Covid-19 impacted commerce in China?

The spread of Covid-19 earlier in the year caused lockdowns across China, causing people to turn to e-commerce for purchasing everything from daily necessities to clothes and luxury items. However, even as offline retail has opened back up, the acceleration of China’s digital transformation has not slowed, resulting in lasting changes across consumer behaviour, new trends and interests, and purchasing behaviour. In order to adapt to these changes, brands will need to not only provide online sales channels, but also provide positive digital experiences.

How have sales in different categories reacted post-Covid-19?

The sales data shows that despite the outbreak, e-commerce has continued to grow steadily. Examples of the top categories that have experienced growth on Tmall and Taobao include:

• Women’s fashion: Growth rate of 30.7%
• Men’s fashion: Growth rate of 29.1%
• Snacks/nuts: Growth rate of 53.8%
• Beauty/skincare/body care: Growth rate of 24.8%
• Mother and baby: Growth rate of 36.5%

Read Also  Five consumer trends to watch in China in 2020

What is an important trend that brands need to be aware of when entering the China market?

One of the most significant trends that has arisen over the Covid-19 period and continues to be significant in e-commerce is live streaming. In fact, the number of people using online live streaming related services exceeded 560 million people in March. When it comes to live streaming, there are two main types that brands can utilise:

• Key Opinion Leader (KOL) live streaming: Brands can collaborate with KOLs who already have a following to promote a product or service during a livestream. These livestreams are hosted by the KOLs and are effective at driving sales.
• Internal live streaming: Another option is for brands to build up their own internal live streaming teams, training their employees to become the online equivalent of salespeople. An advantage of this option is that the brand has direct control over what is said during the livestream and does not need to pay the KOL fee. However, these internal livestreams also do not come with the pre-established audience that KOLs have.

When it comes to live streaming, what are some important points that brands should take note of?

• KOL fame does not always mean sales. Brands should first define what their goals are for the live stream – do they want sales or brand awareness? Many brands have made the mistake of investing huge amounts of money into KOL live streamers that do not fit with their brand image or KPIs.
• Promote the livestream in advance. In order to boost awareness ahead of time, brands should always promote any planned livestreams through their own social media channels and using paid media. If working with a live streaming host, make sure the host also promotes the live streaming session beforehand.
• The timing of the live stream is key. Livestream timing can affect the number of viewers – as an example, 7pm or 8pm during the week is usually the best.

Livestream timing can affect the number of viewers, as an example, 7pm or 8pm during the week is usually the best.

In terms of regulations, what do brands need to be aware of?

Since China’s digital and e-commerce landscape is extremely fast-changing, new regulations and platform policies are being constantly updated. As a result, brands need to stay up to date on the situation in China, since it could be very different just six months in the future. Examples include changing cross-border e-commerce and live streaming regulations or changing policies when it comes to platforms allowing direct links to other social or e-commerce platforms.

Read more about the previous sessions below:

Session 1 – Why and how to sell to China

Session 2 – Building Brand Credibility Online in China

Session 3 – How to emotionally engage with Chinese consumers

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Who or what is ByteDance?

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RED started off as a platform for sharing product reviews and recommendations among young Chinese consumers, after which the platform began to implement e-commerce features that allowed individual merchants or brands to open up stores and sell products. However, despite the e-commerce options and the ability to purchase directly on RED, the platform is still mainly used to research products and find reviews, before the buyers head over to other e-commerce platforms such as Tmall or JD, to purchase the product.

Considered one of the biggest online lifestyle communities in China, last year, the platform reached over 85 million monthly active users on average and had a total of over 250 million users. RED’s user base is predominantly female, with the majority still under 30 years old, which makes the platform popular for categories that include travel, beauty, fashion, luxury goods, and fast moving consumer goods (FMCG). Although beauty is the largest category on RED, travel is currently the fastest growing.

These changes will have a large impact on smaller brands who require a lower commission rate in order to consider opening a store on the platform.

RED has its own user base, but compared to larger e-commerce platforms, user numbers are still relatively small. It’s therefore no surprise that the platform is better known for grassroots promotions and product seeding. The reviewers on the platform are Key Opinion Consumers (KOCs), a type of influencer that’s smaller in scale than a Key Opinion Leader (KOL), and which focuses on product testing and reviews. KOCs are generally considered more trustworthy and authentic due to their image of being ‘just another consumer’, making them a powerful influencing factor on the purchase decision making journey of consumers. Therefore, RED is a powerful tool for building brand awareness, especially if the target audience matches with RED’s already established user base. Many brands invest in building up a presence on RED to increase their credibility and reputation among consumers, even if the brands do not have a store on the platform.

Xiaohongshu reduces commission rate to just 5%

Reduction in commission rate

In early July, RED sent a notice to sellers, informing them of a reduction in the base commission rate that the platform would be charging. Before the reduction, RED’s commission rate was between 15 and 20%, depending on the merchant and the category of goods, which makes the drop a significant change.

Here’s an overview of what the company outlined in their notice to users:

• As a result of the COVID-19 outbreak and the slow recovery of the Chinese market during the latter half of the year, RED announced that it is willing to work with the merchants on the platform to build an ecosystem.
• Starting from July 1^st, 2020, RED will be reducing the base commission rate to 5%.
• The reduction in the base commission rate is applicable to merchants that have signed a store service agreement with RED and whose agreement is still in effect. An exception to this includes instances in which the merchant and RED have other agreements stipulated.
• For sales that are directed from RED’s product recommendation features, the commission rate charged by the platform is reduced to 3%.

With the reduction in commission rates, more brands and merchants will be encouraged to focus their e-commerce efforts on RED, by increasing investments, opening up a store, collaborating with KOLs, conducting product seeding, or by utilising the advertising tools that the platform has available. These changes will likely have a large impact on smaller brands that have lower sales volumes and require a lower commission rate in order to consider opening a store on the platform.

Since RED’s main source of revenue comes from advertisements, dropping the commission rates could be an attempt to increase the merchants on the platform, and therefore the revenue from sales commissions.

The lowered rates will also make RED more competitive for brands when compared to larger e-commerce platforms such as Tmall, which has a commission rate of 0.5 – 5%, and JD, which has a commission rate of between 2 and 8%. The exact commission rates for both Tmall and JD are dependent on the category. Moreover, RED prohibits diversions to other platforms such as Douyin, Kuaishou, Weibo and Taobao, which further limits the loss in traffic to competitors.

The increased attention on RED from brands and sellers will also impact its customers since after opening stores on the platform, brands will begin to drive customer traffic to RED. RED is likely to therefore become more accepted among users as a platform for not only reviewing and recommending products, but also for purchasing products. This shift in perception among consumers should also increase future e-commerce activity on the platform and could be an attempt to create a closed-loop system where users can go to RED both for product research and product purchase.

Sandra Weiss works for RedFern – a China-specific, full-service agency that helps brands navigate the digital ecosystem, increase their brand awareness and convert that awareness into sales. Learn more here.

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During the Covid-19 outbreak in China, live streaming was a market saviour for many brands and stores that were forced to shut down their offline channels due to the lockdown. As consumers were also isolated in their homes and spent more time online, the period became an opportunity for brands to focus on their online sales channels, a big part of which included live streaming.

Livestreaming was a market saviour for many brands and stores that were forced to shut down their offline channels due to the lockdown

In terms of percentages, Taobao Live saw a 719% month-on-month increase in new merchants in February, while the number of live streaming sessions on Pinduoduo increased by over 500% from February to March of this year.

The importance of live streaming in China was also demonstrated during the 6.18 festival, which was the first nationwide shopping holiday this year since the Covid-19 outbreak. Over the course of the 18-day event, JD hosted over 300,000 live streaming sessions, with live stream hosts ranging from KOLs to CEOs. In addition, more than a dozen live streams were hosted through Alibaba on 16^th June, which, combined, saw a total of more than 100 million RMB in sales.

New rules and regulations

Livestreaming is therefore extremely prominent in e-commerce and has helped drive sales for a vast number of different brands and industries. However, with the increased use of live streaming, there has also been an increase in concern for the misuse of the new format, especially due to the fact that live streams are not a permanent form of content. Examples of these concerns include vulgar or illegal content, fraudulent activity, and misrepresentation of products or services sold through live streaming, which could include false promotions and poor quality of products.

In order to tackle these concerns, several departments in China, including the State Administration for Market Regulation, have begun to work on developing standards for – and increasing supervision of – live streaming activity. National standards for e-commerce through live streaming are being developed by the China General Chamber of Commerce and, provincially, by authorities in the Zhejiang province, where Alibaba is headquartered. These standards are expected to be officially released and implemented in July, and will cover live streaming platforms, hosts, networks and all entities involved in the e-commerce live streaming industry.

The China Advertising Association (CAA), a non-profit organization that represents the Chinese advertising industry and promotes best practice, released its Code of Conduct for Online Live Marketing, which took effect on 1^st July. The report stipulates the rights, obligations and responsibilities of businesses, brands, or other participants of e-commerce activity through live streams. A summary of the main points outlined is provided below:

• Livestreaming hosts must have their real names authenticated on the platform before any live streaming activity can be conducted. During the front-end live streams, hosts may still use screen names, as long as they are in line with the requirements of the laws and regulations.
• During the live stream, all information provided to viewers must be complete and accurate. Livestream hosts cannot misrepresent, exaggerate, or spread false information on the products or services they promote, and cannot mislead viewers.
• Illegal or vulgar content cannot be spread through live streams.
• Any marketing data from the live stream that is provided by the host, for example to the live streaming platform or to the merchants, must be accurate. This includes live stream viewership numbers and sales numbers.
• Livestreaming platforms must provide marketing data as requested by the relevant authorities and must operate under their supervision.
• If breaches of the code of conduct are found, the CAA will report these instances to the relevant authorities for investigation.

Livestreaming hosts must have their real names authenticated and provide accurate information

In terms of recognising and regulating the profession of the livestreaming host, several steps have also been taken:

• Earlier this year, the Ministry of Human Resources and Social Security in China released a report that recognised 10 new professions, one of which was livestreaming salesperson, listed under internet marketing specialist.
• Authorities in Zhejiang province released ‘Specifications for Training and Evaluating E-commerce Livestreaming Talent’ on June 26^th. In this report, the first standards in China are provided for livestreaming hosts and include areas such as skill level, professional knowledge, training, talent evaluation and certification. These regulations set three skill levels – junior, intermediate and advanced – which are determined through independent assessments.

Finally, led by the Cyberspace Administration of China, crackdowns on illegal livestreaming activities have already begun, with a large number of livestreaming platforms already being warned or terminated due to their spread of vulgar or illegal content.

With new regulations and scrutiny on livestreaming activity in China, e-commerce through livestreaming is likely to become even more popular due to the additional trust that viewers will have for the information about the products and services they are being sold.

Sandra Weiss works for RedFern, a China-specific, full-service agency that helps brands navigate the digital ecosystem, increase their brand awareness and convert that awareness into sales. Learn more here.

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When it comes to China’s female consumers there is no singular female demographic, explains CBBC‘s retail and e-commerce business advisor Pearl Zhu. “Women’s spending habits differ based on a wide variety of factors – marital status, location, degree of financial independence, social media engagement, working schedule…” she explains. These different factors result in very different and very specific consumption trends. For example high-end kitchenware, seasonal wardrobes, fitness and wellness spending, and luxuries. Whilst many would assume that female spending power is concentrated in China’s major cities, Zhu encouraged brands not to ignore lower-tier cities, which actually drive demand for some product categories, such as beauty devices.

Zhu also offers broader insight into how brands can connect with female consumers, highlighting the importance of understanding who your audiences are and, crucially, figuring out what message you can deliver that speaks to their needs.  “Modern femininity in China is a combination of modern and traditional traits,” she says. Understanding how specific social issues and challenges impact women’s lives is of utmost importance. Whilst women in China share many concerns with their counterparts around the world – balancing family and career, independence and connection – different social pressures apply in different countries and, in a country the size of China, even in different towns and cities. Zhu encouraged brands to “bravely step into social and real-life issues and always stay on-trend.”

Zhu encouraged brands not to ignore lower-tier cities, which actually drive demand for some product categories

International brands should carefully narrow down their target audience. One way to achieve this, suggests Adam Knight, cofounder of TONG Digital, is through a brands platform strategy. Women in China are more digitally engaged than men, and niche platforms have evolved to cater to every consumer group. Noting the trend of female-focused digital platforms, Knight says that “every brand that wants to get its content strategy right needs to understand the affordances of different platforms in China.” One example of an international brand leveraging female-focused social media in China is Louis Vuitton’s first live-streaming event, which attracted more than 152,000 page views on RED.

Knight also says that other trends relating to China’s female consumers include self-empowerment and body positivity messaging in advertising, “although these messages remain relatively niche,” he adds. He goes on to explain that there is a clear trend in the rise of clean and ethical consumerism, with 30 percent of Chinese women having bought products making anti-pollution claims. On this point, Lexie Morris, the general manager of Whittard of Chelsea in China, observes that while the momentum of sustainable consumerism in the UK has been largely consumer-led, this switch appears to be being led by brands in China. “Both brands and consumers in China are showing a lot of interest in sourcing and ingredients,” says Morris.

Chinese brands have become dominant in several female-targeted industries in recent years. Perfect Diary, founded in 2016, is a prime example. Having mastered the art of sales through storytelling and seeded content, the Chinese beauty company was able to achieve RMB 100 million in sales in only 13 minutes during its Singles Day promotions last year. This success was partially achieved, Knight argues, through its hyper-personalised and localised marketing strategy which involves the cultivation of private groups on WeChat containing a few hundred potential consumers. These groups are led by automated virtual influencers who answer questions about the brand and its products, providing an intimate, personalised experience akin to getting recommendations from a friend.

Success was partially achieved through hyper-personalised and localised marketing strategy involving the cultivation of private groups on WeChat containing a few hundred potential consumers

As Chinese brands move towards such personalised marketing strategies, a one-size-fits-all approach from international brands will no longer cut it. Noticing Chinese companies’ skill in generating followers, and the dominance of domestic brands in China, some international brands have begun collaborating with Chinese companies on crossover campaigns which have been well-received by consumers. For example, Fenty Beauty collaborated with Hey Tea, a bubble tea brand, to market a limited-edition makeup bag accompanied by a voucher for tea, and MAC Cosmetics partnered with online game Honor of Kings to release a new line of lipsticks. Given the dominance of Chinese brands, a carefully selected collaboration can be incredibly important for an international company.

International brands have also started to make forays into the world of live-streaming, KOLs, and influencer marketing. This industry is a huge driver behind consumption in China, with the best KOLs – such as Austin Li – expected to shift 10-20,000 units of a product within 10 minutes, regardless of the price point. But this industry can seem confusing to UK brands. Cecilia Yan, a Key Opinion Leader, says that although the industry started with image- and text-heavy blog promotions, it is now driven by video. “Understanding the different kinds of influencers that are out there is key,” she says.  “There are different KOLs for different industries, and different influencers provide different content and skills.”

Given the dominance of Chinese brands, a carefully selected collaboration can be incredibly important for an international company

Yan highlighted the importance of having a specific campaign objective before approaching influencers, be it branding, sales, or engagement. “If you know your objective, then you can choose the right KOL in the right industry,” she says. Morris explains that for an international brand such as Whittard of Chelsea, it’s important to “separate our KOLs into live-streaming KOLs, branding KOLs, and sales KOLs…we’re then very clear on what we’re expecting them to deliver.”

KOLs are not amateur reviewers – some of the most popular influencers use their professional skills and experience as make-up artists, fitness coaches or journalists to offer trustworthy and informed recommendations to their followers. As Yan notes, a good KOL must embody both authority and inspiration.

Brands looking to appeal to China’s female consumers must be very intentional when designing their strategy, selecting their target group, and approaching KOLs. By targeting specific platforms, personalising advertising campaigns, bravely and sensitively approaching social issues, considering collaborations with Chinese companies, and strategically engaging expert KOLs, brands can position themselves to be as effective as possible in approaching one of the world’s most confident consumer groups.

Click here to watch more on this subject. 

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‘Influencers’ are people who have wide followings on social media platforms like Instagram or YouTube. They are people who can make serious money from posting branded content to their legions of followers. The majority are pop stars, reality TV personalities or supermodels, and brands pay thousands of dollars for them to showcase their products. The more followers they have, the more they can charge the brand.

Taylor Swift, Kim Kardashian or Beyoncé are household names who have dominated screens on and off social media for many years now. But how many people have heard of Li Tianyou? What about Yu Li or Wei Liuyuan? These are China’s wanghong, the country’s own internet celebrities.

China’s wanghong don’t having armies of stylists, personal assistants and photographers who ensure their images are carefully curated; these internet personalities livestream from their own bedrooms.

Wei Liuyuan, who goes by the name Qing Wu on social app Momo, has managed to attract over a million followers by performing exotic pole dancing. However, the rising stars today are young men from China’s rural north east whose social commentary attracts audiences of tens of millions.

China’s live-stream market was worth at least $3 billion in 2016, up 180 percent on the previous year

Li Tianyou has more than 22 million fans that tune into his live streaming platform, on app YY. Described by the New York Times as “a hero to a generation of disaffected young people in China’s smaller cities and rural areas. Many of them are spiteful toward elites, sceptical of authority and eager for an escape from menial work,” they attribute his success to “his crude jokes and rat-a-tat riffs on modern life”.

Li, who is the son of a cattle farmer uses a style known as hanmai, or “microphone shouting.” It’s a rap-like performance that is popular amongst more rural communities, and is a modern take on the traditional Chinese performance of crosstalk. His work, he told the Times, “speaks to Chinese people who come from common families, or even from poor families.”

Yu Li, who goes by the name Brother Li, also spends hours a day broadcasting hanmai on a social network YY. He earns more than $100,000 a month.

Whilst brands pay western celebrities to endorse their products – be that staying at their hotels, driving their cars or wearing their clothes, in China it is the individual fans rather than brands who are paying to watch their idols.

Fans offer virtual gifts – for example teddy bears or perfume – that represent real money but often cost less than a dollar. Think of it as a virtual tip. Or perhaps slipping a note into the thong of a stripper.  Those wanting to show off their wealthy status might offer more money to ensure their name flashes on to the screen. Pay enough and the star might give you a “shout out” mentioning your name to all his fans. You can pay to be a VIP in his chat room.  Whilst dancer Wei made 2.5 million yuan from these online gifts, Li Tianyou earns more than $2m a year.

China’s live-stream market was worth at least $3 billion in 2016, up 180 percent on the previous year, according to iResearch. The sector will soon generate more money than the Chinese movie box office, analysts predict.

This has not gone unnoticed by authorities. According to official data, over 344 million people use one of China’s 150 live-streaming apps. In late 2016 a formal set of regulations were implemented, imposing stricter controls on these apps, forbidding sexual content and news reporting during live-streams.

Three live streaming sites were forced to shut earlier this year because they didn’t have the correct licenses and the government how has the ability to reprimand streamers who would “harm national security, damage social stability, disturb societal order, violate the rights of others or broadcast obscene or erotic activities.”

China has been leading the way in micro-payments for some time and as people continue to look for more authentic content rather than bland, corporate branded messages, western social media stars may also start to look to this as a means of income.

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