How China’s biggest online influencers fell from their thrones

How China’s biggest online influencers fell from their thrones

No one could have predicted how quickly three of China’s most influential influencers would disappear.

On June 3, Austin Li, a 30-year-old livestreamer with over 60 million followers on the Alibaba-owned e-commerce platform Taobao, abruptly cut off a stream after a tank-shaped ice cream dessert appeared on the screen. Although he later stated that it was due “technical problems”, most people understand it to have triggered governmentcensors who saw it as a reference the anniversary of the Tiananmen Square protests. Li isn’t known to be arrested and his account still remains active. However, he hasn’t streamed or posted on any social media platforms since that day. Fans and observers suspect that he may not have permission to stream again.

In China, livestreaming e-commerce is a massive industry worth over $180 billion. Combining QVC-style TV marketing with the live interaction and convenience made possible by smartphones, these streams drew in 388 million Chinese viewers in 2020. It took half a decade for the industry to reach its peak. Influencers like Li have grown to rival the popularity enjoyed by A-list celebrities in China. They have been endorsed as innovators and job-creators by the central government and have been known for facilitating billions of dollars worth of online purchases within a single night. Their status as retail rainmakers has given them enormous power over sellers, including multinational corporations, which allows them to influence who is featured and what the prices should be.

But in Li’s and at least two other cases, these online empires were toppled overnight in what appears to be a government crackdown extending back to late 2021.

As 2021 was drawing to a close, Taobao’s most- and third-most-followed livestreaming influencers, Huang Wei (known as Viya online) and Zhu Chenhui (known as Cherie), were suddenly fined millions of dollars for tax evasion by a local tax authority in Hangzhou. Their Taobao accounts disappeared along with all their social media presence, even after they made public apologies. They have never streamed live again.

Before that, influencers at this level were thought to be too powerful and important for the tech industry to turn against. However, the harsh response suggested otherwise. The industry is still dealing with its aftermath. Austin Li, who survived the crackdown, was said to have had clean tax records. He was a major beneficiary Huang and Zhu’s downfall, taking in the traffic, attention and business deals that his peers left behind. This was, at least, up to this week.

The demise of these mega-influencers has led to a power shift within the industry. The attention and money they received could now be diverted towards smaller players. Taobao, the platform where most of these activities take place, also started a campaign in January 2022 to help small and midlevel influencers with cash rewards and traffic support.

And the events have changed the overall dynamics between influencers and brands. One, brands are not likely to continue offering deep discounts to customers who used to be able to access big-time influencers. This is because they are now making deals with smaller livestreamers. Many brands are now creating their own livestreaming channels, instead of relying upon influencers’ vast reach. Jialu Shan, a research fellow with the Global Center for Digital Business Transformation, says that this might be good news for brands as customers might attend their own live sessions. However, it is bad news for customers as they won’t be able to enjoy the deals only Viya and Li can offer The fate of the top influencers is a clear indication that livestreaming ecommerce cannot be ignored by the government. “Key Opinion Leaders (KOLs) are a big business that has evolved into a major industry and are essential to e-commerce. However, with multimillion-dollar paydays, high visibility, and social media backlash, Franklin Chu, the US managing Director of Azoya International, has previously worked with Austin Li.

E-commerce influencers who livestream are also subject to increasing regulations. These regulations include product quality control, reporting of sales numbers, and minors participating in livestreams. Since 2020, the government has released multiple regulatory documents that address different aspects of the business, putting the industry under close watch. While influential people like Huang and Zhu are no longer visible online, their marketing and business teams struggle to stay in the industry. Their assistants claim they are no longer associated with the companies that once supported their celebrities former bosses. However, Chinese media have reported it’s still the same teams. If Li’s appearance with the tank-shaped icecream is to end his career, it is likely that Meione will follow suit. His team, the tech platforms and regulator have not yet made any statements, leaving millions of his fans anxiously waiting. They won’t be alone in celebrating if he returns to his daily streams: his fans will also include the sellers and marketing agencies that have benefited from his popularity. Franklin Chu says that Azoya has worked successfully with him in the past and would likely do so again, provided there are no significant declines in his marketing effectiveness.”

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