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Xinhua Silk Road
Policy

China Focus: China tightens regulations on livestreaming e-commerce

December 17, 2020


Abstract : As the latest branch of the Internet economy, livestreaming e-commerce has rapidly developed into an important marketing method. However, problems such as sellers infringing on consumers' rights and interests to boost their popularity and profits are becoming increasingly prominent.

By Xinhua writers Hua Hongli and Fang Lie

HANGZHOU, Dec. 16 (Xinhua) -- Li Hao (pseudonym), a 26-year-old state-owned enterprise employee in Beijing, never expected that a birthday gift from a livestreaming platform would spoil the birthday party of his girlfriend.

Li bought cubilose, or edible bird's nests from Xin Youzhi, dubbed Simba, a grassroots but leading livestreamer on popular short-video platform Kuaishou, who is now under investigation for selling fake edible bird's nests.

"I feel guilty for ruining what would have been a wonderful 26th birthday for my girlfriend," said Li.

Edible bird's nests, mostly made of the secretions from the salivary glands of birds, are expensive delicacies that have been used in Chinese cooking for hundreds of years, and are traditionally believed to provide various health benefits.

"I trusted him and the products sold via his livestreaming platform because he has over 71 million followers on Kuaishou," said Li. "He destroyed his reputation."

As the latest branch of the Internet economy, livestreaming e-commerce has rapidly developed into an important marketing method. However, problems such as sellers infringing on consumers' rights and interests to boost their popularity and profits are becoming increasingly prominent.

Some livestreamers make false claims and exaggerate the efficacy of their products. In Simba's case, his bird's nests were accused by some people as mere sugar water.

He sold over 15 million yuan (about 2.3 million U.S. dollars) worth of bird's nest products in a livestreaming session on Oct. 25. In a letter of apology posted on his Weibo account, Simba pledged to recall the bird's nest products and refund nearly 62 million yuan to his buyers.

In addition, livestreaming data such as comments, likes, views and sales figures can be manipulated.

Faking data can lead to excessively high return rates and infringe upon consumers' rights and interests, said Chen Jian with the China Consumers Association (CCA). "In the long run, it will also negatively affect the platforms, streamers and even the entire industry."

Purchases are driven not only by consumers' needs but also their love for and trust in the livestreamers, who often have a huge number of followers.

Xin sold 1.88 billion yuan worth of goods during a 12-hour livestreaming session on Kuaishou on Nov. 1, his new single session record. Another two leading livestreamers Viya and Li Jiaqi on Taobao sold 5.87 billion yuan and 3.48 billion yuan worth of goods respectively in the third quarter of 2020.

Chinese market watchdogs have recently issued a series of regulations to better monitor the livestreaming e-commerce market and crack down on violations by both streamers and platforms.

On Nov. 5, the country's State Administration for Market Regulation released a guideline highlighting strengthening oversight over the marketing activities of e-commerce platforms.

On Nov. 13, the Cyberspace Administration of China issued draft regulations to ban operators and marketing personnel of livestreaming platforms from fabricating or falsifying livestreaming e-commerce data such as their number of followers, views and likes.

As livestreaming e-commerce further develops, regulations will only become stricter in the future, said Li Bin, a lawyer with the CCA. Both platforms and streamers should carry out livestreaming activities legally and in compliance with regulations, Li said.

E-commerce livestreaming became the country's fastest-growing internet application in the first half of 2020, according to a report released by the China Internet Network Information Center.

With over 400,000 livestreamers active in the industry, China saw over 10 million livestreaming marketing activities in the first half of this year, attracting over 50 billion views, said the report.

China's livestreaming e-commerce market is expected to exceed 900 billion yuan this year, according to iiMedia Research. As a revolutionary form of e-commerce, the new model has added fresh vitality to the livestreaming industry with an upgraded user experience that could lead to higher user stickiness.

"Consumers should establish a rational view of consumption, maintain a good consumption mentality and make purchases according to their needs," said Lyu Laiming, a professor at Beijing Technology and Business University. Enditem

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Keyword: Internet economy livestreaming

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