China’s “common prosperity” crackdown has turned a harsh spotlight on the country’s massive livestream retail business – underlining the fragility of a surging sales channel that some of the world’s biggest brands have come to rely on.
More than 100 million followers of Viya, dubbed the country’s “queen of livestreaming” by the Chinese media and public, awoke on Tuesday to find her e-commerce and social media accounts shut down after news that she had been fined more than $200 million for tax evasion.
The rise of celebrities partnering with brands from L’Oreal to Unilever and Adidas to sell consumer goods in live online streams has seen the sector billow. Consultancy McKinsey expects the trade in the world’s second-biggest economy to be worth $423 billion next year – more than double estimates for 2020 and bigger than the economies of countries like Norway and Ireland.
But it has also led to an awkward tango for global players, with little choice but to partner with internet stars with the clout – until now – to make or break product sales campaigns. Some, like Viya, have even challenged how sponsors like L’Oreal do business.
Beijing’s vow to be tough on tax dodgers as it seeks to eliminate vast disparities in income at a time of slower economic growth has claimed numerous high-flying victims. But the scale of the fine on Viya, a 36-year-old former singer whose real name is Huang Wei and who once appeared on a stream with U.S. reality TV star Kim Kardashian, far exceeds that of other well-known cases.
“People were shocked to learn live streamers make so much money,” said Liu Xingliang, president of the tech consultancy China Internet Data Center. “With such profitability, Viya’s company could be valued at 100 billion yuan ($16 billion) if it went public.”
Along with Viya’s closest-selling rival by sales, Li Jiaqi – also known as “Lipstick Brother” – the two biggest stars of the sector have come to be seen as crucial for brands seeking to get a product placed on daily evening livestreamed shows on Taobao, the online marketplace owned by Alibaba Group.
So much has their clout grown that the pair broke ties with L’Oreal last month in a public dispute after they accused the French cosmetics giant of not giving their viewers the lowest price on a facial product. L’Oreal later offered shopping vouchers to settle the dispute.
L’Oreal didn’t immediately respond to a request for comment on Viya.
In a statement, Viya apologized for not paying her taxes but could not be reached for further comment. Li’s company told Chinese media on Monday that business operations were normal.
Trust and community
Analysts say livestreaming sales personalities like Viya and Li appeal to Chinese consumers not only because they are entertaining or are able to negotiate steep discounts for their viewers with brands. …….
