In five minutes this past November, Chinese livestreamer “Xin Ba” sold 42.5 million sets of Whoo Korean skincare products, and made more than 400 million yuan ($57 million) in sales during that day’s shopping event, according to Kuaishou, the Tencent-backed video platform.
For many Chinese, it’s the dream of overnight wealth, and the social mobility it can bring. For global brands, these internet personalities — “key opinion leaders” or KOLs — are emerging as the most effective way to reach China’s hundreds of millions of shoppers.
Xin, whose full name is Xin Youzhi, is a self-proclaimed farmer’s kid whose selling point is providing value for money. His conversational skills are hallmarks of his native Dongbei, the northeastern part of China that’s known for a culture of fast-talking entertainers. It’s also a three-province region bordering Siberia and North Korea, with an economy that’s struggled to shake off industrial overcapacity.
“They (people from Dongbei) are much more open in terms of being able to do ad lib comedy, responding on the spot, so that type of content appeals to audiences nationwide, even for people in the south,” said Hao Wu, director of a 2018 documentary on Chinese livestreamers called “People’s Republic of Desire.”
In the early days of livestreaming, the region provided a ready pool of talkers — to whom viewers were willing to shower with virtual monetary gifts.
In fact, the three provinces of Dongbei had the highest proportion of professional livestreamers in 2018, according to Chinese social networking platform Momo. Citing official figures, the report said that by the middle of last year, China had more than 425 million livestreamers nationwide.
And the pie is growing.
For Kuaishou users with more than one million fans, transaction volume in the last 11 months grew 9 times, versus 34 times for those with 200,000 fans, Wang Yulin, CEO of Mockuai,a Kuaishou partner, said at a conference in Beijing on Dec. 17.
A Kuaishou representative noted these were third-party figures, and would not comment on reports the company is eyeing a U.S. IPO next year with a valuation of at least $25 billion.
Rising barriers to entry
But even as lesser-known brands turn to KOLs for help, the industry is still dominated by heavyweights, and increasingly demands professionalization.
About a year ago, one user’s videos could easily gain traction, but now, a whole team needs to support that person, said Kelvin Zhao, who is based in Beijing and has spent the last four years working for a top content creator.
″(For individuals), the best time is over,” said Zhao, according to a CNBC translation of his Mandarin-language remarks. Zhao noted it now costs at least as much to create a good short video as it does to make an online movie. “To win is very hard, not impossible, but the investment you need to make is much higher.”
According to a report in March from industry research firm TopKlout, there are now at least 5,000 agencies known as “multi-channel networks” — which act as talent agencies connecting KOLs with brands and sometimes assisting with content production.
Pedro Yip, retail partner at consulting firm Oliver Wyman, said a middleman can get 10% to 25% in commission, of which a smaller share goes to the KOL. “Income changes as popularity moves with the market,” he said. “Usually what happens is the price goes exponential.”
Is livestreaming forever?
For those who gain that traction, career uncertainty remains high.
Five years since Wu started following a few livestreamers for his documentary, the director said they still make about the same income as before. But the overall growth in the fan base has plateaued as new video platforms such TikTok grab eyeballs.
″They all try to have a backup,” Wu said. “But if you think about it, these people usually don’t have college degrees … They don’t have any social capital, they don’t know how to run a real-life business. They try to set up restaurant(s), bars, and they all fail.”
Even Xin, who has nearly 34.7 million followers on Kuaishou, knows livestreaming is not forever.
During a Dec. 12 shopping event, he said he needs to keep on improving himself, accumulate fans, and develop his own product supply chain, state media reported. Xin was not available for additional comment.
source: https://www.cnbc.com/
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