China’s growing army of online influencers are gaining ever more sway over its consumer sector — and attracting Beijing’s attention in the process.

Influencers, also known as Key Opinion Leaders (KOLs) in China, help to sell products directly to consumers who watch their content on social media and live stream apps such as Douyin, Taobao, and Xiaohongshu. Promoting products from cleaning sponges to Dior handbags, KOLs have quickly come to dominate retail marketing. The KOL industry is dominated by celebrity live-streaming, which two years ago was estimated to be worth $30 billion.¹The China Association of the Performing Arts estimated it as $30 billion in 2020 and some analysts say it may top $100 billion in 2022.

However, the sudden online disappearance of three of China’s best known KOLs in recent months has sent a shiver through the industry, while the government’s introduction of a new code of conduct could complicate its future too. This week, The Wire takes a closer look at the world of China’s influencers.

THE INDUSTRY AT A GLANCE

Chinese KOLs’ remarkable ability to make products attractive to consumers sets them apart from influencers in other nations. Around two-thirds of Chinese viewers order a product after watching a promotional live stream, according to iResearch, a China-based market research firm. 

A major reason for the KOLs’ success is the strong connection between their social media persona and the products they sell: “The biggest difference in China is that the influencer industry is a fully integrated social network that thrives on social selling rather than just brand awareness and inspiration,” says Michael Jaïs, chief executive of Launchmetrics, a New York-based social data analytics provider. 

Another key difference between Chinese and Western influencers is that the former tend to focus on sales rather than brand awareness. Most Chinese KOLs collaborate directly with brands — either domestic or foreign — and often have contracts with companies to sell their products, typically receiving a commission from every product sold via a personalized link from their sites. 

Over 11 million KOLs currently operating in China have more than 10,000 followers, according to data from China-based media data agency TopKlout, meaning competition is fierce. The pressure on individual influencers to grow their audience encourages them to aim for authenticity in their reviews, analysts say, despite the inherently commercial nature of their work.

“From the very get-go it was quite clear that being a KOL was a commercial endeavor. They are working in the industry to make a living and that has always been transparent,” says Crystal Abidin, an associate professor at Curtin University in Australia who has been studying the rise of influencers in East Asia since 2008. 

CANCELED KOLS

The personal trajectories of some of China’s biggest influencers have been rather more volatile than the sustained growth of the industry. In less than a year, three of the most popular KOLs have disappeared from public view. 

The most recent to vanish is Li Jiaqi — known as the ‘Lipstick King,’ thanks to his ability to sell make-up products. In June, one of Li’s live streams was abruptly cut off while he was promoting a Unilever ice cream brand by positioning the product in the shape of a tank — a controversial symbol in China due to its links with the Tiananmen Square massacre in 1989. He has yet to return to live streaming.

Other influencers have fallen victim to Beijing’s unease with wealth inequality. The country’s most followed KOL Viya, whose real name is Huang Wei, was fined a record $210 million for underreporting her income in late 2021, while fellow influencer Zhu Chenhui, also known as Cherie, also received a big fine.

If you are an influencer in China, you are expected to adhere to correct guidance of public opinion and have a correct orientation in accordance with socialist values.

Fergus Ryan, a senior analyst at the Australian Strategic Policy Institute

“The government doesn’t want to see the kind of top tier, extremely successful KOLs because they expose the social stratification in Chinese society that the government wishes to hide,” says Altman Peng, an associate professor at Warwick University in the U.K. who studies Chinese social media.

The government’s concern with excessive wealth is also evident in a new code of conduct for KOLs published by the Ministry of Culture and Tourism in June. Content that subverts state power, violates national religious policy, or promotes shoddy merchandise is banned, although no consequences for breaking these rules are outlined. Displaying large amounts of luxury goods and excessive amounts of cash that could “belittle low-income groups” is also prohibited. 

While the new guidelines may appear to be a sign of increased scrutiny of KOLs, those operating in the industry — who appear on tightly censored social media platforms — have long implicitly followed the rules. 

“The limitations have always been there. They are just more on the table and everybody knows now,” says Jeffrey Wang, co-founder of Tic Toc Ventures, a Shanghai-based influencer business incubator. 

BALANCING ACT

China’s leaders have in fact tended to look favorably on KOLs, especially those that help poor and rural populations sell their output. During a 2020 trip to a rural county in Shaanxi, President Xi Jinping praised live streamers selling a locally-grown black fungus saying, “e-commerce is very important in promoting agricultural products and has a big role to play.” The clip subsequently went viral and merchants quickly sold more than 20 tonnes of the fungus. 

“If the industry can help people in tier-five cities sell more product to tier-one cities, the industry will grow and the government wants that,” says Tic Toc Ventures’s Wang.

China’s authoritarian government has also recognized the potential for the KOL industry to help it politically. “The government is tightening its control to encourage more digital influencers to engage in nationalist political propaganda which is a safe way to both increase sales and push current politics,” says Warwick University’s Peng. 

The Chinese government has, for example, supported both Chinese and foreign influencers to travel to Xinjiang and publish positive content that seeks to undermine allegations of human rights abuses in the region, according to a December 2021 report published by the Australian Strategic Policy Institute (ASPI). 

These influencers used by the government produce content both on Chinese social media as well as Western sites such as YouTube. Foreign travel vloggers were specifically targeted to promote Xinjiang, according to ASPI’s research. Government promotion of the Russian invasion of Ukraine via social media KOLs has also been reported.

“If you are an influencer in China, you are expected to adhere to correct guidance of public opinion and have a correct orientation in accordance with socialist values,” says Fergus Ryan, a senior analyst with ASPI’s International Cyber Policy Centre.

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