The disappearance of a top livestreamer shows the risk of doing business in China

In the span of less than two weeks, Li Jiaqi went from being China’s top e-commerce influencer to semi-taboo topic. Li, who has more than 43 million followers on Chinese social media platforms, abruptly ended a livestream session citing technical issues on June 3rd. Since then, he’s been absent from his daily livestreams, during which tens of millions of people would watch him promote products ranging from face masks to hand sanitizers.

Li disappeared after he displayed a tank-shaped layered ice cream. Tanks are often used as a symbol for the 1989 June 4th Tiananmen protests, during which the Chinese military cracked down on students. Chinese authorities have forbidden any discussion or commemoration of the massacre, and those who violate that unspoken rule are punished.

Although for now Li’s accounts and name can still be found on Chinese social media, no mainland Chinese media covered the possible cause of  Li’s suspension. Meanwhile, both Li’s agency and Taobao, the e-commerce platform that hosted Li’s livestream under Chinese tech giant Alibaba, have been mum on the incident. This has prompted speculation about whether Li is banned by Beijing because of what seems to be an inadvertent mistake rather a calculated political statement. “He disappeared just because of a tank shaped dessert? They are too sensitive and stupid. Originally not many youngsters knew about that history, now many are being encouraged to learn about it after this incident,” said a user on Weibo.

Li’s sudden disappearance showcases the high level of uncertainty of doing business in China. Despite signals from Beijing indicating its willingness to relax scrutiny of the tech sector recently, the fact that the country’s most influential live e-commerce figure could vanish overnight lays bare the growing risks companies face in China, where political red lines are quickly expanding to include even mundane moves like Li’s ice cream display.

Another layer of risk facing companies, especially those engaged with content business, comes from the young generation’s lack of awareness of many historical events, including the Tiananmen protests, due to years of Beijing’s censorship of those events. This means youngsters who grew up under China’s tight internet control, including Li who was born in 1992, struggle to navigate taboos when creating or moderating content — a situation now named by internet users as “Li Jiaqi Paradox.”

Brands set to suffer loss from Li’s absence

One immediate consequence of Li’s disappearance could be a short-term blow to the many brands that have contracts with him to promote their products, including Dior and La Mer, according to Nikkei Asia, a financial magazine. The brands will now have to find new channels for the goods days before the 618 shopping festival, one of China’s two annual shopping extravaganzas.

The stakes could be high. Li sold a whopping $1.7 billion worth of goods during a 12-hour-or-so livestream last year, once again proving his clout in the live commerce industry. This year, Li’s first-day pre-618 sale is estimated to have exceeded 4.1 billion yuan ($611 million), surpassing the same period last year, Tracy Dai, director of operations at marketing and research firm China Skinny, told Quartz. (Platforms’ pre-sale periods before shopping festivals usually start at least half a month ahead of the event.)

The impact could be even bigger for Taobao, which lost Viya, another top livestreaming influencer, late last year after she was fined for tax evasion by authorities. She has since disappeared from the industry. With Li’s suspension, it’s unlikely another key opinion leader can step up to fill the void, said Dai.

The transformation of the livestreaming industry

Meanwhile, analysts say Li’s disappearance could in turn transform the livestream e-commerce industry, which reached around $171 billion in value in 2020 according to McKinsey.

“The trend of pursuing top livestreamers has probably passed…Live e-commerce is developing towards the direction of becoming more diversified,” said Tang Xiaotang, an independent consumption analyst based in China.

The industry used to reply heavily on top influencers’ personal charm, with brands often having to pay them handsome commissions and granting exclusive discounts to land a spot livestreamers’ sessions. Now, many lesser-known, cheaper influencers are finding creative ways of attracting audience.

One such example is Chinese private education giant New Oriental, which was hit hard by Beijing’s crackdown on the after-school tutoring market last year. The company’s shares have jumped recently after some of its former tutors became popular influencers by using English during their livestreams, including to sell rice for the company’s newly founded e-commerce platform.

“Product type will also be diversified, with companies like New Oriental targeting the middle class in big cities to offer pricier goods,” said Tang.

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