The rise of rational consumers and other shifts in China’s livestreaming space

A year after the “tank cake” debacle that saw Lipstick King Li Jiaqi temporarily disappear from social media feeds, the livestream industry is still reeling. As China’s most beloved livestreamer and the golden boy of his agency, the incident sent shockwaves through the entire livestreaming industry. Both foreign and domestic brands in China have become wary of collaborating with KOLs over the last five years following a spate of celebrity scandals, most notably pop star Kris Wu’s rape conviction. But Li Jiaqi wasn’t hiding any criminal inclinations and had made no comments criticising the government.

Li returned to livestream sales three months later, but this time with heightened scrutiny from China’s National Radio and Television Administration (under the direct control of the CCP’s Propaganda Department since 2018). Agency heads were now all too aware that such a minor infraction—like showing a tank-like cake on screen—might be enough to topple an entire business empire if they weren’t careful.

Taking Li Jiaqi’s agency MeiOne as a case study, what lessons has the livestreaming industry learned a year from the interruption to Li’s success? And is the age of the star livestreamer as the engine of the industry over? 

From stars to ensembles: risk management

Li Jiaqi’s three month hiatus prompted MCN agencies (which manage livestreamers) to re-evaluate the star-oriented business model, ushering in a new era of “assistant streamers” as agencies train up new talent. Cultivating a diverse roster of livestreamers seems like a shrewd move financially for MCN agencies—especially since livestreaming doesn’t appear to be going away anytime soon. Data released in April by Beijing Consumers Association found 90% of consumers watch livestreams, indicating that it is an integral part of the e-commerce consumer journey.

However, the personal magnetism that made star livestreamers like Li Jiaqi so successful also means the new diversified approach is far from guaranteed success. Close to half of the previously mentioned survey respondents claimed “fondness” for a given livestreamer is the main factor motivating them to watch livestreams. A further 41.68% said it is trust in the livestreamer that makes the difference. This is a spanner in the works for agencies like MeiOne—star power is hard to train up and bonds built over many years cannot be easily replicated.

Sure enough, fans have noticed MeiOne’s change in strategy and for some, it’s a dealbreaker. “If I see it’s Li Jiaqi streaming, I’ll scroll for a bit, check out what products are on offer today, see if anything’s worth buying, but if it’s one of the assistant streamers I’ll just exit the broadcast immediately,” CBNData quoted one of Li’s subscribers as saying. Another viewer complained of the “weak” professional ability of the assistant streamers and claimed their temptation to buy products was thwarted by “unclear explanations.” This begs the question: how can MCN agencies shore up the stability of their income streams whilst still giving viewers what they crave?

(A clip from a recent livestream on Li Jiaqi’s main channel 李佳奇Austin on Xiaohongshu)

Rational consumers, sustainable business models

The good news is consumers are themselves beginning to become less reliant on star livestreamers even if they can’t help but love them. Post-pandemic China is marked by a rise in what is called “rational consumption.” In the face of economic uncertainty, Chinese shoppers are less likely to make impulse purchases and blindly follow trends, preferring to thoroughly research products and carefully weigh up whether products are cost-effective and meet their needs. Chinese consumers have been steadily becoming savvier over the last decade such that, even as the economy recovers, this shift in consumer behaviour is expected to remain highly informative to the market.

It naturally follows that consumers are now less likely to throw their money at a product just because their favourite livestreamer recommended it. They may tune in initially because of their loyalty to streamers, but if they don’t see the point in the product or think they can get it cheaper elsewhere, they won’t buy. This widens the gap between viewing figures and sales figures. In other words, charismatic stars remain a powerful tool for MCN agencies, but can no longer be the only reason fans tune in.

Agencies need to take a multi-pronged approach to adapt. One of the major problems MeiOne has run into is that viewers are unimpressed with many of the channel’s product recommendations, which they increasingly see as outdated, irrelevant, or recommended without basis. Offering the lowest prices isn’t always possible with star livestreamers now earning large salaries, but if channels are intentional and well-justified in their choice of brand endorsements, they can earn strong reputations over time.

Agencies can also work on standardizing their content production. Charisma is hard to capture, but it is possible to curate an engaging atmosphere with a consistent tone of voice and well-written copy. Viewers will eventually come around to new faces. A new industry trend called “quiet livestreaming” points to the fact that there is more to popularity than charisma. Li Jiaqi is known for his likable energetic persona—like a best friend giving you advice before you head out on a date. But the stars of the more understated “quiet” livestream style are being likened to art history lecturers and cultural experts. Their knowledge and ability to share it hooks viewers, rather than a frenetic persuasiveness. This is just one alternative style of engaging with viewers, but it highlights that agencies can think outside of the box when designing a successful channel.

A clip from a “quiet” livestreamer’s channel

Above all, MCN agencies can no longer bank on overnight success. Investing more resources beyond the on-screen personalities could be key to unlocking the ever-elusive loyalty of Chinese consumers. But this will take time, whether Li Jiaqi remains scandal-free or not.