Inside the Chinese Influencer Economy 
Wed, April 21, 2021

Inside the Chinese Influencer Economy 

Influencers in China are on a whole different level than their Western counterparts, in large part because they sway opinions more effectively on what the consumers are to buy / Photo by: Andre Engels via Wikimedia Commons

 

The Chinese influencer economy is booming and everyone seems to be on board with where it’s headed if the level of engagement and actual sales from these influencers are to be taken into account. Influencers in China are on a whole different level than their Western counterparts, in large part because they sway opinions more effectively on what the consumers are to buy. 

In fact, the Chinese influencer economy is so big that the country has reported that it is already a part of the $2 trillion earnings estimate of China as of 2019. They may only hold a small fraction of that figure, but if this goes on, there may yet be more influencers to come. 

All Too Common 

It’s understandable that the Chinese influencer economy would be this big if people take into account the fact that China has had quite an active e-commerce record for a while now. According to the Wall Street Journal, an online breaking news and current affairs website, these influencers are more known in China as key opinion leaders, or KOLs, and they’re making bank.

As recorded by Ruhnn Holding, China’s largest influencer company, influencers actually sold about $4 billion goods in the country last year, and that the popularity of the business model has recently been so big that companies themselves said they would rather hire influencers for advertising than go back to the traditional methods of advertising. 

These KOLs, unlike in the West, are more likely present on livestreaming platforms like Taobao and Douyin where they are better able to reach their audience who have the means to buy products that they endorse online. If this works so well in China, why not in the US where influencer culture is so big too that everyone talks about it when there’s even remotely a scandal? Well, those livestream ads in China are more accepted by the audience, whereas US audiences would probably feel like they are watching an infomercial.

What makes the Chinese crowd so different that they would gobble these almost-infomercial ads? Mark Tanner, the managing director of China Skinny, a marketing research firm, said that Chinese audiences are more inclined to trust and buy products marketed by KOLs because they see them as “the most trustworthy and authentic source of information, particularly as there are relatively few other ways to get information with the state controlling the media.” 

It’s easy to see too just why companies prefer the expertise of influencers over traditional advertising methods—their success rate is insane. Recent numbers showed that one in five consumers who subscribe to a livestream will actually buy something compared to those recorded from consumers viewing conventional e-commerce advertising. 

These KOLs, unlike in the West, are more likely present on livestreaming platforms like Taobao and Douyin where they are better able to reach their audience who have the means to buy products that they endorse online / Photo by: bfishadow via Flickr

 

The Downside

Perhaps because it is big and a hot trend right now, Chinese influencers also stand directly in the line of fire in case they take a miscalculated step in the wrong direction. 

Take influencer Li Jiaqi, a prime example of what happens when “as seen on TV” doesn’t turn out to be, well, “as seen on TV.” Previously given the moniker “Iron Lips” for trying on hundreds of lipstick shades in a single show, Jiaqi managed to sell 15,000 lipsticks in five minutes, according to the South China Morning Post, a Hong Kong English-language newspaper founded in 1903. 

Added Pandaily, a Beijing-based media company, the show was watched by 36 million people when it went live and “generated more than one billion yuan for the e-commerce platform.” 

With that many viewers, it’s safe to say that Li has built quite a rapport with his audience, which means that backlash can be disastrously swift and scandalous when it does come. And for Li, it did, after a non-stick pan he used in a livestream turned out to be not so non-stick. In the video, Li can be seen struggling to scrape an egg off from the pan in front of what is likely that 36 million (or more) fanbase. 

But that wasn’t the only mishap Li found himself in. In another instance, Li was accused of lying about “hairy crabs” that were big and meaty and were from Suzhou because the crabs were not really big or meaty or from Suzhou at all. 

For the influencer company Ruhnn, the first Chinese influencer incubator, there are also problems ahead. Jing Daily, a website that publishes news, reports on key trends, insights from leading industry figures, and in-depth analysis of the vitally important luxury market in China, mentioned that after having entered the stock market, Ruhnn already has a “37.2% slip right after its $125 million Nasdaq IPO in April.” If Ruhnn wishes to perform well on the stock market, it has to stick to its influencer training and marketing model, which, at the very least, seems to be something they really are doing. 

Jing Daily added that in Ruhnn’s Q1 Fiscal Year 2020 investor presentation, they revealed that they have been “expanding” their influencer sales and advertising services, two lucrative aspects of influencer marketing that grows exponentially every year.

With the distinction of being the world’s biggest market, it is no surprise that China also holds the biggest influencer economy.