Livestream in China

With the COVID-19 pandemic and the resulting lockdowns in China, the livestreaming industry experienced great popularity and offered a way for people to congregate safely. Over the past 5 to 7 years, the livestreaming industry has experienced explosive growth, transforming from a niche platform for gamers and technology enthusiasts to share their favorite hacks and plays, to a trillion-dollar industry that influences and powers online shopping.

This article will discuss in detail the importance of the livestreaming industry to the Chinese market, the main focus of the livestreaming experience in the Chinese market, different technological applications, regulatory challenges and important statistics for the industry.

What is Livestreaming?

Livestreaming combines a live video and chat experience, enabling one or more people to create a live video that audience members can join in real time. Viewers can participate in the experience by leaving comments, questions, and feedback that live streamers can respond to immediately in real time.

The interactive nature of livestreaming distinguishes it from social media video or live chats alone, creating a more magnetic and influential experience. Instead of simply watching what their favorite gamers, stars, or influencers are doing, livestreaming allows fans to share in the experience and engage in more personal interactions.

Why is Livestreaming Important in China?

The importance of livestreaming in China has grown in 2 main ways. Firstly, it provides a vital connection to people towards their online interests, cultivating a sense of belonging. Online virtual groups and communities, enabled by livestreaming, provide a safe space for Chinese consumers, with adoption especially prevalent amongst younger audiences. Secondly, it serves as an increasingly powerful e-commerce tool, allowing influencers and brand representatives to showcase their products and connect directly with millions of people. Beyond the scale and reach that livestreaming allows for e-commerce, the opportunity to interact directly with the streamer provides a more personal and insightful consumer experience.

The Main Focus of China Livestreaming

Livestreaming in China has progressed significantly since its initial introduction, where it was primarily targeted towards a small network of gamers and entertainers, prior to 2015. With the rapid expansion of 4G coverage throughout the country, and the proliferation of online and mobile-friendly payment processors, Chinese retailers saw an opportunity to leverage livestreaming and popularize the format to reach millions of people across China.

Gaming

Gaming was one of the first sectors to embrace livestreaming, with gamers using livestreaming as a way to share their gameplay online and connect with other users who shared the same interests. Even today, gamers still remain a significant part of the global livestream userbase, leveraging platforms like Twitch and YouTube Live to engage with their fanbase.

For some gamers, building a substantial following allows for more monetization opportunities, which can include the creation of subscriber-only streams or in-game add-on items for purchases. While buying and selling may not be the primary focus of the video stream, popular content can hold a significant value for the creator and their fans.

Entertainment

The entertainment industry, similar to gaming, was an early adopter of livestreaming. It provided a more intimate and engaging way for movie stars, comedians, and various other social figures to connect with their audiences in comparison to standard video media.

For entertainers who already have a pre-existing audience or loyal follower base, livestreaming can be especially beneficial. It is often easier for them to monetize their livestreams by doing reviews of products, creating events for subscribers, or by offering users items during the livestream.

Livestreaming and E-commerce: How Did it Emerge?

The merging of livestreaming and e-commerce commenced when Chinese retail giant Alibaba launched its own livestreaming service, on its e-commerce platform, Taobao. Alibaba recognized that livestreaming could help retailers tap into devoted audience groups, and drive sales by allowing them to showcase their products to millions of Chinese consumers directly.

Sales and promotions of goods is primarily done through influencers, or Key Opinion Leaders (KOLs), on the livestream. Key Opinion Leaders build relationships with viewers, showcase products, and answer questions in real-time. The marketing strategies used are fine tuned to align with the audience’s interests and needs, resulting in better product selection and improved conversion rates. In some cases, KOLS may be celebrities, field experts or company representatives, depending on the type of product being featured.

The high level of engagement and personal touch, combined with a carefully curated product selection increases the likelihood that audience members will make a purchase during a broadcasted stream.

Livestreaming Technology

Livestreaming has become an increasingly popular e-commerce tool in recent years, with 4 key factors that enable this trend:

• Fast, widespread Internet service and cell coverage: Prior to 2015, wireless internet was not available to many Chinese people outside of major cities. As internet availability became more easily accessible, the opportunity to enable millions of consumers to engage in e-commerce was made possible.
• Increased smartphone ownership: In addition to the proliferation of wireless internet, smartphone ownership has grown significantly to allow for more users to participate in livestreaming.
• Robust online payment systems: The rise of online payment systems has enabled smartphone users to make purchases easily and efficiently on livestream platforms.
• Logistics and fulfillment network: The existence of a well-developed logistics and fulfillment network is key to accommodating e-commerce livestreaming and the direct-to-consumer business model, so that companies can quickly deliver goods to its customers.

China’s strength in of all 4 of these areas, in addition to the widespread adoption of new technologies and willingness to try new things, are the main reasons to China’s rise in e-commerce livestreaming.

Why are People Livestreaming?

Many of us have experienced the disappointment of receiving a different item than what was pictured in online shopping, such as an item being the wrong, color, size or simply not meeting user expectations. To avoid this frustration, consumers would generally have to go to a physical retail store to examine an item before purchasing it online for a better price.

Livestreaming has emerged as a solution to this issue as consumers can directly ask questions about a product to the influencer in real time. This removes the need for additional research on their own and allows consumers to obtain the product they want at the most optimal price. For instance, a consumer can quickly find out whether a pillow is firm, soft or silky, among other things, when they want to purchase a new pillow for their bed.

Livestreaming has become one of the biggest income generators for Chinese e-commerce companies. In 2020, more than 760 million Chinese viewers participated in a livestream. Half of these viewers made purchases, which makes up to about a quarter of China’s population.

This consumer trend can be attributed to the power of a personal experiences, exclusive deals made available only during livestreams, and the carefully curated products, making impulse purchases easier and giving livestreams an impressive conversion rate. In 2020, livestreaming conversion rates reached 65%, compared with influencer e-commerce at 20% and traditional ecommerce at 0.4%.

Furthermore, livestreaming is not limited to being an “infomercial with a Q&A aspect”. Technological advancements and the rise of virtual reality technology have the potential to transform livestreaming into an immersive experience, where consumers can experience the product for themselves before buying.

Where to Watch Chinese Livestreams

The largest, and oldest, Chinese e-commerce livestream platform is on Taobao by Alibaba, specializing in consumer retail goods. Other platforms include Douyin by ByteDance, which focuses on beauty, and fashion influencing. Kuaishou, targets China’s rural consumers with relatable everyday content and bargain prices.

However, while e-commerce livestreaming is growing, it is still not the largest type of livestreaming content in China. As of 2022, platforms dedicated to gaming and entertainment, such as Huya with 30.4 million active users per month, YYLive with 27 million active users, and Douyu Live, remain the leaders in this sector.

Important Livestreaming Statistics

• Up to 53% YOY Growth: China’s livestream market has grown at an astounding rate. Between 2018 and 2023, China’s ecommerce livestream market grew from 121 billion to more than 4 trillion yuan, with more growth expected.
• Singles Day Sales Growth: China’s largest shopping event of the year on November 11, reached new heights, with over 505 million people shopping on Taobao Live in 2021 alone.
• Impulse Buying: Livestream ecommerce leads to much higher levels of impulse purchasing. In 2019, 53% of consumers who participated in an ecommerce livestream event reported a “relatively high” desire to purchase, as opposed to the 7% who experienced a normal or relatively low desire.
• Lower Return Rates: Live sales events allow consumers to make more informed purchases, leading to comparatively lower return rates than traditional e-commerce sales models.

Regulations on Livestreaming in China

• The Chinese government has implemented regulations to oversee the livestreaming industry, ensuring a safe and professional environment for buyers and sellers.
• In March 2021, the State Administration for Market Regulation created regulations to safeguard user data privacy and enforce merchant and platform responsibilities toward consumers.
• In April 2021, a task force comprised of various Chinese government agencies began taking steps to ensure that both buyers and sellers were protected with a series of identity verification requirements. This involves verifying the identities of influencers and other key opinion leaders (KOLs) who act as online sales figures.
• In August 2021, the Chinese Ministry of Commerce introduced further regulations aimed at maintaining professionalism in the ecommerce industry. While some influencers treat the industry as show business, turning it into a “shoppertainment” experience, these regulations control how influencers may dress and act on their shows and events. They also regulate how sellers and consumers can leave product or influencer reviews, which is aimed at ensuring professional and honest environment for all parties involved.

Challenges for the Livestreaming Industry

The largest challenge for the livestreaming industry concerns the ever-changing wants and needs of the consumer, as well as the uncertainty regarding whether the sector as a whole will be able to maintain its meteoric growth in e-commerce, or whether it will it lose momentum as consumers lose trust in the model.

Another challenge is the question of international growth. As of 2023, only Douyin (Tiktok) has managed to gain significant international influencer attention, while other apps are largely exclusive to China. However, as the world’s largest producer of consumer goods, China has the potential to introduce its livestream shopping experience to a global consumer base.

In summary, livestream e-commerce is a major market disruptor to traditional e-commerce and may become a standard way for people around the world to shop online in the coming years.  Foreign businesses entering China should take advantage of the opportunities enabled by livestreaming, considering the potential for widespread audience reach, to enhance trust and credibility while providing real-time feedback from the market. Having the knowledge of business practices, while ensuring compliance with regulatory policies can be challenging for foreign investors operating a businesses in China, which is why many businesses opt for a reliable partner like us.

MSA has assisted foreign enterprises with all their business setup needs for over a decade, while providing services in accounting and financial advisory. Our experts will ensure you remain compliant and on track for success with your venture in China. Get in touch with us today!