Tighter control of livestreaming coming soon in China

The China government has recently finished collecting opinions about a draft regulation on the livestreaming industry, and observers expect significant rule changes soon. 

This segment of the influencer-marketing business has been under government scrutiny for some time, coinciding with massive growth in both viewership and the number of brands making use of the tactic. The new regulations, according to the government itself, are intended to form a long-term mechanism to rectify abuses such as sales of counterfeit products, false advertising and fake traffic volume.

Most significantly, the impending rules will mean that video bloggers and livestreamers will be considered businesses in and of themselves. This will substantially alter their legal liabilities, as they will have to obey a broader e-commerce law that was implemented last year. That law requires, for example, that businesses verify their identities before they start livestreaming.

The potential change causing the most dispute is whether livestreamers will also be defined as advertising endorsers. This would make them subject to additional regulations including prohibitions aginst the use of certain terms, such as "best" or "top", when promoting products. 

Though such changes will require additional oversight of influencers by brands and platforms, some observers believe that control is needed, and should work to the advantage of both brands and platforms in the end. 

"The livestreaming market in China is still growing extensively without much order," Zhang Guowei, the head of JD.com's livestreaming business, told Campaign Asia-Pacific. "We already see more high quality and entertaining content coming to livestreaming on e-commerce."

One positive impact of tighter control could be a reduction in downward pricing pressure. "Some live-streamings have very low cost, and they sell the product at a very cheap price, which disrupts the market order," Hong Tao, professor at Beijing Technology and Business University, said in a seminar for livestreaming standards in June. "The draft regulation should change this price-oriented competition."

Livestreaming platforms will also bear additional responsibility. Whether the platform is an e-commerce platform that has livestreaming functions or a livestreaming platform that allows people to sell products, they will all be regulated under the e-commerce law.

"The industry has been waiting for a long time for the regulation to come," Zhang said. "There is still chaos in the livestreaming industry although it has been developing for years. Regulators move is more effective than us as a platform."

The top bloggers and livestreamers have nothing to worry about, according to Qian Yufan, co-founder and COO of Hangzhou Chenfan E-commerce, an agency founded in 2015 that represents several of the most popular streamers. 

"We are glad to see more people choose livestreaming as a way of marketing these days," Qian said. "As a livestreamer agency, we welcome the regulation to bring healthy competition into the market. Good livestreamers will have the chance to win the competition."

The ability to bargain with brands and obtain discounts for the audience will remain a key factor in the competitiveness of livestreamers, as will their ability to build an attached audience, she added.