By Jiayun Feng | November 7, 2019

“Listen up, ladies! You must have your hands on this tonight. This is something that you can’t afford to miss out on.” When a late-night TV infomercial pitchman loudly repeats these lines in a thinly veiled attempt to peddle sketchy products, it boggles the mind that anyone would want to buy them. But when Lǐ Jiāqí 李加琦, China’s top-level influencer, repackaged these catchphrases and delivered them to millions of his followers during a live broadcast on October 20, people took his word as gospel and ventured into a shopping frenzy.

Over the course of roughly five hours, Li introduced a total of 39 products, ranging from skincare items to chili sauce to lipsticks to massage chairs, all of which immediately sold out. At one point during the sales marathon, 30 million viewers tuned in to watch Li, marking a record-breaking night of Taobao Live, Alibaba’s dedicated livestreaming channel, where the broadcast was hosted. 

For Alibaba, the elaborate saga was a carefully designed marketing stunt to hype up its annual shopping extravaganza on November 11. Using an influencer like Li instead of traditional celebrities to front this campaign was a deliberate choice in this golden age of influencer culture, where Chinese consumers who spend a decent amount of time online are looking to cyber-celebrities for purchasing inspiration.

Currently a multibillion-dollar industry, the Chinese influencer economy is still developing. It’s something that every internet-related company in China wants to capitalize on. It’s a cultural topic that’s subject to contentious debate. And with a unique business model, it’s on track to become the next digital miracle exported from China.

Li Jiaqi and Alibaba’s Jack Ma (Mǎ Yún 马云)

The sheer size of China’s influencer economy

The business of achieving a certain amount of internet fame and leveraging it for financial gain is not a novel idea. Before the word influencer entered the lexicon of the English language, there were KOLs (Key Opinion Leaders), cyber-celebrities (网红 wǎnghóng), and many other variations of the term in Chinese. They are all used to describe what influencer stands for — online figures who have a robust relationship to a decent number of followers and can heavily sway their decisions, especially purchasing choices. 

But the Chinese influencer space, which was once dominated by semi-famous bloggers making some small bucks on the side, didn’t fully evolve into a bona fide career path until around 2008 with the ubiquity of social media services like the micro-blogging service Weibo and video-sharing sites like Tudou and Youku. The industry has grown significantly since then, as various sorts of online personalities, such as fashion bloggers and meme-makers, started to realize that monetizing their social media presence can actually be a full-time job. 

According to big data firm CBNData, the Chinese influencer market was valued at about 58 billion yuan ($8.4 billion) in 2016. Then it reached a whole new level after ecommerce giants like Alibaba found a way into the business. Per Chinese think tank TopKlout, the industry is predicted to be worth up to 300 billion yuan ($43 billion) by 2020.

The numbers of influencers and their followers also exploded in the past decade. A 2018 industry report by consulting firm iResearch notes (in Chinese) that as of May of that year, on Weibo, there were over 20,000 mega influencers who boasted more than 1 million followers, up by 23 percent compared with the previous year. The study also found out that Chinese influencers had around 588 million combined followers across social media platforms in 2018, who accounted for over 70 percent of total internet users in China that year. 

“Papi” Jiang (Jiāng Yìlěi 姜逸磊)

How do you make money as a Chinese influencer? 

On April 22, 2016, Jiāng Yìlěi 姜逸磊, one of China’s megawatt influencers known as Papi Jiang, who became an online sensation by producing short videos, conducted an auction for the first ad to be placed in her videos. Lily&Beauty, a Shanghai-headquartered cosmetics retailer, won the bid with a deal that was worth 22 million yuan ($3.15 million).

The high-profile event was no doubt a memorable moment in the history of Chinese influencers. But partnership deals of this size only come around once in a while. And when opportunities arise, only a tiny percent of influencers can hit the big time. So how do Chinese influencers make money on a day-to-day basis? What are their main monetizable skills?

1. Product-focused content

As long as a specific item is primarily featured in a video or an article, that’s product-focused content. It usually comes in the form of product placement, reviews, tutorials, or unboxing. When creating this type of content, influencers make sure to plug a product link in the caption, and brands offer a commission on any sales or traffic that the content drives.

2. Sponsorship

Sponsorships are where the big bucks are made, but only big-name influencers like Papi Jiang can earn that kind of money. Because sponsored content is considered relatively high-end and costs a lot for brands, companies are more involved in the creation process, making specific requests for things like where their product will be featured and for how long.

3. Tips from followers

Compared with other revenues, which largely rely on how brands perceive a cyber-celebrity’s star power, tips come directly from followers. This is the main revenue stream for influencers on livestreaming platforms like Douyu and Kuaishou, where they receive tips in the form of virtual gifts from fans frequently.

4. Merchandise

For fashion and beauty influencers, launching their own apparel or cosmetics lines is an optimal business further down the road. Zhāng Dàyì 张大奕, a fashion-blogger-slash-model-turned-entrepreneur, is arguably the most successful on this front. With more than 20 million followers on social media, Zhang launched her own Taobao shop in 2014. On Singles Day 2015, Alibaba’s annual shopping extravaganza, her store made it into the top 10 on the platform’s women’s clothing category, and reported over $44 million yuan ($6.3 million) in annual gross merchandise volume.

Zhang Dayi

China’s influencer incubators: Multi-Channel Networks

The first generation of Chinese influencers were, for the most part, low-key fame seekers hoping to carve out a side career with their online presence, but it didn’t take too long for a handful of domestic digital talent agencies to form, spring up, and make influencer a more official line of work. 

Calling themselves Multi-Channel Networks (MCNs), a concept that finds its roots in America in the mid-2000s, when YouTube was founded, these Chinese media companies seem to have far surpassed their American peers by extending their reach beyond representing influencers and online personalities on brand collaborations. Instead, Chinese MCNs are multiple-hat-wearing agencies juggling a string of jobs, including scouting and training potential influencers, creating and distributing content on behalf of them, and eventually helping them snag lucrative deals with brands, from which they are primed to take a major cut.

Probably compared with American MCNs, the highly effective market of Chinese digital talent agencies is more akin to South Korea’s K-pop music industry, where entertainment companies recruit idol prospects at a young age, make them go through rigorous training, and eventually put them in the pop culture market for consumption.

According to a 2019 report released by the think tank TopKlout, China is currently home to more than 5,000 MCNs, whose combined value is estimated to exceed 11 billion yuan by 2020. More than 90 percent of top-level influencers either have signed to an MCN or established their own MCN. 

While it’s up for debate as to whether Chinese MCNs have turned the industry, which thrived on real talents and creative content in the first place, into a results-obsessed and exploitative regimen, there is little resistance to this business model within the Chinese influencer community. According to Chinese tech blog PingWest (in Chinese), this is largely because it is nearly impossible to become a macro influencer in the current environment without leveraging the all-encompassing power of MCNs. When talking to the outlet, Liú Fēi 刘飞, CEO of Gufu TV, a mid-level influencer incubator, revealed that turning a fledgling influencer into a big-name one with a giant following to sell things to normally requires millions, which are mostly spent not on content creation, but on gaming algorithms of different platforms and making posts actually show up on people’s screens.

In other words, if you are a nobody from nowhere who wants to carve out a profitable career as an influencer, financial support from an MCN is just as vital as intangible inputs like time and dedication. 

The mental and physical toll of the influencer game

It’s extensively reported that a career in digital content can take a toll on creators’ physical and mental health, but the situation is particularly alarming in China, especially for early influencers who launch their careers with MCNs and are subject to constant exploitation.

In a feature article (in Chinese) in September, Tencent News reported that many wannabe influencers, who were mostly young girls drawn by a flood of money into this market, were inclined to sign to shady MCNs and got severely mistreated by their agencies. According to several victims interviewed by the outlet, the work conditions and wages were astonishingly demoralizing. Some of them were required to spend more than six hours on livestreaming seven days a week. “Endless. Repetitive. I work like a robot,” a micro-influencer said, revealing that she was struggling with depression under the weight of internet fame. “We are paid by the minutes we spend in front of the camera. Traveling, dating, even taking a sick leave are all luxury.”

Fake it till you make it: Influencers lying about numbers is still a rampant problem

It’s no secret that wannabe influencers can buy fake followers, likes, comments, and even video views from hundreds of vendors online. But this dubious practice is particularly ubiquitous in China, where manufacturing fakery is an elaborate scam constructed by influencers, MCNs, and social media platforms, which share an objective of profiting off big brands through sponsored posts.

For aspiring influencers and digital talent agencies, the temptation of rosy numbers is hard to resist considering how easy it is to buy fake followers and how little it costs to do so. Per Radar Finance (in Chinese), a click farm charges as little as 18 yuan ($2.58) for 1,000 followers on Weibo. The most popular item from this vendor is a package for the short-form video platform Douyin, where 20 yuan gets you 10,000 views, 300 likes, 10 reposts, and five comments from active accounts. And for social media services like Weibo and Kuaishou, they tend to turn a blind eye to this phenomenon because numbers carry significant weight when they try to attract major brands to advertise on their platforms.

But while sponsors are not completely in the clear when it comes to counterfeit or fraudulent accounts, they are also not completely in the dark, either. In October 2019, an entrepreneur in Shenzhen brought the issue to the forefront in a viral article (in Chinese), in which he accused Hive Media 蜂群公司, one of the biggest MCNs in China, of scamming him through what he called a “musical performed by zombies.” According to the author, a fashion influencer shared a video sponsored by his company on Weibo in September, which soon generated over 3 million views and 1,000 comments from Weibo users, most of whom expressed strong interest in purchasing a product featured in the clip. But the sales number in the backend was zero, and coupons were redeemed by only two people who actually worked at the MCN. “Is this a norm for influencers and agencies behind them to sell a fake show to us clients and leave us with delusional joy? It’s unfathomable how many companies have been scammed this way,” he wrote.

Weibo’s annual Influencer Festival in 2016

Although the industry has seen massive growth, it is subject to little regulation

In the U.S., there are a set of guidelines issued by the Federal Trade Commission to regulate social media endorsements. One of the prominent rules in place requires online influencers to explicitly disclose if they receive anything, be it money, gifts, or something else, that could affect their judgment about a company or product. Although studies have found that influencers rarely follow the rules and often face no consequences for violation, the existence of such principles serves to deter them from participating in outright fraudulent practices like false advertising, sales of potentially harmful products, or blatant scams.

But in China, sponsored content on social media falls into a gray area where influencers are able to avoid liability that comes with their posts, even paid ones, as long as they are not labeled as advertisements. To fully exploit this loophole, Chinese influencers often brand their endorsement articles and videos as subjective reviews by individuals, featuring no declaration of how much they get paid through such business practices. 

The lack of effective regulations in the Chinese influencer industry has put consumers in a vulnerable position. In May, a Douyin user called out an influencer on the platform for false advertising in a viral article (in Chinese), in which she documented how excruciating it was to get a refund after she purchased some snacks through an affiliate marketing link attached to a sponsored video and found out the products she received were of awful quality. While the victim eventually got her complaint heard and was properly compensated after weeks of incessant effort, she wrote in the final update of her blog post: “Fortunately, I won in the end. But unfortunately, this hard-earned success didn’t come from the influencer’s reflection on her illicit behavior, nor from the platform’s commitment to protect customers.”

Top-level influencer Li Jiaqi also found himself in hot water lately. During a Taobao livestream on October 30, while cooking an egg on a nonstick frying pan that he tried to hawk to viewers, Li failed to cook an egg without getting it attached to the bottom of the pan. More than 400,000 viewers, including some of Li’s most devoted fans, witnessed the fiasco in real time and left a flurry of negative comments while Li was still on camera. “What a laughable mess,” some of the remarks read. At the center of a meltdown, Li later explained that he neglected to read instructions and consequently used the product the wrong way. But as a number of critics rightfully pointed out, Li’s negligence was not an isolated event, rather, it reflects his chronic abuse of trust from his fans, who see him more as a trusted expert rather than as a paid salesperson. 

But there is a bright side to Li’s misfortune. Since the high-profile incident, dozens of media outlets have called the influencer industry into question. In a recent piece (in Chinese) published by the People’s Daily, the state-backed newspaper commented, “A series of cases like this really prompted us to ask: How much credibility should we put in items fervently endorsed and recommended by influencers?”

Authorities also appeared to be stepping up efforts to put the industry under increasing levels of scrutiny. On November 1, China’s National Radio and Television Administration, the country’s top media regulator, issued a notice (in Chinese) warning influencers that misleading consumers was strictly banned in all sorts of programs akin to commercials, including short videos featuring product placement.