How China’s live-streaming KOL stars are changing the face of business

Tucked away in the basement of an unremarkable commercial centre in downtown Guangzhou, a booming southern Chinese city, is an important “factory”. It doesn’t produce shoes or shirts, or anything you might expect; it churns out influential live-streaming celebrities.

Hifan Multi-Channel Network is only a few years old but already is one of the top five multimedia companies in the city. With only 40 members of staff, it has created a stable of about 100 live-streaming celebrities, or key opinion leaders (KOLs).

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It is a driving force behind sourcing and producing the next generation of KOLs catering to China’s appetite for live-streaming of “entertainmerce”, a combination of entertainment and e-commerce.

Sales revenue in China’s live-streaming market grew by 180 per cent in 2016 and was worth 21 billion yuan (US$3 billion), according to market research company iResearch. Content ranges from singing and dancing to shared insights and details of the daily lives of these mass-produced KOLs.

Since it exploded onto the online retail scene in 2016, live-stream shopping has opened a new channel to allow internet users to indulge in the instantaneous consumer lifestyle of “I see, I like, I buy”.

Hifan’s chief executive, Tiger Ai, says his company pulled in a total of about 30 million yuan (US$4.4 million) in sales in 2017 by using its own KOLs to sell products – mostly fashion and cosmetics.

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The Guangzhou KOL factory has a hectic production schedule. Ai works 12 to 14 hours a day, while his KOLs normally do an eight-hour shift, clocking in either at 4pm or 9pm and broadcasting until late, when online shoppers are most active. There are 12 broadcasting studios, all in different themes.

Some resemble a girly apartment or living room; others are furnished with vanity sets, or decorated like an upmarket wine bar.

“Despite the glamour, this is a very brutal business that drains every bit of energy out of you. It’s demanding and unforgiving, to say the least. The best years of a KOL’s career are in their early 20s. Just like a flash in the pan, their career lasts only a few years and after that they are out,” says Ai.

During their best years, they must amass as much recognition as possible in order to use their success to move into another sector.

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As customers demand more transparency and authenticity in their shopping experience, having a personality they admire adds a trust element to a sales pitch.

With the lines separating e-commerce, social media, and entertainment increasingly blurred, Ai believes live-streaming shopping in China will evolve into a mainstream retail mode.

“The success of a KOL is based on their personality, and how they come across depends on their power to pull in the audience and create a loyal following. This means that a KOL needs to create and maintain a unique connection with their followers,” Ai says.

KOLs who sell products earn commission, taking a 20 per cent to 30 per cent cut on each item bought by their live-stream viewers. Those who focus on entertainment make their money from virtual gifts from adoring fans, which can be exchanged for cash.

Chinese KOL’s power is enhancing and going to be another channel accessing into China market. Through livestream and broadcast, it will enhance the brand exposure and build up brand building. In a long run, it could create word of mouth and generate more revenue.

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Source:how China’s live-streaming KOL stars are changing the face of business- South China Morning Post