Jake’s Take: The Li Jiaqi Livestreaming Fallout in China

What’s the state of China’s livestreaming sector after the latest Li Jiaqi scandal?

I shared my thoughts on this question with Nikkei Asia.

In case you missed it, last month China’s most popular livestreamer Li Jiaqi sparked controversy during a stream for Chinese beauty brand Florasis. After a viewer complained that a Florasis eyebrow pencil was too expensive, Li Jiaqi fired back questioning the work ethic of anyone who saw the product as expensive.

Li lost 1 million followers overnight, as many of his previously-loyal fans were outraged by his comments that they perceived as insensitive to the economic realities of ordinary people. (The livestream mega-star is almost certainly a multi-billionaire, although his wealth is not public information).

Florasis—an upstart brand that has been closely linked to Li—saw its sales plummet across multiple channels, according to the WPIC Marketing + Technologies data team.

The fate of Florasis highlights the risks of working with livestreaming mega-stars, as I explained to Cissy for the Nikkei piece. Moreover, these stars charge exorbitant fees and demand exclusive discounts, which can entirely erode profit margins. For these reasons, lower-scale livestream influencers and brand-produced livestreams have become more popular in recent years.

What about the impact for Alibaba?

As I told Cissy from Nikkei Asia, Li Jiaqi was an important partner for Taobao in growing livestreaming as a format, but his utility has decreased to the platform. Alibaba earns more revenue if brands use their ad budget on a range of smaller-scale live-streamers combined with spend on in-platform marketing tools, rather than channeling most of that budget into expensive engagement fees with Li Jiaqi. With Li Jiaqi losing fans, it will help Alibaba promote lower-level livestreamers on the platform, which is a more sustainable model.