Get with the programme

Dong Mingzhu: her debut livestream was regarded as a disappointment

Liang Jianzhang is not a typical influencer. At 13, he programmed a computer to compose a five-character quatrain, a form of classical Chinese poetry. At 15, he earned early admission to the prestigious Fudan University in Shanghai. At 34, he took his company Ctrip, now Trip.com Group, public on Nasdaq. At 42, he was awarded a PhD in Economics from Stanford University. And now at 51, he has become one of China’s top influencers, selling holiday packages worth more than Rmb200 million ($28.3 million) in just seven broadcasts.

Liang’s sales pitches were entertaining and informative, according viewers. In trying to promote the city of Huzhou, where the blockbuster movie Crouching Tiger, Hidden Dragon was partly set, he donned a traditional hanfu robe (see WiC479) and styled his hair in the fashion of ancient times. When explaining what to do in Changzhou, a prefecture-level city in Jiangsu province, he impersonated artist Tang Bohu, known as one of the Four Masters of the Ming Dynasty.

“Livestreaming is congenial to peddling relatively low-priced items such as lipsticks and daily necessities, but not high-starred hotel bookings, which come with big budgets and scheduling risks,” Liang acknowledged. “To change the rules of the game, we are giving discounts of as much as 60% off, and significantly extending the reservation period.”

Trip.com is one of many companies that are jumping onto the livestreaming bandwagon with gusto (for our first mention of the phenomenon see WiC448; also see this week’s “Entertainment”) in a bid to reboot sales. According to the country’s Ministry of Commerce, the number of livestreaming sessions (a combination of basic entertainment and heavy selling of online goods) topped four million in the first quarter. The fad has even encouraged the chief executives and chairpersons of prominent companies to try their hand as hosts. Liang Linhe, president of Sany Heavy Industry, a Changsha-based manufacturer of construction equipment, sold 186 heavy trucks for $50 million livestraming on Douyin in March. Fosun chairman Guo Guangchang hawked a Rmb28,800 Lanvin pencil bag in just five minutes during another live broadcast last month (see WiC400 on the Shanghai-based conglomerate’s acquisition of the French luxury brand).

Gree’s CEO Dong Mingzhu was the latest to be recruited for a spot in front of the cameras. The anticipation was for a profitable session – after all, she started her career as a hugely successful sales rep (see WiC65). But her debut show on Douyin on April 24 fell spectacularly flat. Attracting a viewership of 4.13 million, Dong only managed to make Rmb223,500 of sales. The best-selling products were power banks for electronic gadgets, priced at Rmb139 each, and a new model of air purifier that Gree has developed in response to the pandemic (see WiC492). The rest was pretty much a flop. Of the 38 products that Dong tried to sell, most recorded single-digit or zero sales.

Her performance was considered inferior even to Luo Yonghao, a smartphone entrepreneur turned livestreaming host who got mixed reviews for his sales skills (see WiC490). On the same day as Dong made her debut, Luo was back in action selling a wide variety of goods including snacks, audio systems and electronic goods. His efforts brought in Rmb31.2 million of business, 14 times Dong’s haul at Gree.

What’s brutal about these broadcasts is that consumers are more than happy to critique the performances of some of China’s most successful businesspeople. In Dong’s case she was widely faulted for being too uptight on camera and having little interaction with the audience, which clashed with the livestreaming style popularised by celebrity mega-hosts such as Li Jiaqi and Viya (see WiC448).

Her hour-long session was also interrupted numerous times by technical glitches. Each time there was a disruption, the viewership dived. “Is Gree headquarters using a 3G network?” a netizen teased.

Dong’s biggest mistake, according to iFeng, was failing to offer competitive prices for her goods. A lot of the merchandise is typically sold at deep discounts during live streams as a form of promotion, but Dong didn’t do the same on on her show. In fact, the prices on some of the products were soon being exposed as more expensive than the same goods on e-commerce sites.

Losing over Rmb30 billion in sales since January, the Zhuhai-based company is expecting declines in net profit of about three quarters in the first three months, following a nearly 6% drop in full-year earnings for 2019. Dong made clear in an interview with state broadcaster CCTV in April that bricks-and-mortar stores would continue to be the mainstay of her distribution strategy. But Gree has been upping its investments in online marketing since the beginning of 2019 and it established a dedicated e-commerce unit last September.

The focus on online sales has intensified since rival Midea Group reported a higher share of air-conditioner sales – Gree’s core business – from online channels in the first half of last year.

“In Gree’s business model dealerships have played a huge role. These dealers are now becoming the main hindrance to the company’s digital transformation,” Liu Buchen, an analyst in the white goods sector, told Huxiu, an online news outlet.

We also reported last March that Dong had even tried to mandate that her employees set up their own e-commerce stores selling Gree’s goods (see WiC445). But after her own lacklustre livestreaming, more than a few of Dong’s staff will be thinking that they could do a better job at broadcasting Gree’s goods.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.