Zhao Yuanyuan was best known as the man behind the launch of Taobao Live. So when he abruptly left his position as the head of Alibaba’s e-commerce livestreaming platform in March, the industry was shocked, especially as his departure came when livestreaming e-commerce sales were starting to surge during the pandemic.
Last week, 21CN Business Herald reported that Zhao was fired for corruption. Based on documents leaked to the press, the allegation is that he exploited his position for personal benefit, accepting gifts and entertainment.
Zhao’s departure came at roughly the same time that Jiang Fan, who had previously been tipped as a potential successor to Zhang Yong as CEO of the Alibaba Group, was demoted for “improper behaviour”. Jiang is alleged to have had an affair with Zhang Dayi, one of the best known livestreamers on Taobao Live (see WiC493). He was subsequently demoted and removed from the internet giant’s core partnership of 37 people, which is Alibaba’s decisionmaking body.
The bigger picture is that e-commerce livestreaming shows little sign of slowing and contributed more than a third of China’s e-commerce sales in March. That spike in sales came courtesy of the lockdown in many cities, but there is still significant room for livestream sales to grow in more normal times, given it still only accounts for about 1% of retail sales in general.
Demand for the best of the livestreaming hosts has also surged in the first half of this year, according to employment website Lagou, with local governments also eyeing a piece of the growing pie. One of the most active is Guangzhou, the capital of Guangdong province, which has been styling itself as a hub for the sector, and offering incentives to companies and brands to set up there. These include personal rewards for the top performers: Huadu district in Guangzhou is promising Rmb500,000 in allowances towards buying a house in the area for stars that attract more than half a million followers online and generate annual sales of more than Rmb50 million ($7 million). Livestreaming businesses with annual turnovers of more than Rmb500 million can receive grants worth up to Rmb10 million if they locate there too.
As part of the campaign Guangzhou launched what it called the world’s first livestreaming festival. The three-day event last month featured upwards of 200,000 livestreams, showing a variety of goods in an effort to stimulate online sales.
“Guangzhou has a very rich supply chain: for example, there are many good bases, wholesale markets and brands,” plugged Viya, Taobao Live’s top livestreamer (see WiC474), adding that its professional logistics network is another key advantage for those that choose to locate there.
Guangzhou is not alone in trying to be the ‘livestreaming capital’. The China Daily reports that Shanghai just granted Li Jiaqi permanent resident status (he is another popular livestreamer; see WiC491). Other cities, including Hangzhou, Chengdu and Chongqing, are chasing the same sector and promising similar incentives. Hangzhou’s Yucheng district, for instance, also offers generous subsidies on housing for leading livestreamers.
“Viya and Li Jiaqi bring teams of over a hundred people, with annual revenues of Rmb1 billion to Rmb3 billion. Their gross merchandise value will exceed Rmb10 billion this year, if not more. So in many ways they already rival large listed companies. Behind them is a market that is so big that you can’t see it all,” Meow Finance, a financial blog, remarked.
“They are competing for talent, for the sector, and for the future of their cities,” Cai Zhonghan, professor at Beijing University of Architecture, told Huxiu, about the rival city plans to win over the best of the livestreaming talent.
Cai adds that the advent of the 5G era is going to make ‘new retail’ more important than ever and that the livestreaming platforms will play a part in that transformation. “The economic benefits of the e-commerce livestreaming industry are already very apparent. Look at Li Jiaqi and his team. The amount of sales they have generated already challenges traditional shopping malls. As a result, it is not surprising that the e-commerce livestreaming industry, with its low barriers to entry and high payoffs, has become a new battleground between cities,” says Cai.
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