Sellers’ market

Wu Jinyan: stars in popular new drama about livestreaming

Despite his spotty entrepreneurial track record, Luo Yonghao, the man behind a slew of defunct businesses ranging from handset maker Smartisan to a venture that sells synthetic shark skin, seems to have finally struck gold.

Last week, Shanghai-listed power cable maker Sunway announced plans to buy into Xingkong Yewang, an e-commerce livestreaming company controlled by Luo, which was only set up in April this year following Luo’s livestreaming debut (see WiC490).

Sunway will pay at most Rmb589 million ($89 million) in cash and shares for a 40.3% stake in Xingkong Yewang from existing shareholders including Luo’s brother, who holds the shares on behalf of his sibling.

Luo Yonghao is listed by regulators as a “discredited individual” for failing to meet debt obligations arising from the collapse of Smartisan in 2019. The failed venture had mired him in Rmb600 million worth of debt, Luo told a TV reality show earlier this year, and he plans to repay it entirely before the end of the year.

Luo’s pledge will become much more credible following the Sunway deal as it values Luo’s seven month-old firm at nearly Rmb1.5 billion.

Onlookers are sceptical of the company’s prospects. “Up until September this year, there was only one host under Xingkong Yewang, that is, Luo Yonghao. Since then it has successfully signed singer Qi Wei and comedian Li Dan and others. But even Sunway acknowledges that the business is highly dependent on Luo,” commented news portal Jiemian. “But as we can see from Ruhnn, when its biggest livestreamer Zhang Dayi was embroiled in a scandal last year it directly impacted the company performance, leading to a net loss of Rmb56.6 million as of the second quarter of 2020.” (For more on Ruhnn and Zhang see issues 448, 471 and 493.)

But no matter, some investors were still excited to get a piece of the e-commerce livestreaming pie. After the deal was announced, Sunway saw its share price jump by the 10% daily limit for three consecutive days, reaching an all-time high.

In another sign that livestreaming has become a mainstay of the consumer sector, a new TV drama about the lives of livestreamers has become the most watched show since it started streaming on iQiyi early this month. Something Just Like This follows Duan Ran (played by heartthrob Huang Jingyu), the son of a retailing tycoon who, without knowing much about the workings of the industry, acquires a livestreaming company and becomes the boss of video host Qian Xixi (actress Wu Jinyan). Duan quickly realises that he’s in over his head and solicits Qian’s help to navigate the industry.

So far, reviews for the show have been largely positive. “What attracts me to the show is the topic about e-commerce livestreaming, which is undeniably a big trend. After the pandemic, too, there has been a shortage of new topics for TV so the show feels fresh. Moreover, the lively performance between the two leads is also very cute. But I hope that the show will include more scenes about e-commerce livestreaming in the later episodes,” one critic wrote on Douban.

Producers are also determined to make e-commerce livestreaming more than an exotic backdrop for the drama. Screenwriters reportedly interviewed a number professional livestreamers to better understand their challenges and what goes on behind the scenes – as well as the clever sales tactics. For instance, at the beginning of her livestream, Qian first engages with her followers by modelling a denim jacket while telling them that it isn’t for sale because of “very limited inventory”. She then teases her buyers later in the livestream by saying because they love the jacket so much she will try to see how many of them she can procure but “once the link goes live, make sure you buy it before it is sold out!”

The series comes at a time when livestreamers again contributed the lion’s share of sales to this year’s Singles’ Day (which takes place annually on November 11). Viya, a celebrity on Taobao Live, singlehandedly sold Rmb16.5 billion worth of products. Rival Li Jiaqi, dubbed the ‘king of lipsticks’, offloaded Rmb10.6 billion (see WiC518).

But behind the money and glamour is a cut-throat industry that is replete with sweat and tears, reported news portal Blue Whale Media in a recent industry expose.

“I see a lot of hosts who break down under pressure,” a stage designer confided. “An e-commerce livestreaming team costs hundreds of thousands of yuan or more a day. Everyone in the room is counting on the host for their livelihood so you can imagine the pressure they endure. If you ask me to bear that kind of pressure daily, I couldn’t do it.”

Another former livestreamer concurred: “Nobody struck gold by luck alone. While we all admire Li Jiaqi and Viya more with each passing day, we have no idea how hard they have worked to get to where they are. After the pandemic, the competition became even more intense. It is not uncommon for livestreamers to break down and suffer from insomnia; many have depression. Yes, the industry has a lot of opportunities, but even if you are given the opportunity, can you persist?”

Luo’s latest deal is sure to attract others to follow his new career path. Nevertheless, the Shanghai Stock Exchange has demanded that Sunway clarify the potential risks it faces when it comes to buying into a firm which has nothing to do with its core business of cable manufacturing.

Beijing Business Today, meanwhile, warned Sunway’s shareholders that they are essentially buying into the personal celebrity of Luo, who has more than 16 million followers on weibo.

“As an asset-light company that was founded less than a year ago, Xingkong Yewang is too impatient to go public. But of course, for its shareholders [such as Luo], that’s good news: to take such a short amount of time to sell to a listed company at such a high premium. However, retail investors may face a great deal of risk,” the newspaper says.

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