‘Double-edged sword’: Supplement firms need to be wary of China’s new livestreaming regulations
The China Advertising Association introduced the first-of-its-kind policy, named as “Internet Livestreaming Marketing Behaviour Standards” for implementation on July 1.
The goal is to stem unethical marketing activities such as making false product claims and fabricating sales volume.
According to Charles Diao, regulatory manager at US-China Health Products Association, the content of the policy is in fact nothing new, but a compilation of relevant regulations from existing laws.
These include the e-commerce laws, consumer rights protection laws, and advertising laws.
One of the biggest problems relating to livestreaming marketing, is the prevalence of ‘Shua Dan’ otherwise known as ‘brushing orders’.
In this case, companies pay a group of people to buy their products during the livestreaming sessions, giving the public the false idea that their products are highly sought after.
Diao believes that the introduction of the regulation is the first step towards more in-depth policies targeted at arresting unethical livestreaming activities.
“Regulations tend to come in place later than required. Just like the e-commerce rules, which only came into place after e-commerce activities have flourished, the rules for livestreaming marketing are coming in now because livestreaming is now becoming very popular,” he told NutraIngredients-Asia.
As such, although the current policy does not have binding powers, he foresees that companies which intend to rely on livestreaming in the long run will take the policy seriously.
Clinicians, a nutraceutical brand under New Zealand-based Douglas Pharmaceuticals, has been conducting livestreaming marketing to reach out to its consumers in China.
Livestreaming marketing is one of the key growth drivers for the company. In last year’s Double 11 shopping event, the firm generated NZD$800k (US$517k) from livestreaming alone.
For all its livestreaming sessions, the company makes it a point to pair up the live-streamers with state-certified nutritionists or ISF certified nutritionists.
However, the company foresees that with the policy introduced, it might be more difficult to engage the top-ranked live-streamers.
“This new policy will add a few challenges for us to approach the top ranked live streamers who are extra cautious,” Carlos Zhao, China regional manager told us.
This also means that top-ranked live streamers will prefer to work with companies of repute.
“However, we also see it as an advantage for us as it could be an entry barrier for others,” Zhao said.