China is taking steps to regulate its booming livestream e-commerce market with the first set of rules for the sector to take effect on Wednesday.
Why it matters: With livestreamed e-commerce seeing a big upswing beginning last year, Chinese regulators are stepping up efforts to bring more order to the market.
- Consumers have accused livestream hosts of misleading advertising, endorsing products for a fee while claiming recommendations are an “opinion.”
- Increased scrutiny will change how livesteamers partner with brands and present products to consumers.
Details: The China Advertising Association (CAA) issued a notice on June 24 about rules to be implemented on July 1 which restricts false and misleading advertising on livestreams and requires real-name registration from both merchants and individual livestreamers.
- The notice ordered e-commerce livestreams to give “comprehensive, truthful, and accurate” descriptions of the product and services to guarantee the consumers’ right to know and to choose.
- The notice forbids livestreamers from using false advertising, vulgar content, and exaggeration to mislead consumers.
- Platforms that host livestream sessions should maintain self-censorship and support training for its hosts.
- CAA will publicly denounce parties in breach of the notice and request relevant authorities to investigate in cases where laws or regulations have been broken.
Context: China’s broadcasting regulator urged e-commerce platforms to tighten the reins in preparation of Singles Day last year, foreshadowing the market control mechanism.
- The move is in response to an episode involving livestream mega host Li Jiaqi, the “Lipstick King,” who has nearly 28 million followers on Taobao Live, during Singles’ Day promotion involving a purportedly nonstick skillet which burned an egg during his show.
- Among the exaggerated and misleading claims, another key opinion leader during a livestream claimed the skincare product she introduced contained an ingredient that won the “Nobel Prize for cosmetics.” The livestreamer apologized for the misinformation later.