In September, Three Sheep Group, a Chinese content provider for Internet platforms, was fined 68.94 million yuan ($9 million) for engaging in false advertising during its live-commerce sessions—where livestreaming and e-commerce are combined. Xin Youzhi, a host on the short-video platform Kuaishou, has been suspended by the platform several times for similar false advertising. Dong Yuhui, known for his bilingual livestreams on the East Buy e-commerce platform, recently severed ties with the company and is now reportedly selling potatoes online at inflated prices.

In light of these scandals, questions about the long-term sustainability of China's booming live-commerce industry have raised concerns among both industry insiders and the general public.

Cui Wei (ThePaper.cn): The appeal and credibility of livestreamers with large followings are on the decline. These influencers must eliminate harmful practices like creating false personas, relying on marketing gimmicks and even manipulating their fans' emotions. Instead, live-commerce should focus on improving the quality of products promoted on platforms and fine-tuning after-sales services. While there is still demand for live-commerce, as online traffic has already plateaued, the industry's competition will shift toward product quality and service excellence.

Li Mingtao (Oriental Outlook): The cost of advertising in live-commerce continues to rise, but user numbers remain stagnant. To keep the industry afloat, new sources of traffic are needed. Nowadays, more and more companies are venturing into short dramas and videos, while platforms like e-commerce giant Alibaba's Taobao are reallocating resources to stimulate consumption with engaging content. Short drama- and video-driven e-commerce is quietly emerging, and many industry insiders see this as the new trend to hop on.

Chen Bing (Economic Daily): Live-commerce accelerates the time it takes for products to reach consumers through real-time interaction. This immediacy reduces advertising and marketing costs, something that especially benefits small and medium-sized enterprises with limited budgets. By leveraging big data and algorithms, platforms can now deliver precise, targeted content to consumers, aligning supply with demand and supporting greater market diversity and precision.

However, the rapid growth of the live-commerce industry has also caused chaos. Some platforms and hosts or influencers, fixated on generating online traffic, have resorted to deceptive practices, including false advertising and fabricated consumer reviews.

Without being able to physically inspect products showcased during live-commerce events, consumers are at risk of purchasing items of poor quality or products that completely differ from their advertised appearance.

According to statistics from the State Administration for Market Regulation, complaints related to live-commerce have surged in recent years, increasing 47.1 times over the past five years. The main issues include "three-no" products, meaning items without the manufacturer's name, a production date, or a quality certificate. Additional problems involve incorrect goods and a lack of post-sales services.

In its early stages, live-commerce was able to generate huge profits for businesses at relatively low costs due to a rapidly expanding user base and limited competition. However, as more companies have entered the market, more problems have arisen, posing challenges to the industry's healthy and sustainable growth.

On a positive note, specialized laws—such as the E-Commerce Law and the Advertisement Law—are increasingly regulating live-commerce to better protect consumer rights to information and choice, and to prevent violation of consumer rights and interests caused by information asymmetry. Guaranteeing the healthy and sustainable development of the industry largely depends on a solid legal framework to guide and regulate it. 

Copyedited by Elsbeth van Paridon

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