'Trust me, you need this': how China's live-streaming KOL stars are changing the face of business

Tucked away in the basement of an unremarkable commercial centre in downtown Guangzhou, a booming southern Chinese city, is an important "factory". It doesn't produce shoes or shirts, or anything you might expect; it churns out influential live-streaming celebrities.

Hifan Multi-Channel Network is only a few years old but already is one of the top five multimedia companies in the city. With only 40 members of staff, it has created a stable of about 100 live-streaming celebrities, or key opinion leaders (KOLs).

It is a driving force behind sourcing and producing the next generation of KOLs catering to China's appetite for live-streaming of "entertainmerce", a combination of entertainment and e-commerce.

Sales revenue in China's live-streaming market grew by 180 per cent in 2016 and was worth 21 billion yuan (US$3 billion), according to market research company iResearch. Content ranges from singing and dancing to shared insights and details of the daily lives of these mass-produced KOLs.

Since it exploded onto the online retail scene in 2016, live-stream shopping has opened a new channel to allow internet users to indulge in the instantaneous consumer lifestyle of "I see, I like, I buy".

Hifan's chief executive, Tiger Ai, says his company pulled in a total of about 30 million yuan (US$4.4 million) in sales in 2017 by using its own KOLs to sell products - mostly fashion and cosmetics.

The Guangzhou KOL factory has a hectic production schedule. Ai works 12 to 14 hours a day, while his KOLs normally do an eight-hour shift, clocking in either at 4pm or 9pm and broadcasting until late, when online shoppers are most active. There are 12 broadcasting studios, all in different themes.

KOLs hired by Hifan in Guangzhou broadcast online from one of the company’s studios. Photo: South China Morning Post 

Some resemble a girly apartment or living room; others are furnished with vanity sets, or decorated like an upmarket wine bar.

"Despite the glamour, this is a very brutal business that drains every bit of energy out of you. It's demanding and unforgiving, to say the least. The best years of a KOL's career are in their early 20s. Just like a flash in the pan, their career lasts only a few years and after that they are out," says Ai.

During their best years, they must amass as much recognition as possible in order to use their success to move into another sector.

As customers demand more transparency and authenticity in their shopping experience, having a personality they admire adds a trust element to a sales pitch.

With the lines separating e-commerce, social media, and entertainment increasingly blurred, Ai believes live-streaming shopping in China will evolve into a mainstream retail mode.

Hifan staff sort out goods and products delivered to its KOLs. Photo: South China Morning Post 

"The success of a KOL is based on their personality, and how they come across depends on their power to pull in the audience and create a loyal following. This means that a KOL needs to create and maintain a unique connection with their followers," Ai says.

There are two types of live-streamers: those who focus on sales and others dedicated to entertainment.

KOLs who sell products earn commission, taking a 20 per cent to 30 per cent cut on each item bought by their live-stream viewers. Those who focus on entertainment make their money from virtual gifts from adoring fans, which can be exchanged for cash.

Most KOLs take in between 20,000 and 40,000 yuan a month. They work regularly n the office, at home, or even in the great outdoors. Cici He, 22, is not your average live-stream celebrity, though. She hosts a show at an outdoor wholesale fashion market targeting mainly young people, and from monthly sales of a million yuan she earns 90,000 yuan to 100,000 yuan a month in commission.

Others do almost as well. Sucola Lin, a 20-year-old dancer who exploits his boyish image, has a fan base of 130,000 on Weibo, China's biggest microblogging website, and e-commerce giant Taobao, and can earn 60,000 yuan in a good month selling cosmetics to young men and women. He had extensive training, including dance and voice lessons, provided by Hifan.

Singer and chat host Yoyo Jiang performs live for her online fans. Photo: South China Morning Post 

Yoyo Jiang, 27, is a former teacher who aims to build a career selling her own brand of fashion online. She's hoping to expand her social network and, as an entertainment KOL, focuses on singing, dancing, and chatting with fans.

For 20-year-old Million Zhu it was an ambition to become an internet sensation - to make good money or set up future career possibilities - that got her into the business.

Ai says KOLs don't have the skills to become professional actors or singers and are aiming to raise their profiles to switch to another sector.

Photo: South China Morning Post 

"They may seem to be having fun at work, chatting with their fans or even singing karaoke with viewers, but it is a tough and competitive business that calls for some really demanding hours," he says.

Ai regards himself as a life coach. For most of the KOLs who are working for him, it is their first job. This makes him feel responsible to teach them the trade without them losing touch with their values.

Ai has more ambitious plans for the company and wants to team up with manufacturers to become a supplier to push Hifan's own fashion and other products.

"Live-streaming shopping has yet to reach a mature stage, which means there is plenty of room for expansion and further development," he says.

The idea behind it is that "shopping is entertainment and entertainment drives sales", which means a KOL's personality, style, and how they interact with customers are key to their success.

According to 2017 estimates by venture capital firm Kleiner Perkins, live broadcasts in China eclipsed mobile games, television, radio, videos and music as a source of revenue per hour.

The engagement between the host of the live-stream and viewers is super important. During a live-stream, viewers can have questions answered in the chat section, which is sometimes manned by office staff or the host.

"Fans like their idols to share their own insights, all of which are conducive to 'raising' the temperatures of an online shop to create a welcoming atmosphere enticing followers to spend their money. In other words, it's the ambassador-like service of KOLs that pushes the sales," Ai says.

"It is like injecting life into the products to make shopping an authentic, personal and exciting experience."

This article was first published in South China Morning Post