BEIJING - The fall of one of China’s top influencers has triggered a clean-up of an industry that has gained attention for unethical profit-making behaviour.
Mr Zhang Qingyang, better known as Crazy Brother Yang on Douyin, was 2024’s fourth-ranked internet celebrity in China by net income, taking in nearly 1.9 billion yuan (S$355 million) that year.
But in September 2024, the influencer network company he co-founded, Three Sheep, got into trouble when the firm’s live-streaming hosts hawked mooncakes supposedly made in Hong Kong under the Meicheng brand.
Sold at 169 yuan for three boxes, the snacks were described as “high-end” and said to be sold at as much as 700 yuan a box in Hong Kong. But there were in fact no brick-and-mortar shops selling Meicheng mooncakes there, and these were actually made in mainland China.
On Sept 26, Three Sheep was fined 68.9 million yuan for false advertising, and ordered to suspend its business. Amid the public outcry, the company apologised and said it would do a “comprehensive internal rectification”, and Mr Zhang has not reappeared online since.
The fallout has continued.
Now, the authorities are targeting companies like Three Sheep, known as multichannel networks (MCNs), which help online content creators to plan content as well as market their channels, in exchange for a cut of their profits.
Draft regulations issued on Jan 10 by China’s internet regulator, the Cyberspace Administration, stated that MCNs must not help their contracted online accounts spread rumours, fabricate data such as views, “hype up” topics to mislead the public, among other things. The public can submit feedback on the draft until Feb 9.
Influencers will also be required to publicly declare which MCN companies they work with – a move meant to increase transparency for consumers, as live-streamers often sell products from their MCNs. Social media platforms must establish reporting channels for complaints about MCNs and handle these concerns “in a timely manner”.
While MCNs have been targeted in previous regulations, the latest draft rules were the first to be dedicated to the regulation of such companies as they have become more powerful, noted Associate Professor Jian Xu from Deakin University in Australia.
There are an estimated 28,000 MCNs in China in 2021, up from just 160 in 2015.
Among the most successful of these companies was Three Sheep, established in 2021. Their ...