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Business trends

When China's top influencers speak, consumers listen

Powerful 'Wang Hong' have huge impact on product sales and market trends

Some 20,000 Chinese influencers with over 1 million followers wield huge clout in the country's e-commerce scene.

GUANGZHOU -- Li Ziqi knows how to make a show of something as mundane as cooking. In online videos that feature an idyllic countryside, she delicately picks red peppers and listlessly dices them with a Chinese kitchen knife.

She is one of the most popular of China's more than 20,000 Wang Hong, internet celebrities that create trends and push products to Chinese consumers.

Many Chinese, traditionally skeptical of brands and companies, rely on these influencers to inform their choices everything from food to cosmetics to travel goods. And with China's e-commerce sector rapidly expanding, thousands of new talent agencies are popping up to market these digital superstars' appeal.

Li, who lives in a rural town in Sichuan Province, creates content mainly about food and country life, and broadcasts it to 20 million followers. Her texts and videos on Weibo, the largest microblogging website in China, are mostly about cooking and farming, and emphasize the allure of "slow living." She also has a food product brand in her own name.

"She has more presence about her than a movie or TV star," said one of who followers, a man working for an interior goods shop in Shanghai. "Every time, I can't wait for her next video."

Her Weibo account is linked to the e-commerce site for her food brand so that her followers can immediately buy products she promotes in her videos.

Many her products use ingredients from her home province of Sichuan, like red pepper seasoning with Chinese tea flavor. She works with various food makers on product promotion projects that focus on her brand's image, which has been carefully cultivated online.

Li Ziqi's social media postings feature her cooking and farming in China's countryside. (Screenshot from Li Ziqi's Weibo page)

High-powered influencers like Li play outsized roles in the Chinese consumer experience. There are an estimated 20,000 influencers in China with more than 1 million followers.

Many use not only Weibo, but also TikTok, the viral video app owned by Chinese social media giant ByteDance, and Taobao Live, the live streaming unit of e-commerce behemoth Alibaba Group.

The growing number of Wang Hong has created a new breed of talent agencies for internet celebrities, called multichannel networks (MCNs). Li has a deal with Hangzhou Weinian Technology, an MCN founded in 2013. In 2018, the company raised 80 million yuan ($11.4 million) from Sina, the operator of Weibo, and other investors.

Beijing-based Ividea Cultural is a leading Chinese MCN.

Founded in 2011, it went public five years later by listing on the National Equities Exchange and Quotations, an over-the-counter market also known as the New Third Board. It now has some 100 influencers on its roster, including many young mothers, such as Dong Wanle and An Xiaotao.

Ividea broadcasts advertisements for many hygiene and fashion products. The company racked up 84 million yuan in sales and posted a gross margin of 33% in 2018.

Chinese influencer Li Ziqi sells food products branded with her name on her Weibo page. (Screenshot of Li Ziqi's Weibo page)

Chinese MCNs differ somewhat from their counterparts in the U.S. and Japan, which mainly focus on supporting video production by YouTubers, offering technical assistance for filming and ideas for promotion videos.

In China, MCNs are involved in a wider range of operations, including developing new brands and products by capitalizing on the images and messages of specific influencers.

The number of Chinese MCNs has soared to about 6,800 from 980 in 2016, according to an estimate by 36Kr, a Chinese news and data website that mainly tracks startups. Nikkei has a minority stake in 36Kr.

But the industry is at risk of overheating. For the past three years the number of MCNs has been growing faster than the online streaming market. The field is crowded with small businesses, with only about 30% of MCNs earning 50 million yuan or more in annual sales.

Many smaller MCNs face a tough road ahead as more influencers switch to agencies in pursuit of reach and profit.

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