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Media & Entertainment

Disappearance of China's online sales king is blow to Alibaba

Li Jiaqi is latest superstar livestreamer to go silent amid crackdown on sector

Top online sales host Li Jiaqi is known as China's "Lipstick King" for selling 15,000 tubes in five minutes on Alibaba's Taobao livestreaming platform.   © Getty Images

HONG KONG/SHANGHAI -- The abrupt disappearance of China's top online sales host from Alibaba's Taobao platform may only deal a short-term blow to the e-commerce group, but it highlights the risks of relying on a few celebrity influencers, analysts say.

Rumors are swirling around the fate of Li Jiaqi after his popular show on Alibaba-owned Taobao -- where he shifts a dizzying array of products to 64 million followers -- was abruptly cut on Friday. He cited technical issues but then failed to show up at an online sales session a few days later and has since gone off the radar.

Li's canceled program last week had featured an ice cream and cookie cake shaped like a tank, just a day before the anniversary of the Tiananmen crackdown in 1989, when military vehicles and troops poured into Beijing's biggest public square and killed pro-democracy protesters.

That prompted widespread suspicion that the 30-year-old Li had been sidelined by censors in mainland China, where any reference to the decades-old event is banned, especially in the days before its June 4 anniversary.

Known as the "Lipstick King" for selling 15,000 tubes in five minutes on Taobao, Li ranks at the top of China's sizzling livestreaming sales sector, which has surged in popularity in recent years as COVID-19 lockdowns kept millions of eager buyers at home.

His sudden disappearance could be a big hit for brands that contracted him to promote their products -- from Dior foundation and La Mer skin cream to domestic furniture and pet supply makers -- during the current "618 Festival" and "Singles' Day" in November.

The events are China's two-biggest shopping extravaganzas of the year, which together can account for more than half of a brand's annual sales.

"There will undoubtedly be some impact on Taobao too, but I believe that would be manageable," said Chen Tao, a senior analyst at consulting company Analysys. "We anticipate that the real amount of live sales on Taobao accounts for a small percentage -- around 10% -- of total sales on Alibaba's e-commerce platforms."

Still, Alibaba has bet on livestreaming as it grapples with slowing growth and mounting competition from rivals JD.com and Pinduoduo while livestreaming competitors, including the short video platforms Douyin and Kuaishou, also nip at its heels.

The e-commerce group, which recently reported its slowest quarterly growth since going public in 2014, has seen its market share slip from over 80% to less than 50% in the past seven years.

In March, both Alibaba's Taobao and Tmall recorded year-on-year declines in transaction volumes for the first time ever, with the pace reaching the low teens in April.

Livestreaming is driven by social media influencers' frantic offers of cheap deals, and Li was central to that blitz.

He shifted a whopping $1.9 billion in goods in just 24 hours to kick off Singles' Day in November, and once outsold Alibaba founder Jack Ma in a one-on-one selling competition.

Neither Alibaba nor Li's agency, Meione, responded to requests for comment on Li's situation, but his legion of fans expressed dismay on social media.

"I hope Li Jiaqi is able to restart livestreaming soon. If not, I would surf Taobao less often," one wrote.

Li is the latest among several major Chinese retail influencers to suffer a fall from grace in recent months.

Viya, a top influencer on Taobao Live known as the "queen of livestreaming," was pulled offline late last year and slapped with a record tax-evasion fine of 1.34 billion yuan ($200 million). 

Several other influencers were also hit with tax-evasion penalties and went offline as authorities cracked down on the sector to bolster a broader effort aimed at narrowing China's yawning rich-poor gap.

"It's another public relations crisis," said Hu Yuwan, associate director at the Shanghai-based research advisory company Daxue Consulting. "For merchants, the main role of livestreamers is to increase brand exposure, bring in more traffic and boost short-term sales. But they shouldn't be the only, or main, channel for sales." 

Together, Li and Viya accounted for an estimated 13% of the total transaction values on Alibaba's e-commerce platforms, way ahead of their nearest competitors.

"The reason Viya and Li Jiaqi were so influential was because Taobao needed role models to bring in a lot of influencers to its platform," said Zhang Yi, chief analyst at Guangzhou-based iiMedia Research. "So Taobao provides these top influencers with numerous promotions and opportunities to reach a wider audience."

Alibaba has been diverting some traffic to smaller influencers since last year, and that could open up an opportunity for new names to emerge in place of Li and Viya.

"If Taobao provides other influencers the same access, they may become more influential as well," Zhang said.

But some say it is unlikely that Li's career is over.

Like many Chinese born after Tiananmen, he may not have even been aware of the sensitivity of a tank-shaped dessert given the government's decadeslong effort to keep the bloody event secret, said a Beijing-based journalism professor, who asked not to be identified.

"From the censors' perspective, Li's streaming should have definitely been halted," he said. "But I believe it might restart in the future."

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