Star livestreaming sales anchor Xin Youzhi, who named himself after Simba the lion king, was fined $138,000 for selling fake birds-nest food supplement products on leading short-video app Kuaishou.
Guangzhou Municipality Administration for Market Regulation late Wednesday revealed the investigation and punishment for Xin's recent livestreaming sales of counterfeit products.
The authority issued fines of $306,000 upon the counterfeit product manufacturer, Guangzhou Rongyu Trading Co.,Ltd, and fined Xin's company, Guangzhou Heyi E-commerce Co.,Ltd., $138,000 for "misleading advertising practices."
Meanwhile, Kuaishou said it will suspend Xin's account, which has over 71 million followers, for 60 days. Netizens criticized the punishment as not harsh enough.
Consumers commonly face similar issues as 37.3% of livestream purchasers said they have encountered problems such as counterfeits and exaggerated advertising, according to a survey conducted by China Consumers Association (CCA) this March.
Livestreaming e-commerce has taken the country by storm in recent years. During the first half of this year, China saw over 400,000 active live-streamers and over 10 million livestreaming marketing activities, according to a report by China Internet Network Information Center.
Born in a village in northeast Heilongjiang province, Xin often emphasizes that he is the "the son of a farmer," in aims to create a strong bond with his mostly rural livestreaming fans. The billionaire sales king of Kuaishou claimed to have donated $21 million to Wuhan and donated medical supplies to his hometown during the coronavirus early this year.
On Sept. 17 and Oct. 25, Xin held livestream sessions on his Kuaishou account, selling what he claimed was the Chinese specialty of edible birds nest made from the secretions of bird salivary glands.
As a type of expensive delicacy that some claim has high-nutrition and health properties, bird nest is commonly used in Chinese cuisine. The bird nest under the brand Mingzhi was sold at an unusually low price of $6 per unit via Xin's livestreaming platform. Xin generated as much as $2.3 million in sales of this single product Oct. 25.
Wang Hai, a renown blogger who claims to have been involved in exposing counterfeit goods for 25 years, said Nov. 19 that the Mingzhi bird nest product was "just made of sugar water." Wang revealed a laboratory report proving that it did not contain any proteins or amino acids, the main ingredient in the bird saliva, but only carbohydrates and sugar. Wang further said the product would only cost "no more than 1 yuan ($0.15) to make."
In response, Xin initially denied these claims, but one week later he posted a letter of apology on his Weibo account, offering to "recall all the bird nest products and refund nearly 62 million yuan to the consumers."
Aside from this bird nest products, Wang said several other products including horse-oil soap and anti-odor toothpaste Xin has promoted via livestreaming sales were also counterfeits. Authorities haven't verified Wang's claims.
Some live-streamers' traffic data, views and sales figures were also reportedly falsified. "Faking data can lead to excessively high return rates and infringe upon consumers' rights and interests," Chen Jian with the CCA told Xinhua News Agency. "In the long run, it will also negatively affect the platforms, streamers and even the entire industry."
China's top regulators recently rolled out a series of rules to reign in this hot business sector. Within one month, the Cyberspace Administration of China and the State Administration for Market Regulation issued regulations that ban livestreaming platforms from fabricating e-commerce data and also strengthen oversight over the marketing activities on e-commerce platforms.
