Shanghai’s Covid-19 lockdown delivers another heavy blow to live-streamers, devastating ads and sales – Yahoo Finance

The six-week-long lockdown in Shanghai, along with a string of lockdowns in other cities in the surrounding Yangtze River Delta region, has dealt another heavy blow to the region’s once-thriving live-streaming industry after being hit hard by a regulatory crackdown last year.

Having been stuck at her Shanghai flat for 40 days straight, 27-year-old professional live-streamer Zhu Cancan said she has mostly given up the job for now.

Zhu still sets a morning alarm, but not to get ready for work. She wakes up early to get a jump on buying fresh food on grocery apps. Her more relaxed schedule now usually consists of playing the Tencent Holdings mobile game Honour of Kings in the morning and an online version of Mahjong with friends in the afternoon. In the evening, she binge watches TV dramas.

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“It’s basically impossible for you to sell products via live-streaming under the Shanghai lockdown. Express delivery systems are not working, so I’m unable to receive products that I planned to sell. Teammates are also being locked in other places,” Zhu said. “Brands are also being hit hard, and many have already cut their budgets.”

“If you could make 200,000 yuan [US$30,000] a month in the past, now it’s around 40,000, or zero,” she added. Zhu still gets some income by posting advertisements on her social media accounts such as Weibo, the Chinese microblogging platform where she has 3.4 million followers.

Zhu, from Anhui province, is one of hundreds of live-streamers whose life has been turned upside down by the Shanghai lockdown, amid disruptions to logistics flows and weakened demand in a slowing economy. In March, total retail sales of consumer goods in China declined 3.5 per cent year on year, compared with the 34.2 per cent jump last year amid a recovery from the 2020 downturn, according to official government data.

Private express delivery systems, which is how goods purchased online are typically sent, have been severely disrupted by pandemic control measures. Many online merchants now keep their buyers apprised of changing conditions by sending them lists of cities and districts to which they are currently unable to ship products.

In a list shared by a bookstore on Taobao, 16 provinces – including eastern Jiangsu and Zhejiang and northern Heilongjiang – have been affected. Taobao is owned by Alibaba Group Holding, owner of the South China Morning Post.

Since Shanghai’s lockdown started on April 1, residents have only been able to obtain essentials through group buying and government supplies. E-commerce purchases for unessential items like books and coffee are unlikely to be delivered.

Zhu said a friend in Hangzhou now only gets about two ads per month for her live-streaming channel, where she previously had ads nearly every day.

“Not only are influencers in Shanghai affected, the situation is also not good for those living outside Shanghai,” Zhu said. “Brands are in Shanghai, consumption power is in Shanghai, advertising companies are in Shanghai. You just can’t do your work efficiently.”

Zheng Liuping, a live-streamer living in Yiwu, Zhejiang province, has struggled to keep his business operating as usual during the outbreak. Yiwu, another city with a vibrant live-streaming community, conducted mass testing last month after reporting a few local Covid-19 cases.

“Many consumers cancelled their orders as they are unable to receive the products,” Zheng said. “Although we get a similar amount of traffic, the orders we receive are less than before.”

Deng Jinling, another Yiwu resident, uses live-streaming companies to help her sell thermoses domestically. However, deliveries are often postponed or cancelled, she said.

“You may see place A locked down, and place B operating normally. Later, place A may open up, but place B is locked down. We are stuck in a cycle,” she said.

Early in the pandemic, China’s live-streaming industry benefited from changing consumer habits as people were forced to do more of their shopping online while confined at home. In 2020, the scale of China’s live-streaming e-commerce industry exceeded 1.2 trillion yuan, nearly triple the size of the previous year. The industry is projected to exceed 4.9 trillion yuan in 2023, according to an iResearch report published last September.

The industry has also been targeted by regulators. In one of the more high-profile cases, tax authorities fined live-streaming queen Viya 1.3 billion yuan in December for tax evasion. Her official Weibo account and her Taobao shop later disappeared from the internet.

Under rules jointly issued in March by the Cyberspace Administration of China, State Taxation Administration, and State Administration for Market Regulation, platforms are required to provide reports on their live-streamers twice a year, which must include details such as personal identification numbers, bank account information and income.

Huang Wei, also known as Viya, speaks during the Boao Forum for Asia (BFA) in southern Hainan province on April 20, 2021. Photo: AFP alt=Huang Wei, also known as Viya, speaks during the Boao Forum for Asia (BFA) in southern Hainan province on April 20, 2021. Photo: AFP>

The situation in the live-streaming e-commerce sector shows a wider disruption of the e-commerce industry, according to Chen Tao, an e-commerce analyst at Analysys. “The essence is the disruption of logistics flows, which affect the normal operations of the live-streaming e-commerce sector,” he said.

Chen said he expects the industry will recover once the outbreak is under control.

Carrie Zhang, a Shanghai-based partner at Bain & Company, also sees potential benefits to the industry in the long run. Despite the “short-term disturbance”, new habits have emerged among younger consumers, such as those in Generation Z, who often use live streaming and other internet videos to get information on brands.

“The industry has experienced hyper growth [over 100 per cent year on year] in the past few years,” Zhang said, “With major players already achieving sizeable gross merchandise value in 2021, the growth rate is expected to come down this year. However, [live streaming] is probably still going to be the fastest-growing e-commerce format in China.”

For now, though, Zhu has been using this period to take a break from the constant grind of the industry, as she has been able to live on her savings. It has also helped stem the tide of constant notifications.

“Before the outbreak, I saw many new friend requests on WeChat every day when I woke up,” she said. “But now no one adds me.”

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

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Shanghai’s Covid-19 lockdown delivers another heavy blow to live-streamers, devastating ads and sales – Yahoo Finance

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