News Apr 26

Chinese regulators propose sweeping measures for live marketing

In a country where media is censored, this live-streaming phenomenon brings out a bit of a contradiction – a proportion of the population is streaming live on the Internet, selling things; it needs some serious head-scratching to pull this off - and a lot of new rules

Chinese regulators propose sweeping measures for live e-marketing
An online saleswoman speaks to viewers in a live broadcast. File photo by AFP.

(ATF) As China tries out new technological innovations, it is letting ‘100 flowers bloom’ for a period, before selecting the flowers it wants, while the rest are canned. Nowhere is this better illustrated than in China’s live-streaming experiment over the past few years. 

The initial hope was to have millions of small to medium traders online hawking good nationwide thus boosting the domestic economy. But an investigation into government departments and laws were needed to bring ‘order’ to live-streaming. 

In a country where media is censored, this live-streaming phenomenon also brings out a bit of a contradiction – a proportion of the population are streaming live on the Internet, selling things. It needs some serious head-scratching to pull this off.

Though there were many firms in this race at the start, Baidu will launch the "Live Stars" Challenge in the near future, according to informed sources, and launch the "Millions of Anchors" plan. 

This challenge has set up recruitment audits, live-streaming qualifying, peak matchups and other links. While hunting the top star anchor of these live shopping events, it will also pass a series of support plans involving hundreds of millions of users, subsidies worth millions, and big cash incentives for the new generation of live broadcasts.

Besides other big players in the e-commerce sector, like Alibaba, Tencent and JD.com, three listed solo live broadcast platform firms are surviving – Tiange Interactive, Momo and YY.

There have been a few hiccups with the livestream roll-out, such as scams, bad language, lewd behaviour and other inappropriate activity, so recently seven departments – the State Internet Information Office, the ministries of Public Security, Commerce, Culture and Tourism, plus the State Administrations of Taxation, Market Regulation and Radio and Television – jointly issued "Administrative Measures for Webcast Marketing (Trial)" on the Cyberspace watchdog website www.cac.gov.cn.

This webcast marketing, or live-streaming, is an emerging Internet business model that has developed rapidly in recent years and helped promote employment, expanding domestic demand, boosting the economy, and fighting poverty.

At the same time, many problems have emerged – misconduct by live marketers (both in their words and deeds), with use of minors to make profits, poor performances by those responsible for platforms, false propaganda and data falsification, frequent use of counterfeit and inferior goods, and difficulty in proving that consumers' rights have been protected. But the public response has been strong, so there has been a need to promptly regulate these set-ups.

Important administrative components include the Cyber Security Law, the Electronic Commerce Law, the Advertising Law, the Anti-Unfair Competition Law, Regulations on the Ecological Governance of Network Information Content, and other regulatory documents are seen as essential for the oversight of the online market in a way that maintains legitimate rights and interests of the people, as well as promoting healthy and orderly development of this new business format, which appears to have great practical significance.

The new measures to regulate live-streaming combine current and long-term perspectives, with standardised management, and fully considering the development trend of webcast marketing, industry reality, and the various participating entities. The idea of comprehensive coverage and classified supervision is aimed at the "people, goods and field" in live marketing, and includes entities "before and behind the stage" and elements of "online and offline" in the scope of supervision. It seeks to clearly outline the rights and responsibilities of the participating entities, such as the live broadcast marketing platforms, live room operators, live marketers, and live broadcast marketing agencies, and further consolidate their responsibilities.

What requirements is the government proposing?

The "measures" clarify that live marketing platforms should improve their accounts with registration and cancellation of live marketing functions, information security management, marketing behaviour norms, protection of minors, consumers' rights and personal information, management of networks and data security, plus other mechanisms.

The government wants platforms to carry out security assessments, perform filing procedures, obtain relevant administrative licenses, have the technical ability to maintain the security of live content, and formulate platform rules and conventions in accordance with laws and regulations, and require platforms to develop catalogues of live marketing products and services.

They want to authenticate and verify the real identity of operators of live broadcast rooms and live marketers, as well as strengthen the management of platforms, plus measures to control possible violations of high-risk marketing activities. They want a hierarchical management system and a blacklist system for operator accounts in live broadcast rooms, and to improve complaint and reporting mechanisms. The "measures" also detail requirements for platforms to assist consumers in safeguarding their rights and assist in paying taxes as per the law.

Precautions have been proposed, so that platform operators can take preventive measures such as arranging special personnel for real-time inspections of key live broadcast rooms with large numbers of fans and large transaction amounts, and extending the storage time of live broadcast content (to several years). They also want platforms to identify risks, and have control measures such as pop-up prompts, prominent signs, and function and traffic restrictions for behaviour seen as risky that may affect the physical and mental health of minors. They also want platforms to take measures such as blocking live broadcasts, closing accounts, blacklisting, and joint disciplinary actions against people who violate laws and regulations.

Live broadcast marketers and operators of live broadcast rooms should be at least 16 years old, and they are required to abide by laws and regulations relating to public order and good customs, and to promote products or services truthfully, accurately and comprehensively. They manage the advertising compliance related to live marketing activities, venues, interactive content, to verify information about product service providers and protect consumers.

Operators of live broadcast rooms, plus live marketers should sign a written agreement with live broadcast marketer service agencies to clarify information, review the quality of products, ensure that consumers' rights are protected, and supervise the fulfilment of these rights.

Consumer rights are a major concern, so the government wants live marketing platforms to promptly handle public complaints and reports on illegal information content and marketing behaviour. Consumers jump to other platforms to purchase goods or receive services through links in the live broadcast room, QR codes, etc. When a dispute arises, a live broadcast marketing platform must assist consumers to safeguard their rights and provide necessary evidence and other support. Operators and marketers must act in accordance with laws and regulations and not deliberately delay or refuse legitimate and reasonable requests made by consumers without justified reason.

The government has proposed improved working mechanisms such as information sharing, consultation and judgment, education and training, strengthening guidance via industry associations and chambers of commerce, and information sharing on live marketing entities that seriously violate regulations.

It also wants joint punishments in accordance with the law and provisions for civil, administrative and criminal legal responsibility. People who break the new rules and cause damage to others shall be subject to civil liability in accordance with the law. If a crime is committed, criminal liability must investigated in accordance with law; or relevant competent authorities such as Internet Information Technology shall deal with issues in accordance with relevant laws and regulations and their respective duties.

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China live-streaming online marketing government regulations regulatory clampdown