A question that breaks the situation- How can live streaming, which has repeatedly been involved in public controversy, go far and far-

“Success comes with its challenges.” Since the rise of live-stream shopping in 2016, the industry is now facing a new wave of change after passing through what many describe as the “seven-year itch.” With diminishing traffic bonuses and increasingly fierce competition, the landscape is ripe for a major reshuffle.

On October 17, the Shanghai Municipal Cyberspace Administration hosted the third session of the “Clear and Bright e-Up! Enterprise Salon” in Jing’an District. This gathering focused on constructing a transparent live-stream shopping ecosystem and sought to explore effective paths for high-quality development in the live-stream economy.

One of the attendees, Professor Lao Guoling, Director of the E-Commerce Research Center at Shanghai University of Finance and Economics and an appointed researcher at the Institute of Modernization in China, emphasized the significance of collaborating to create a transparent ecosystem in live commerce, especially in today’s context.

**Question 1: Why is live-stream shopping facing so many setbacks?**

The live-stream shopping industry has shown steady growth in recent years. On October 11, the China National Institute of Metrology, along with various organizations, released the “Live-Stream E-Commerce Industry High-Quality Development Report (2023-2024)” in Shanghai. The report indicated that from 2019 to 2022, live-commerce penetration grew from 4.9% to 30.4%, with the 2023 figure soaring to 37.8%, a year-on-year increase of 24.3%.

As reported by the China Internet Network Information Center, by December 2023, the number of live-stream shopping users reached 597 million, making up 54.7% of internet users, an increase of 8.27 million compared to December 2022. On the supply side, live-streaming has become an essential sales channel, while on the demand side, consumers are increasingly open and rational about their shopping habits, solidifying its status as a mainstream consumption method.

Lao noted that the positive signals emerging from policies indicate that live commerce has transcended the confines of the screen. “It has a stimulating effect on the surrounding economy, providing flexible employment opportunities for many and helping some increase their income through live-stream sales.”

However, the sustained excitement in the business realm has come with increasing crises, as demonstrated by recent high-profile failures in the live-streaming sector. For instance, prominent hosts like “Crazy Little Yang” have faced penalties for false advertising, and “Sister Rain from Northeast” misrepresented cassava flour as sweet potato flour, events that have drawn significant public scrutiny.

Lao explained that from around 2020, due to unique circumstances, lead hosts bore the weight of consumer expectations. However, the increase in sales hasn’t paralleled an improvement in host quality. “As small hosts grow into larger ones, consumer expectations escalate, yet their skills and product quality haven’t kept pace. The disparity between expectations, much like the difference between shopping at a boutique versus a street vendor, becomes a source of controversy when issues arise.”

Moreover, intense price competition among hosts has led to significant discrepancies in product pricing across different streams, resulting in a troubling “involution” within the industry. This price-cutting not only shrinks profit margins for merchants but also traps consumers in a dilemma. “Some merchants compromise on product quality to cut costs, exacerbating consumer distrust in live commerce.”

**Question 2: How can we rebuild trust after failures?**

“Success comes with its challenges,” Lao acknowledged, citing indeed a crisis of trust among audiences due to the failures of top hosts. “With increased influence and a growing fan base, live-streamers must tread carefully and avoid crossing certain lines.”

From a regulatory standpoint, Lao noted that there are already established boundaries the industry must adhere to. “Platforms must provide training before employees take on roles to ensure they understand what is off-limits to avoid penalties.”

Building trust is a lengthy endeavor, and live commerce professionals must take careful steps to guarantee positive user experiences. However, trust can swiftly erode due to just a couple of incidents. “If an industry repeatedly faces failures, it can create an impression of chaos,” echoed Wei Yinghui, partner at Meiwan (Shanghai) Network Technology Co., Ltd. He cited the flashy years of televised shopping, suggesting current live-streamers should approach their roles with humility and learn from past mistakes to ensure sustainable development in the sector.

Besides the responsibility placed on hosts, companies and platforms must share accountability. Platforms should define governance norms, identifying what content should be promoted or restricted, including misleading personas and inappropriate behavior. Balancing commercial interests with mainstream values while prioritizing social responsibility is essential. When discrepancies arise, platforms should act promptly before relying on regulatory measures. Wei suggested the introduction of a tiered system for hosts, promoting excellence through a competitive model that leverages both leadership and community effects to steer the industry forward.

Similarly, Lao proposed a categorized management approach to enhance industry self-regulation and enforcement. “We need to actively seek out solutions to plug potential gaps in the future.”

On one hand, reinforcing industry self-discipline is critical. Corporations should prepare internal standards rather than over-rely on external regulation. Various industry associations, including those linked with e-commerce and MCNs, should enhance their self-regulation and mutual oversight. On the other hand, regulatory enforcement should act as the last line of defense to ensure a more transparent and orderly development of the live economy.

**Question 3: What direction should live-stream shopping take?**

Wei views the live commerce model as a reconstruction of traditional shopping traffic. Prior to e-commerce, consumers flocked to convenience stores, supermarkets, and shopping malls. Initially, there was skepticism regarding e-commerce—questions around product authenticity and payment security. However, over the past decade, trust in e-commerce has been built, shifting consumer behavior towards platforms like Taobao and JD.

“The emergence of live commerce represents yet another shift, moving from a model of ‘Traffic + Shelves’ to ‘Traffic + Content,’” he pointed out.

Wei stressed the crucial role of content in live commerce. As products proliferate, consumers face tough decisions. Therefore, live-stream content should focus on assisting consumers in making informed selections. “Notably, comedian Li Dan’s recent live-stream on Xiaohongshu effectively captured audience engagement through emotional storytelling, indirectly promoting products.”

Lao stated that live commerce has gradually evolved into a broader live economy, where content and products engage dynamically. “Consumers today desire insightful content marketing alongside their shopping experiences. For example, a host might recite poetry to cultivate atmosphere before introducing products, but ultimately must connect back to the sales aspect; it can’t solely be about performance.”

He clarified that while engaging content draws consumers, the fundamental value and quality of the products remain paramount. No amount of charm from a host can compensate for poor product quality over the long term.

“The future of live commerce will undoubtedly center around product quality, empowering new consumer behavior. Leading enterprises must set an example, driving the industry towards positive growth,” Lao predicted.

Wei added that the evolution from shelf-based e-commerce to content-driven e-commerce embodies a merger of “consumers finding products” and “products finding consumers.” “Both models will coexist in the future. Ultimately, e-commerce and live commerce still center around goods and services—especially in a market where products are largely similar. To thrive, live commerce must elevate its service quality, ensuring a sense of trust and security for users.”

**Question 4: How is Shanghai positioned to lead in live-stream shopping?**

As an international metropolis, Shanghai boasts significant potential and advantages in the live commerce arena. Currently, the city is actively taking steps to elevate the industry to new heights with strong resolve and action.

To propel the development of the live economy further and enhance its impact on consumption, trade, industry, and culture, multiple departments in Shanghai, including the Municipal Commission of Commerce and the Publicity Department, have jointly issued a “Three-Year Action Plan (2024-2026) for Promoting High-Quality Development of the Live Economy.”

Notably, this action plan is a new upgrade following the “Three-Year Action Plan (2021-2023) for Promoting High-Quality Development of Live E-Commerce” issued in April 2021. The updated plan aims for a scale three times larger, with a goal of reaching 600 billion yuan in live commerce retail sales, compared to the previous target of 200 billion yuan by 2023.

By 2026, the Shanghai Municipal Government plans to maintain its leading position in the live economy, enhance its empowering impact on industries, significantly improve the industry ecosystem, and ensure steady growth in live commerce scale. It aims to establish a robust collaborative ecosystem enriched with a variety of live commerce forms and a scientific structure while fostering a high standard of industry norms and regulatory frameworks, ultimately positioning Shanghai as a globally influential hub for the live economy.

The Shanghai Municipal Cyberspace Administration is actively taking on the responsibility of promoting careful yet inclusive regulation and strengthening industry self-regulation. They are also guiding live-stream platforms and MCNs in improving content monitoring and review capabilities as part of a campaign against misinformation and low-quality content.

Lao noted that Shanghai has unique advantages in building a clear live economy ecosystem. “A high-quality environment can significantly boost economic momentum. If companies can enhance their management practices, they will likely benefit from policy advantages and ride the wave of industry growth.”

Wei highlighted that as a key player in Shanghai’s live commerce scene, Meiwan has set stringent standards since 2019, establishing the industry’s first product selection and quality inspection team to ensure compliance on all broadcasted products. In 2020, Meiwan co-authored the first national group standard for live marketing service practices, followed by a more stringent set of enterprise standards in 2021. Additionally, Meiwan has also contributed to Shanghai’s first group standard for live-streaming language usage from 2022 to 2024.

In terms of corporate branding, a transparent live economy ecosystem can greatly enhance brand image. “For businesses aiming for long-term operations, their environment should resemble a healthy ecosystem with fish, plants, algae, and microorganisms thriving together,” Wei concluded. “A clear live ecosystem serves as a guiding force for dealing with challenges intelligently. Companies must avoid sacrificing long-term health for short-term profits, or risk encountering a barren ‘fish pond’ in just a few years.”