(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

HONG KONG - E-commerce’s thriving world of celebrity influencers is getting a horrifying new feed. "Queen of livestreaming" Viya, whose real name is Huang Wei, was fined $210 million by Chinese authorities for tax evasion and had her social media accounts shut. Investors wiped up to 12% off platform providers like Bilibili and Alibaba. The effect on the fast-growing $300 billion influencer market suggests that underestimates the risk.

Thirty-six-year-old Viya is the face of Chinese livestreaming and a household name. She had built a base of more than 100 million fans across her personal channels on Alibaba’s Taobao live, Bytedance’s Douyin, and Weibo. These have enabled her to sell some $30 billion-worth of goods annually from snacks to a rocket-launch service. Viya’s success underpins an industry that is projected to grow 60% a year and surpass $770 billion in market size by 2023, according to iResearch, a consulting firm.

Her accomplishments have not only inspired over 1.2 million Chinese “livestreamers” to join the influencer business by the end of 2020 but also helped with the rapid rise of companies like short-video app Kuaishou, which just raised $5 billion in a Hong Kong public offering in February. Revenue in livestreaming, which mainly comes from fans’ purchases of virtual gifts to show admiration for the hosts, accounted for 62% of Kuaishou’s bottom line last year.

Others are a bit less exposed. Bilibili, which specialises in longer-format video, sources about 30% of its revenue from value-added and other services that include live broadcasting. But its livestreaming platform has been an attractive feature to keep viewers engaged, glued to screens, and impulse-buying. And for e-commerce behemoth Alibaba, livestreaming is an important battle ground as it steps up efforts to attract brands and influencers. Viya is undoubtedly a heavyweight figure: On the premier livestream show of the company’s annual Singles' day festival, she sold 8 billion yuan ($1.26 billion) worth of goods on Taobao live, second only to “lipstick king” Li Jiaqi.

Officials from the tax bureau in Hangzhou city, where Viya’s business is based, said they had detected irregularities through “big data policing” and such efforts would be strengthened, adding Viya had failed to rectify after they repeatedly urged her to. State media has also weighed in by saying tax is an effective way to redistribute wealth fairly, echoing President Xi Jinping’s common prosperity drive. The Chinese livestreaming sector now has more targets on its back.

 

CONTEXT NEWS

- Internet celebrity Viya, whose real name is Huang Wei, was fined 1.34 billion yuan ($210 million) for tax offences in 2019 and 2020 including hiding personal income, according to a statement from the tax bureau in Hangzhou, a city in southern China, on Dec. 20.

- Alibaba’s U.S. shares were down 5.8% on Dec. 20 to $115 following the news. Video app Bilibili’s stock fell 11.6% to $44.

 

($1 = 6.3742 Chinese yuan renminbi)

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Antony Currie and Katrina Hamlin) ((For previous columns by the author, Reuters customers can click on CHEN/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe | yawen.chen@thomsonreuters.com; Reuters Messaging: yawen.chen.thomsonreuters.com@reuters.net))