No cheating on short video platform

Since the 2010s, the short video industry has boomed globally. According to the 47th “Statistical Report on the Development of China’s Internet” released by the China Internet Network Information Center (CNNIC, 2021), as of December 2020, the number of Chinese netizens reached 989 million, of which the number of short video users was 873 million. From a global perspective, Tiktok, becoming one of the most famous short video platforms in 141 of 155 countries, comes in 39 languages now. TikTok becomes the only app besides Facebook to reach the 3 billion downloads milestone (Brian, 2022). The rise of the short video industry is inseparable from the millions of creators who post videos on the platform. According to a report from SignalFire, a venture capital company, ten million people around the globe consider themselves creators (Taylor, 2021). Influencers created a $10 billion marketing industry in 2020(Haenlein et al, 2020). The income of these influencers mainly comes from the likes they gain from the users, advertisement payments from brands, and profits from the sales of products to their followers. Such a revenue model makes some influencers choose to sacrifice the benefit of their followers. They try to earn more profit by deceiving the consumers. In China, the government tries to solve this problem by asking the platforms to have supervision of the influencers. However, this method fails for the reason that the short video platform lacks the power to constrain the influencers because of the deep profit connections between them. In this essay, I am going to argue that the short video platform in China should learn from the case in other countries to increase the power of supervision on influencers by decreasing the number of oligopoly influencers on the platform and creating Counterfeit Crimes Units within the company, to avoid influencer taking advantage from selling fake products.

In order to promote the healthy development of China’s e-commerce economy, the People’s Republic of China promulgated the E-commerce Law to regulate the market order. The E-commerce Law of China (2018) requires short video platforms to supervise influencers as well as bear joint and several liabilities with the influencers. However, the practice of requiring platforms to supervise their influencers didn’t work efficiently. For example, Xinba, an influencer who had 70 million followers on one of the most popular short video platforms Kuaishou and sold products worth 125 million yuan in the summer of 2020, was found selling fake bird’s nests, an expensive Chinese delicacy, to his followers (Qu and Zhang, 2018). The local Market Supervision Bureau fined Xinba’s company 900,000 Chinese yuan. However, Kuaishou’s punishment for Xinba’s behavior of selling fake products is only to block his platform account for 60 days (Deng, 2021). Xinba knelt to apologize to his followers and paid a good effort to recover his image during the blocking days. After a brief hiatus, he announced his return and continued his sales on the platform. In the first sales event after his return, the value of the goods he sold exceeded 2 billion yuan. In addition, his followers exceeded 80 million, about 15 percent higher than before (China Marketing Insights, 2021). Compared with the sales of goods and the number of fans before the Xinba scandal was revealed, we can see that the existing punishment did not bring him a great negative impact. He is still active on short video platforms in China and is able to profit from selling products to followers regardless of the quality of his promoting product.

Kuaishou companies took little measurement on punishing Xinba’s illegal behavior because the company has lots of common interests with oligopoly influencers like Xinba. In other words, the closely related profit between the platform and oligopoly influencers is the incentive of companies’ behaviors like taking little action on punishing bad actors. According to Kuaishou’s 2020 annual report, Kuaishou’s total annual revenue is RMB 58.8 billion, of which selling products to users accounts for 56.5%. Moreover, the value of products sold by influencers who have a large number of followers accounts for the majority of the total sales transactions on the platform. For example, influencer Xinba and his family accounted for nearly a third of the platform’s gross merchandise transactions in 2019. For the Kuaishou platform, sanctioning Xinba’s counterfeiting will have a great impact on the platform’s interests.

Influencers like Xinba have the ability to go against the platform comes from the fact that they build strong emotional connections with their followers, which their followers can’t get elsewhere. According to a report by Deng Guoji (2021), an associate professor at the School of Sociology at Nanjing University in China, 74.9 percent of Kuaishou users are younger than 25 years old. About 90 percent of them have not attended college, are unemployed, or engage in manual labor. These people lack the right to speak in society and are eager to get attention from society. Unlike celebrities in the traditional sense, who will still have a sense of distance from their fans no matter how easy-going they are, influencers on short video platforms dedicate to building a strong emotional connection with their followers. For instance, Xinba promotes himself as the “son of peasant”. He publicized that he dared to challenge capital to gain the lowest price of products for his followers, though it is hard to confirm that this is not the skill he used to sell more products. From Xinba’s short video account, followers feel his respect for followers and consider themselves family or friends. The emotional bond that audiences form with influencers has a positive effect on the followers’ purchases (Hwang and Zhang, 2018). Out of trust in family and friends, followers of Xinba are willing to buy products from him. Also, with this kind of psychological connection, even though Xinba’s influencers were deceived by him, they forgive him easily because of his apology and choose to keep supporting him. By utilizing the emotional need of the followers, influencers like Xinba gained lots of loyal followers and earned a lot of profit for the platform. The loyal followers help enforce the profit connection between short video platforms and the influencers.

Creators’ influence on followers is not limited to China. According to a report, influencers are considered trusted opinion leaders, their recommendations are considered more trustworthy than traditional forms of advertising (Driel and Dumitrica, 2020). The promotion or selling of products on short video platforms increases people’s willingness to shop online. 67% of the TikTok users say that they are inspired to shop even though they are not looking to do so (TikTok for Business, 2022). Moreover, “63% of consumers agree that they prefer to trust the word from a friend, a relative, or an influencer, instead of trusting the advice that comes directly from a brand (Wilhelm, 2021).

However, situations like cheated followers on short video platforms happened globally as well. For instance, in 2020, Amazon sued two influencers Fitzpatrick and Kelly-Krejci for selling counterfeit goods on TikTok (Palmer, 2020). Fitzpatrick and Kelly-Krejci bought counterfeit wallets, and bags, which were falsely labeled as luxury goods from brands like Gucci. They promoted these fake products on short-video platforms by posting photos and videos and guiding consumers to use “hidden links” to buy products instead of official channels. In this case, followers received fake products instead of regular products. After the scandal was exposed, Kelly Fitzpatrick and Kelly-Krejci were forbidden from selling and were banned from promoting, or advertising products that already existed on Amazon (Palmer, 2020). Their career as influencers was deeply influenced by the punishment. Also, as a lively example, the consequence of Fitzpatrick and Kelly-Krejci sent a strong message to people who would be bad actors that they will be fully accountable for what they did. A better platform environment was contributed in this case.

Kuaishou companies can learn from the success of punishing Fitzpatrick and Sabrina Kelly-Krejci’s actions. There is a small profit connection between Amazon, TikTok, and the influencers. The influencers are not strong enough to influence a large portion of the profit of the platform. In this case, the platform does not need to make a choice between the benefit of the company and the benefit of the consumers. The platform is powerful enough to supervise the behavior of influencers and take action to punish them after finding their false behavior. In the short term, it may be hard for the platform to manage the behaviors of millions of followers who have deep emotional connections with the influencers. Working on increasing the power of constraint on influencers will be a good way to shape a better environment in the short video industry.

Hence, for Kuaishou Company in China, it is necessary for the company to adjust its relationship with the influencers. In Kuaishou Company now, the personal behavior of a few oligopoly influencers like Xinba has the ability to affect the operation and interests of the platform. Kuaishou can work on cultivating other influencers who can attract fans like Xinba. For short video platforms, having 10 influencers with 1 million followers each is better than having a single influencer who has 10 million influencers. The development and popularity of new influencers can bring benefits to the company, freeing the company from relying on a very small number of influencers, and weakening the impact of oligopoly influencers on the platform. Numbers of likes and followers make the influencers visible to the platform and brands and help them earn money. After reducing the impact of influencers who have a large number of followers on companies’ profits, the company’s ability to regulate and control the influencer’s behaviors has been strengthened.

Moreover, short video platforms like Kuaishou can launch Counterfeit Crimes Units like Amazon, a team dedicated to protecting the benefit of the brand and followers to hold bad actors accountable by working through the court system and in partnership with law enforcement, for better supervision. The feedback from customers shows that the creation of the Counterfeit Crimes Units actually works. With this system, only less than 0.01% of goods received counterfeit complaints from consumers on Amazon (BusinessWire, 2019). Bad actors’ careers as influencers will be negatively impacted because of the punishment from lawsuits. In this case, the benefit of both platform and followers will be protected.

In conclusion, current influencers can take advantage of selling counterfeit products because of the common interest between short video platforms and influencers, as well as the strong emotional connection between influencers and followers, which is hard to completely change in a short term. Short video platforms in China can solve this problem by learning from amazon’s case. They can increase their power of supervision by decreasing the impact of oligopoly influencers on the companies’ profit and by creating Counterfeit Crimes Units to hold bad influencers’ behavior accountable.

Work Cited

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