A Deep-Dive Into China’s KOL Market
Why China’s KOL market isn’t slowing down anytime soon
By Ashley Galina Dudarenok
China’s key opinion leader (KOL) market has been one of the fastest-growing and most durable economic phenomena in recent years. Ruhan Holding, a Chinese firm that specializes in KOL-driven ecommerce, found that the country’s influencers drove US$4 billion in sales in 2018.
China is also known for the outsized role that its influencers play in consumer behavior. According to CCTV, 83% of young consumers’ purchasing decisions are highly influenced by KOL recommendations, while 38% of consumers feel the same in the U.S. In the UK, the number is only 32%. Judging by the sheer number of potential followers in the world’s most populous country, it’s easy to see how powerful the KOL economy is compared to other countries.
For example, Huiyi Zhuanyong Xiaomajia, a comedy and pet blogger on Weibo (China’s answer to Twitter), has 41 million followers, and the average engagement (i.e., likes, shares, and comments) for one of his posts is around 10,000. He is considered a small- to medium-sized influencer in China. Let that sink in.
Li Jiaqi is the top live streaming blogger and cosmetics salesperson on Taobao with 18.5 million followers [as of February 2020]. He gets more than ten million views for his daily streams. Viya is also a Taobao live streaming seller who showcases items ranging from skincare to cereal. She has 15.3 million followers, and her regular live streams get more than 12 million views per stream. The two consistently sell tens or hundreds of millions of Renminbi worth of products.
To compare, Bill Gates has 48.9 million Twitter followers, Robert Downey Jr. has 42.6 million Instagram followers, and Lady Gaga has 39.4 million Instagram followers. These public figures are all internationally-known, whereas Chinese KOLs are only known within China and among a small number of Chinese expats.
The pace of digitization in the country means that its modern celebrities and influencers went straight to the web without skipping a beat and brought ecommerce with them. When we talk about China’s Internet economy, the role of KOLs can’t be ignored.
How KOLs disrupted retail
The standard retail cycle (i.e., demand to influencer content to purchases) has been upended to become influencer content followed by consumer demand, and then purchases.
The supply chain formed by KOL ecommerce allows for pre-ordering to eliminate excess stock. When it’s their own product line, influencers will work closely with manufacturers to make sure extra stock can be ordered if there’s demand. This chain eliminates intermediary retailers who were necessary to reach customers in the past.
KOLs who have product lines are also in the unique position of promoting products for competitors, putting many brands in the awkward position of having to rely on the competition to promote their product. New influencers or those who don’t have product lines can turn to another trend: MCNs.
Multi-channel networks (MCNs) are changing the game
MCNs are agencies that create core content for platforms and train professional KOLs. They are bringing a certain level of standardization and consolidation to what has become a broad and fragmented market.
More and more platforms are also launching their own internal MCN support programs. Xiaohongshu, or RED, announced its MCN plan in November 2019, stating its intention to create ten super KOL accounts with RMB 1 billion in backing.
KOLs–supported by vast amounts of traffic–share consumer demand and feedback with ecommerce platforms, suppliers, brands, and MCNs to form a supply chain that can quickly adapt and iterate.
What can we expect in the future?
Expansion and diversification
According to an iResearch survey, the number of online celebrities with more than 100,000 fans increased by 51% from 2017 to 2018. As of April 2018, the total number of Chinese KOL fans reached 588 million, up 25% from 2017 (iResearch).
With this expansion comes new types of content and new ways to consume it, such as using VR to enable customers to view a product from all angles before making a purchase. KOLs will also become more effective in targeting consumers with the use of data analysis and other tools.
Social responsibility is gaining importance
More and more influencers are using their enormous platforms to do good. Li Jiaqi did a special live stream on the eve of Chinese New Year; instead of selling, he asked viewers to make donations to Wuhan after the coronavirus outbreak, raising a total of RMB 71.4 million.
Key opinion consumers (KOCs) and private traffic
Brands know they can’t rely on independent KOLs for everything. Many brands are building in-house KOCs to review and promote new products and discounts, and manage customer relations. They openly work for the brands, which followers see as another way for companies to diversify their promotional efforts.
KOL brands will continue to excel
More and more influencers will work to build brand and product lines once they attain a certain level of popularity. This process is particularly easy for Chinese KOLs, given their proximity to the world’s largest manufacturing hubs and sophisticated supply chains.
Increased platform competition
Taobao’s dominant position in live streaming ecommerce may not last for long, and platform competition may soon replace MCN competition as the key to winning traffic. JD.com, Weipinhui, and Pinduoduo are all planning to enter the ecommerce live stream market. Even video apps, such as Douyin and Kuaishou, are filled with KOLs selling products during live streams.
Taobao occupies much of the mindshare in first and second-tier cities, so the new players will likely start from the sinking market (third- and fourth-tier cities and below) and then slowly occupy the first and second-tier cities.
Journey to the West
Several Chinese YouTube accounts have gained success in recent years. Li Ziqi showcases an idealized and cinematic portrayal of rural life in China, which has captivated viewers around the world. Her channel currently has around nine million subscribers and more than a billion views.
Another YouTube channel by a quirky blogger, who goes by Ms. Yeah in English, has garnered 8.3 million subscribers and almost two billion views for her odd hacks and unusual takes on office life in China. With domestic channels highly saturated and competitive, these KOLs are showing that going international on YouTube may be the way forward.
About the Author
Ashley is a renowned China marketing expert, entrepreneur, speaker, vlogger and bestselling author. In 2019, she had the honour of being recognized as a LinkedIn Top Voice in Marketing in 2019 and an Asia-Pacific Top 25 Innovator. She is the founder of two companies: China-focused social media agency Alarice and China digital marketing consultancy and training company ChoZan. The #1 YouTube business vlog about Chinese, consumers, social media and marketing is Ashley Talks and she has 3 Amazon bestsellers: Unlocking the World’s Largest E-Market, Digital China: Working with Bloggers, Influencers and KOLs and New Retail: Born in China Going Global. Ashley is a promoter of women in leadership and has created the self-development program FIRE. She’s a contributor to the SCMP, the Next Web, China Daily and her commentary has been featured in Forbes, The Wall Street Journal, CNBC, WIRED and more.
This story was originally published in Jumpstart Issue 29: Back to Basics as A Stream of Influence.