China celebrities like Lu Han and Papi Jiang make a lot of social media money

China celebrities like Lu Han and Papi Jiang make a lot of social media money

One factor behind the boom in the industry has likely been the increasing integration of online retail and social media on the mainland, giving rise to a more interactive form of online shopping.

“In China, the line between social media and e-commerce is much more blurred … On Chinese platforms, e-commerce is always one click away from content,” Angelito Tan, CEO of China-based RTG Consulting, told CNBC.

Unlike other social media platforms, such as Facebook and Instagram, some platforms used in China “explicitly exist to help users make purchase decisions,” Tan explained, citing Taobao and social e-commerce app Xiao Hong Shu as examples.

In a May report focused on the local retail sector, PWC noted that it was “almost impossible to distinguish” between the two areas today.

While China’s key opinion leaders — a phrase used by the marketing industry to refer to these social media celebrities — appear to have plenty in common with Youtubers and Instagram influencers in the U.S. and Europe, the way their followers relate to them is different.

Consumers in China often regard mass media with suspicion, but they are more trusting of social media personalities, essentially thinking of them as part of the “outer rim” of their friend group, said Brian Buchwald, CEO of consumer intelligence company Bomoda.

Rather than Instagram influencers who “can seem unattainably beautiful or rich,” content produced by social media stars in China tends to comes across as more do-it-yourself and genuine, said Tan. That level of authenticity is further enhanced by the use of livestreaming channels, which feature real-time, unedited video streams.

But working with popular online personalities isn’t always a perfect strategy for companies: Celebrities often already have a massive portfolio of endorsements, and some of those may conflict with a given brand.

For instance, French fashion house Dior received some backlash from Chinese netizens when it appointed actress Zhao Liying as its brand ambassador last year. Some saw Zhao as a mass market name based on her past endorsements of consumer products like chocolate and toothpaste.

Despite the risk of potential over-exposure, brands seem likely to continue pursuing China’s top social media stars to gain a foothold with local consumers.

“Everyone’s still fighting over the same consumer [and] millennial audience,” Buchwald said.

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