Shanghai publish new rules on live shopping, curbing “lowest price” sales tactic

July 13, 2022 0 Comments

On July 13, Shanghai published guidance on the marketing methods of lives shopping industry.This is the first provincial guidance on live shopping in China. The guidance addresses several grey areas within the industry and clarified the responsibilities of all parties involved.

According to the guidance, live shopping platforms should develop and publicize a set of rules on live shopping, and establish blacklist systems for live shopping hosts. Vendors on such platforms should display their business license prominently on their page, and shall not sell goods or services prohibited by laws and regulations. Live shopping operators should strengthen the selection of goods sold in their live rooms, and shall not ask vendors to sign “lowest price agreements” or other unreasonable exclusive terms. Live hosts should be at least 16 years old; dress, talk and behave with decency; and shall not make refund and return commitments that exceed the provisions of laws and regulations. MCN agencies (commonly referred to companies managing influencers and offering assistance in practices such as live shopping) should fulfill their obligations on information security management, product quality inspection, consumer rights protection, and taxation according to law.

Previously, as several widely popular live shopping hosts in China caught in scandals and vanished from live shopping platforms, Chinese consumers began to question the credibility of live shopping. In April this year, e-commerce company QianXun was fined 190,000 yuan for falsely advertising a beverage.  The company belongs to Huang Haifeng, husband of China’s previous live shopping queen Viya who was banned after her tax evasion scandal. Netizens are triggered by the couple’s “lack of integrity” as well as lack of regulation on live shopping platforms.

Shanghai’s new guidance responds to such problems by urging platforms to establish “live host black lists”, which will include “hosts and personnel who participated in live shopping” who have “serious violations of the law” or “bad social impact”.

The guidance also targets one of the most tempting aspects of live shopping for consumers — the “lowest price” tactic. In the past, live shopping hosts attract buyers by claiming they can offer the lowest price and best incentives for certain products/brands. 

The tactic may benefit consumers but has put vendors in an awkward place. When the “lowest price” tactic became a trend, vendors and businesses found themselves the passive ones in the power dynamic, forced to sell products at unfavorable price levels. Shanghai’s guidance has forbidden signing “lowest price agreements” with vendors and falsely advertising “lowest price” to attract buyers.

In addition, the new guidance outlines a number of forbidden products to appear in live shopping, including “goods or services that harm the national interest and the public interest and violate public order and morality”, “goods or services that do not meet the requirements of environmental protection”, vapes, prescription drugs, medical supplies, and infant dairy products, beverages and other foods that claim to fully or partially replace breast milk.

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