What makes a top live commerce host or KOL (Key Opinion Leader)? Is it their appearance, emotional intelligence, talent, or training? Or are these just the bare minimum requirements?

Our team visited the top three Multi-Channel Networks (MCNs) in China last week (as part of our MW Immersion: Live Commerce), uncovering the secrets behind their success in such a competitive landscape. With millions of aspiring KOLs, how does one truly stand out and become the best of the best?

Tune in as we dive into what MCNs are doing to nurture talent, as well as the innovative business strategies they are exploring to grow without over-relying on KOLs:

This episode also distills eight key learnings from our immersion, touching on diverse topics from the rise of AI hosts and sustained platform investments to leveraging China’s robust supply chain for live commerce. 

Check out the full episode here:

Also available on Spotify and Apple podcast.

Featured materials:
MW Immersions: Live Commerce [Hangzhou, May 2024], Momentum Works
Who is Temu?, Momentum Works
Is MCN a good business model?, The Impulso Podcast
Our learnings from visiting top MCNs in China, The Impulso Podcast

[AI-generated transcript] [00:00:00] Sabrina
Hello everyone, and welcome to episode 79 of the Impulso podcast by Momentum Works. So on today’s episode, we’re going to be looking at some of the key learnings from our recent live commerce immersion in Hangzhou. So last week, the team was actually in Hangzhou because we held a live commerce immersion.
So it was a three days program with participants from Southeast Asia and India, and we visited over 10 companies. as well as had some sharings and networking events, right? So as you can see, we have a new podcast member or podcast host today is the Cainiao mascot because one of the officers we actually visited while we were in Hangzhou was Cainiao and they have a gift shop.

[00:00:39] Jianggan
What is Cainiao?

[00:00:40] Sabrina
So Cainiao is the logistic arm of Alibaba Group.

[00:00:43] Jianggan
So we’re very grateful that they actually hosted us. And some of our participants and our friends at the office. So this is the mascot. I mean, this podcast is not sponsored, but we just thought this is cute.
You know what Cainiao means, right?

[00:00:55] Sabrina
No. Something bird?

[00:00:57] Jianggan
Like newbie or rookie. And if you look at all the most of the Alibaba like companies the names they use are quite humble, like, Ant financial. Mm. What is, Ant like all the small businesses, right? Who actually make things work.
Yeah. Cainiao is another one thing.

[00:01:11] Sabrina
Very humble names.

[00:01:12] Jianggan
I’m not sure whether this bird can fly though.

[00:01:14] Sabrina
Yes. So we have a new collection, not sponsored by Alibaba by the way. We had to buy it ourselves.

[00:01:19] Jianggan
But if you buy it at campus, it’s a discount. Yeah.

[00:01:21] Sabrina
Yes. So this is a quick sort of summary of some of the highlights of what we did while we were in Hong Cho.

[00:01:28] Jianggan
Lots of sharings and what I do like about that is that a lot of discussions went into business, right? Because we have the MCNs, we have the e commerce platforms, we have e commerce enablers, I mean, the people from different parts of the ecosystem joining us, and many of the discussions went straight into the business.
So in this business area, how do you do it?

[00:01:47] Sabrina
It’s very specific and targeted.

[00:01:50] Jianggan
Yeah, I actually quite like that because we learn a lot as well.

[00:01:54] Sabrina
And of course, I think one of the highlights of the immersion was that we actually managed to visit all of the top three MCNs in China, right? So we went to Joy Media.
As well as Yowant and Befriends. So we’ll talk a little bit more about this later

[00:02:08] Jianggan
This is Joy Media.

[00:02:09] Sabrina
Yeah, we went to joy media They showed us around their headquarters as well as some of their training facilities We also went to Befriends, which I think your friend mentioned

[00:02:18] Jianggan
your friend mentioned about Befriends.

[00:02:19] Sabrina

[00:02:22] Jianggan
You should go to the the the slide above so look at what they said

[00:02:27] Sabrina
Welcome Momentum Works and their friends to visit Befriends That’s a lot of friends.

[00:02:32] Jianggan
So they have a very interesting concept, right? I mean, when they did their first live, I think 2019 or 2020, so, probably 2020, and they said, okay, we’re here to make friends, we’re not here to make money.
And they had like 300 million views or something. A lot, yeah.

[00:02:48] Sabrina
You can make friends and money.

[00:02:50] Jianggan
Oh, 30 million

[00:02:51] Sabrina
comes together. So I think someone mentioned that Befriends actually has one of the most professional equipment that they’ve seen. Right. Even for live streaming.

[00:03:00] Jianggan
Yeah. So the we have a professional photographer following us.
He’s a friend of mine for like 30 years, so I know him very well. And he used to work for a TV station. And we were all looking at the operations of of live commerce, the script, the host and the products and the operations. And he was there checking on all equipment, , the mixers, the cameras, the stuff, and he said, Hmm.
All topnotch,

[00:03:26] Sabrina
very professional. And I think. It’s true. So previously, like, I think in earlier this year, January, February, we actually did an infographic, right? To show sort of, we tried to replicate what this would look like. And I think that

[00:03:39] Jianggan
Because you can’t take photos inside.

[00:03:40] Sabrina
Yeah, we couldn’t take photos inside.
And I think the graphic did absolutely no justice after I went and saw it for myself. So we tried to make a new one. So on the left, this is actually what you see. on screen, right? Mm-Hmm. . But this is what’s happening behind the scenes. So these are the hosts. They have not just one cameraman. I’ve realized most of their studios actually have multiple camera angles.
Mm. So they have like product specific cameras. . And of course you have the people at the site just cheering and adding atmosphere. You have all these people here who are running in and out to get them the products. I think we saw one guy while we were there. He was running out to get durian for the host while they were filming.
And then, oh,

[00:04:19] Jianggan
I watched the durian livestream actually before we went to visit by the same host and he was like eating durian for like two hours and Towards the end he said guys, you should really buy something from me. I’ve been eating for two hours. I mean this this is good

[00:04:33] Sabrina
I cannot imagine that And then of course they have a whole team supporting them as well, right?
So some of these people are from the brands themselves who are there to give their input as well as give any promotions if they feel like it’s right. There’s also a team monitoring the traffic. There’s also a screen showing the hosts, not just themselves, but things that they should say, shouldn’t say as well, which I thought was something very interesting.

[00:04:57] Jianggan
I think the thing about the things they shouldn’t say is actually quite interesting. It’s something that which is very common in China and players outside China are not used to. So one MCN who is from one Southeast Asian country was telling us that That they learn in a hard way that Chinese platforms, including TikTok, limit your traffic when you say the wrong things.
I said, what’s the wrong thing? Facebook.
If they start mentioning Facebook, and boom, your view numbers suddenly started to drop.

[00:05:24] Sabrina
Yeah. So I think this is something that makes it very difficult when some of these hosts or MCNs are trying to cross stream, right? If you are trying to stream across two different platforms, each platforms have their own regulations as well.
So you have to be very careful.

[00:05:37] Jianggan
So that’s why you need like a very sophisticated operations. And as long as we’re doing like, I don’t know, like one session, we went to, they had like 70 million. R& B sales over like 3 or 4 hours?

[00:05:49] Sabrina
Yeah, I think that was the one at Yowant. The scale of that live stream is, imagine 10 times of this image.

[00:05:56] Jianggan
So this doesn’t do justice to them?

[00:05:57] Sabrina
This doesn’t do justice to what we saw at Yowant. Cause this, like, they use a background screen. At Yowant, they had a full set.

[00:06:04] Jianggan
Like purposedly build set.

[00:06:07] Sabrina
a set built just for that live stream and I think they mentioned there was like a hundred staff in the room during the live stream.

[00:06:14] Jianggan
Sometimes you need to have the people from the brands as well. So, I think we were told, so this is the live stream we saw.

[00:06:19] Sabrina
Yes, the girl in the middle is actually from the brand, I think.

[00:06:22] Jianggan
Yeah, she’s there to introduce the product because she would know it much better than the host.
And she’s also there to, to give the authorization. If you see that, okay, if I give her a little bit more discount, it will sell. And she has the authority to do that.

[00:06:34] Sabrina
To give, yeah. So, I, cause I think there’s a lot of quick decision making that has to happen, especially when you’re doing live commerce.

[00:06:40] Jianggan

[00:06:41] Sabrina
So, and of course, we also visited Yowant

[00:06:43] Jianggan
so happy.

[00:06:44] Sabrina
Yeah, everyone is so happy. Do you know why? Cause look at what we’ve circled. So that is 10 liters of Huang Jiu.

[00:06:51] Jianggan
What is Huang Jiu.

[00:06:52] Sabrina
What is Hangzhou? It’s alcohol.

[00:06:56] Jianggan

[00:06:57] Sabrina
so here.

[00:06:58] Jianggan
Okay, so basically this is the Yowant facility, right? At the basement, there’s a shopping mall.
It serves multiple purposes, right? I mean, the first purpose is that they have selected products there. So, live hosts can go there and say, I mean, if they don’t know what to sell, they can go there and pick a few things and then start selling. And they have Sort of worked with the supply chain to make sure that these goods are available But I mean as individuals because this is in a shopping mall, you can also go in a shop We checked that okay, everything is actually much cheaper compare you to what you would find elsewhere

[00:07:29] Sabrina
I think they said for the supermarket, all the products were about 30% cheaper than if you were to go to others just because it’s where they do a lot of live streams as well.
So they had to make sure that the products were the same as they would cost if they were done on a live stream. Mm-Hmm. .

[00:07:44] Jianggan
So we bought this this is Huang Jiu and

[00:07:46] Sabrina
so what is Huang Jiu ?

[00:07:47] Jianggan
People might know Bai Jiu, right?

[00:07:48] Sabrina
Yes. Bai Jiu.

[00:07:49] Jianggan
Do you know Hong Jiu?

[00:07:51] Sabrina
Red wine?

[00:07:52] Jianggan
Yes. Jiu basically means wine or alcohol. And Baijiu is like a distilled liquor, which is transparent.
So white, right? And Huangjiu is is a brewed wine made of glutinous rice quite famous in eastern China. So when we go to Hangzhou and surrounding areas, and they actually brew that. And we saw them saying that, you know, supermarket is great. Okay sure, let’s carry it and they have to give us like a cart to carry that, it’s 10 liters.

[00:08:16] Sabrina
Yes. And we had to drink it over two days. Two nights. Two nights.

[00:08:21] Jianggan
One night is too hardcore. Yeah.

[00:08:22] Sabrina
Yeah, so we’ve distilled some of the top eight
But of course there’ll be more to come as we clean up the notes And as well as have follow ups with our participants and all right But these are the top eight learnings that we have so far.

[00:08:35] Jianggan
Yeah, they cover like AI KOL management, MCN business model, the role of platforms in platforms like e commerce platforms in live streaming And as well as supply chain and the Pinduoduo and Temu

[00:08:48] Sabrina
Yes, an unavoidable topic. So maybe let’s discuss this pointers a little.

[00:08:53] Jianggan
So that’s the photo taking at Tapcut. Yes,

[00:08:55] Sabrina
this was from our visit to Tapcart.
So Tapcart is one of the leading players in digital human AI host generation, right? And these digital humans or AI hosts are not just for live streams. But for short generated video content as well.

[00:09:10] Jianggan
So I think Tapcut is probably the most practical digital human or AI for video player in China.
So we discussed about live and and it turned out that, okay, for live using digital human, there are still some limitations. So for instance For brands which have like stable product portfolio throughout the year, it’s easier, right? Just introduce this. But for lots of like smaller like sellers or lots of KOLs, when they have to constantly sell different products, and they need to constantly adjust the AI, so that that might not be exactly flexible.
But this time around, we saw a new product from Tapcut, which we think is fantastic. It’s called Top View AI. So what does it do? You have a product, And you have some kind of like, you know, videos, some kind of product description, images and stuff. And you upload everything into a web based platform and you will generate a different kinds of scripts, different kinds of promotional videos.

[00:10:08] Sabrina
For you. It’s very interesting because they take a lot of prompts from the website. Not just the video that you send to them, but from trends that they’re seeing on these platforms as well, right? And then they try to incorporate what they think is trending, what they’ve analyzed that gets good engagement from the viewers.
And then they try to add that into your video as well.

[00:10:27] Jianggan
Yeah. I mean, if you think about the implications for marketers, because nowadays we know some of the marketers pay thousands of dollars to produce like one minute video. And for this to cost 1. 5 dollars, right? Something.

[00:10:39] Sabrina
I think it’s less, yeah, less than 1.
5 dollars.

[00:10:42] Jianggan
1. 5 is what they charge the brands for. Yeah,

[00:10:45] Sabrina
for like a video? No, it’s not for a video.

[00:10:49] Jianggan
Not for a video.

[00:10:50] Sabrina
For one video.

[00:10:51] Jianggan
Yeah. So imagine that you just need to have someone sitting behind a computer. you probably have , all the material, all the sort of descriptions and photos of your product.
And somebody can generate like I don’t know dozens of videos over like an hour Instead of having to find an agency having to have you shoot the video Yeah, so I do think that product would probably have very interesting implications.

[00:11:15] Sabrina
But it’s interesting because I think one of our participants asked as well on, I mean, obviously now if we see AI host, what’s the actual penetration, right?
And he said that it actually accounts for less than 1 percent of the total live commerce in China.

[00:11:30] Jianggan
So I do think that the technology is there and there are some restrictions that we mentioned, right? How to run a different products. The platform’s attitude and et cetera, et cetera. So what we do realize is that it’s typically used by large brands and broadcasting.
They will put a portfolio during the hours, which are not, you know top for real human, human host. Yeah.

[00:11:51] Sabrina
Yeah. It’s more of doing off peak hours, right? And I think cause one of the issues with this AI host is that obviously as compared to a real human, the level of engagement is kind of different.
Because they can’t make that human decision which brings us very nicely to our next point of what makes a top KOL for live commerce

[00:12:09] Jianggan
Yeah This is during the sharing of joy media But this is also a question which was discussed by some of the MCN who are on this trip, right? So what what what does it take for KOL to be good, right?
I mean like it’s the appearance. It’s the eq. It’s the talent aspirations or character I think some people said appearance. And I think what people at Joy Media said that, but that’s the prerequisite, right? I mean, this is not what defines a good one versus the average one. And what’s the top?

[00:12:39] Sabrina
I think they said most important is their aspirations, how willing they are to work hard. So I think something Joy Media shared with us was they had this really big host, and she actually streams 364 days a year. So that’s how hard you have to work.

[00:12:53] Jianggan
It takes one day to take a rest every year. Yes. And that day might not necessarily be the Chinese New Year.
It can be any day.

[00:13:00] Sabrina
Any day to rest, right?

[00:13:02] Jianggan
Only take one day of rest. Yeah, so

[00:13:03] Sabrina
I think finding people to, finding KOLs that are willing to put in the hard work to consistently stream.

[00:13:11] Jianggan
I think that you can see in people. With whether a person’s willing to actually put all the hard work. You can see that.
There’s one interesting question which was asked somebody was asking that, Hey so MCN from Singapore was asking, I have a KOL I see the potential, but for whatever reason I’ve been training the person for like six months. Mm-Hmm. is not performing it. And the question to Joy Media is that when should you give up?
And the answer’s interesting. Join Media was saying that. . Okay. If it’s entertainment, KOL mm-Hmm. Then we have a certain period of time that okay, if the person doesn’t perform or doesn’t bring the ROI it’ll probably not worth continuing the investment.

[00:13:50] Sabrina
I think it was three months.

[00:13:52] Jianggan
Something like that,

[00:13:52] Sabrina
something like around three months you would be able to tell.

[00:13:55] Jianggan
Yeah. But I think for e-commerce, they said that it’s just more complex.

[00:13:58] Sabrina

[00:13:58] Jianggan
certain people, they’re just very engaging. But it just can’t sell. So and certain people just take longer time to sell. And so they have have to build all this like judgment into the formula, right?
Okay, so this person, he has 20 million followers. We trained him for the first live session, zero sales. Why? And how much more are we willing to invest? How do we invest in that? So I think for the MCNs participating, this is probably the most worthwhile discussion. Because at the end of the day, as an MCN, you engage with multiple careers, you decide to allocate resources, right?

[00:14:31] Sabrina
You need to know how to best. And of course, I think something to share as well is that, Certain KOLs just work better for certain brands, right? They just better they are just better at selling a certain product So there’s a lot of things that you have to take into consideration When you are training up your KOL I think we spoke with one of the participants on how she’s training up her KOLs as well And it was very interesting.
How do you know how much resources to allocate to them? How do you know how much time you want to give them before they have to start pushing and what are some things that you don’t want your KOLs to do. So I think something she mentioned to me is that for their KOLs, they don’t let them do anything related to the backend because they don’t want them to be too affected by the operations and the metrics.

[00:15:13] Jianggan
Oh, it’s the same here. So I think Joy Media and Yowant both told us that, for some of the high potential ones, even some of the celebrities, they will give them a team of 30 to support everything. Yeah

[00:15:31] Sabrina
So I think Brings us to our next point. So we know that the MCN industry in china is very competitive, right?
And so of course a lot of these mcns are trying to evolve and develop their business model to expand just beyond A talent network and live e commerce.

[00:15:49] Jianggan
Yeah, so they’re doing multiple things, right?

[00:15:50] Sabrina
And we’ve seen this with the three MCNs that we visited.

[00:15:53] Jianggan
They’re different.

[00:15:55] Sabrina
Yes, they’re all evolving in different ways So we’ll start with Yowant So Yowant is who we visited on the first day and something interesting that they do is they’ve actually acquired a shopping mall And turned it into a live streaming powerhouse

[00:16:08] Jianggan
and this photo was taken on a bus I think where we’re about to turn into the mall.
It looks like a spaceship

[00:16:14] Sabrina
I think the size of the mall is about 250, 000 square meters.

[00:16:18] Jianggan
Yeah, I think, I mean, I read in Yowant’s annual report, it’s like 257? Around that, so it’s huge, right? And they build, I mean, if you go to the next image, they build lots of studios within. So, branded stores and studios on a lift, etc.
So, it’s huge. And also sometimes they do fairs and they will have like people going around and doing live streaming and stuff. So we just, we just saw like a lot of different like operations there.

[00:16:46] Sabrina
It’s very interesting because they I mean they have like all these are specific stores and most of the stores actually have a sort of makeshift Studio inside where hosts can come and do live streaming, right?
But of course they also have some it’s not here but near the escalators and all

[00:17:00] Jianggan
Someone here.

[00:17:00] Sabrina
Yeah, they just have a Small square where like two people would do live streaming. So I think here you got, we got to see a lot of the different scale as well. So we saw a store where there were just two people doing one person was hosting another person was managing the traffic and cheering her on.
Whereas I think at this store we saw maybe a team of 10 just managing the live stream. So you get to see a lot of. The different scale in terms of doing live commerce. And of course we saw the whole setup. So there was apparently this Chinese celebrity whose name I will not say cause I do not remember, but apparently he just before we reached, he did a live stream for about four hours, right?

[00:17:36] Jianggan
70 million

[00:17:37] Sabrina
70 million RMB GMV and he had about over a hundred staff in the room with him. The room was huge. He had over a hundred staff and he had like a real life prop, no fake backgrounds or anything just built. And the scale was insane.

[00:17:51] Jianggan
I think one question asked by the participants is that why do you have to build this?
I mean, isn’t that very costly? And the answer is that compared to 70 million sales, I mean, Yeah,

[00:18:03] Sabrina
because I think the participants were wondering why they didn’t just use a fake background. And what our guide shared with us was that you can tell On the live stream if it’s a real background or not and that kind of affects the viewers perceptions as well

[00:18:16] Jianggan
I think these guys they have done a lot of these kind of streams They probably have data to prove that right?
I mean if you do the real real sort of stage setting And how much would it cost? What’s the ROI? They probably have that they probably have data for that

[00:18:30] Sabrina
Which is probably why they even bought this more in the first place, right? Just to provide the brand sort of a space to do real live stream.
I think we’ve previously mentioned that the conversion, if you were to do live streaming in like a store setting or an actual proper studio with no fake background, it’s maybe three times more GMV.

[00:18:47] Jianggan
It is much better. And they mentioned about between two to three times, if you live stream in a real setting.
So for Yowant specifically, now they send their streamers to Thailand to, shoot for durian, they send like people to Japan and Korea to shoot for like, you know, cosmetic and products which are actually from there. So that gives the consumers more trust and also immersive shopping experience.

[00:19:08] Sabrina
I think we should do a more in depth podcast in the future on just Yowant because I think it’s very interesting what they are doing. It’s very different from what we see other MCNs, how other MCNs are evolving as well, right? So next is Joy Media. So I think Joy Media’s main strength is really the network of KOLs that they have, right?
So there’s this quote that they shared with us when we visited is that there are millions of Douyin influencers and Joy Media accounts for half of them. This was in their lobby. They showed us.
I don’t think this is all their KOLs. I’m sure they have more. Of course it’s not.

[00:19:43] Jianggan
The mentioned is about 100, 000.
And the active ones is about 1, 000 plus. So they actively manage. And the funny thing is that I, I think we, we, we, we spend a lot of time here, because they explain the different types of KOLs. The ones who are selling goods, the ones which are like demonstrating their talent. I think there’s a big difference.
There’s this like martial artist. Oh, yeah. Yeah. It was who had like millions of followers

[00:20:06] Sabrina
who just does traditional martial arts

[00:20:09] Jianggan
There’s like a 60 year old pianist

[00:20:10] Sabrina
There’s something to do short dramas as well right short video and short dramas so

[00:20:19] Jianggan
one of their top keywords is the is the Cantonese couple couple, right and that they so so basically is So They came from a village and because of the city expanding to a village, they got lots of money and and they invest lots of properties and their daily job is to collect rent.
And I was asking him, are they really like collect the rate on a daily basis? They said, yeah. So that’s why they can, you know, do it so real.

[00:20:46] Sabrina
They can do the content well.

[00:20:48] Jianggan

[00:20:49] Sabrina
So I think what was interesting, That we saw at Joy Media was that they really provide very very extensive training for their KOLs, right?
I think they had one whole level maybe more of just training facilities So they they have a gym for the KOLs to work out. They have singing classes Dance classes as well. I think they have some musical instrument classes as well just to train their KOLs

[00:21:11] Jianggan
So some of you in Southeast Asia might be familiar with, like, might have heard of how the Korean

[00:21:18] Sabrina
Korean idols train.

[00:21:19] Jianggan
Yeah. So this is pretty much similar. I’m not sure, probably less like, you know, cruel in a way. But yeah, so it’s, it’s of some

[00:21:31] Sabrina
And it’s very interesting because I think another question that a lot of our participants asked is obviously if you’re investing so much in your KOLs, right? How do you actually retain them?
How do you make sure that the KOLs don’t just train with you and then go out and do it on their own or join a different MCN?

[00:21:47] Jianggan
I think this is something that Joy mentioned, right? And I mentioned that I had recently signed with a few KOLs a lifelong contract. So and this was also a question which was asked in March when we were in Guangzhou, we visited Sunchain and a few other MCNs, right?
And the question we asked was that, okay, if you invest so much in MCN, why would they, like stay with you, right? At the end of the day I do think that so the answer is common, right? I mean, if we provide the best out of them, that that they can sort of demonstrate their talent, they can make money from that, and they look at the market, nobody can do it better than us.
Why would they leave?

[00:22:23] Sabrina
And I think for this KOLs to actually leave and go and do it on their own is very difficult as well because obviously what they’re in charge of is doing the entertainment and the selling, right? They don’t notice the kind of logistics and all that has to go into the back end as well.

[00:22:38] Jianggan
Yes, and also another practical consideration is that many of the MCNs own these accounts So if the KOLs goes out, they have to rebuild the fan b

[00:22:45] Sabrina
You have to rebuild everything And of course lastly we see that Befriends actually has expanded to cover eight business segments So they don’t just do live commerce now as well.
They also have overseas e commerce They also do their self developed brands They have their own health supplements and all and of course They also do sales and supply chains as well as brand operations and management services

[00:23:06] Jianggan
What I find quite interesting about BeFriends is I think they have a very stringent selection criteria for what goods goes to, what kind of goods like go to the live streaming sessions they have, right?
I mean, they have to go to like the preliminary review, like final review. And I don’t know the panel of top KOLs looking at the products and stuff to make sure that they’re confident about the product. then, I mean, after like a few years of operations, they have selected a portfolio of products.
And then that portfolio products would have this stamp saying that, Hey, we have verified this, this products you can trust. Then they open this up to other KOL saying that, Hey you want to sell a product that’s endorsed by us.

[00:23:42] Sabrina

[00:23:44] Jianggan
it’s in a way like Costco. I mean, Walmart, no, sorry, Sam’s Club, right? I mean, you select a product and you endorse it.

[00:23:50] Sabrina
of course, another very interesting discussion we had, because, I mean, our participants are from Southeast Asia and India, right? And a lot of them were asking, why hasn’t Live Commerce actually taken off outside of China, despite some attempts by the platform? So, during our sharing at Vision Plus Capital, something that they shared was that, For live commerce to pick up in China, the platform sustained investment was needed, right?
Even though initially they didn’t see as much ROI, the platforms continued to push this. ,

[00:24:19] Jianggan
I think that evolved into a very interesting discussion, right? Because if you ask different people, different people have perspectives. Some people say that it’s because of culture. Some people would say it’s because of the I don’t know, habits and stuff.
But for any person who have thought about this long and deep, I mean, it’s essentially a better way to demonstrate a product. Right? I mean, it’s real, it’s immersive, why doesn’t it take off? I think we came to this conclusion that if it hasn’t worked in your country, that means that the platforms in your country have not tried hard enough.
If it’s like a small attempt, yes, okay, people look at it, I mean, it’s so what? Right. But, but what happened in China is I think both Taobao and Douyin invested extensively into this Mm-Hmm. , I mean, sometimes forcing brands to participate and and, and, and giving lots of extra traffic to, to, to the early MCNs so that they could, you know, really, really like build some, some critical mass.
So that. and, and, and we heard a story about, I think, I think Douyin right initially when it, when it tried to do e commerce, people saying that, why, why do you do that? Why do, why don’t we just stick with advertising, which is much easier and besides e commerce, ROI is worse than advertising. And then, then I think it requires the top leader to come in and say that, look, this is a new business.
And of course, initially it will look bad. We can’t use the same evaluation criteria because otherwise we would never take off. I think that there’s a lesson there for any like, you know, you
know, just for any new business, any business in general that wants to launch a new product or service, right?
Obviously, if you compare it, you have to use different metrics when you’re comparing it because you can’t compare it to something that’s already successful. You have to spend the time and investment. So I think that’s something that platforms in the region need to continue. But
yeah, this photo, I mean, you want to see a little bit, but but the vision plus capital It’s in Shishi Wetland National Park.
Yes. And it’s very nice outside. Yes, it is. There’s

[00:26:16] Sabrina
a whole like, I don’t, it’s not a lake, it’s a pond outside and the trees and all. It’s a very zen place to

[00:26:23] Jianggan
work. Sabrina wants our office to be like that in future. I’m

[00:26:27] Sabrina
fine with just a photo because I realized there are a lot of insects there. So then I changed my mind.

[00:26:33] Jianggan
Practical considerations

[00:26:38] Sabrina
Another thing we’ve seen is that e commerce platforms in China are also evolving, right? Now, a lot of them are going in to control the supply chain and a lot of this is actually driven by Pinduoduo and Temu

[00:26:49] Jianggan
So this graph on my left came from a report we did very early into Temu’s existence. We said, okay, this is the model, pay attention.
Nobody paid attention. And after a year, everyone said, hey, what hell is this Temu? They’re everywhere.

[00:27:03] Sabrina
And now every time we talk about e commerce, Temu and Pinduoduo just appear.

[00:27:07] Jianggan
Yeah. So so people from other platforms are telling us that, okay Pinduoduo went heavy into the supply chain. and they bypass the whole sort of brands.
. and enablers Sellers or whatever. They go to the, the factories and then they tell you that, we promise you the volume. Give us the best price. Mm-Hmm. And the chances are they will get, they, they will get better prices than anybody else for the consumers. And you can, you can talk, talk about, you know, premium, whatever, whatever, whatever.
At the end of the day, I think if you show people the same products. But much cheaper. Same quality of products much cheaper. I think I think people will gravitate towards the cheaper ones. And and and when people started doing that at scale and the others will lose out, right? Because the price is higher.
And Pinduoduo, the price can be 30 40 percent cheaper. So the others have to follow. So this is a quote from someone from a platform saying we don’t have a choice. If we don’t do it, Pinduoduo will win .

[00:28:02] Sabrina
So, I think if you guys are curious, a little more curious about Temu and Pinduoduo, we do have a report called Who is Temu, which we launched, I think, early last year.
And maybe it’s due for an update, but you can check out the report. So it’s available on our website.

[00:28:17] Jianggan
I think the fundamentals have not changed. Temu as a business have grown a lot. Yeah. But the

[00:28:23] Sabrina
core is still similar. Yeah. And of course, something when we were discussing about all these supply chain and all in China is that obviously we have to acknowledge the scale in China is just different, right?
It’s not something that can be replicated elsewhere. So this is a photo that Jianggan took of Hangzhou’s, . Train station, one of

[00:28:46] Jianggan
the three high speed railway stations in Hangzhou.

[00:28:49] Sabrina
Yes. And like, just look at how crowded it is. So obviously this,

[00:28:54] Jianggan
this is not a festival, it is just this, just like, it’s just a daily, just just random day,

[00:28:59] Sabrina
day to day.

[00:29:00] Jianggan
Yeah. Yeah, yeah.

[00:29:01] Sabrina
And this is what makes China’s scale unique, right? Just ’cause the demand is so much higher than anywhere else in the world.

[00:29:07] Jianggan
Yeah.so that creates, many people doing live commerce are telling you that we have to sell unique products. We have to sell like products of novelty, new products.
But because of the scale that, that they have in China, so, so there’s incentive to develop new things because even a niche product, focus on niche audience can sell.

[00:29:24] Sabrina
And I think that’s why we see when a lot of these Chinese brands or MCNs actually go out of China and venture into maybe Southeast Asia and America.
They find it very challenging, right? Because they’re not used they’re too used to this big scale

[00:29:38] Jianggan
So they’re used to like having that foundation of supply chain They can tap into which is at scale and when they try to operate in the market, which is much smaller Which the supply chain has to be organized in a different way.
I think I think they find it challenging. So, I think in our discussions many people said that okay. One of the reasons why live streaming is taking off in vietnam In a, in a, in a much higher elevated way compared to other countries is that I mean, I’m so close to China. So a lot of the goods can be organized and shipped over within 48 hours by truck.
It’s predictable. And and if you want to sell something, right, it was something new. I sold for it. I get a delivery in 48 hours and the other countries, like one week of you know, sea shipping air

[00:30:23] Sabrina

[00:30:24] Jianggan
Area can do is, is more expensive. Yeah. And shipping it takes time and the custom clearance, et cetera, et cetera.
Mm-Hmm. . So, so, so, but, but I do think that the scale of China, we mentioned about the Chinese players find it hard to say, come to Southeast Asia. Look at six markets. I mean, where do I go And and focus my attention. I, I need to build like, you know. One set of like local expertise local team for each market.
I don’t think they have the ability and patience to do that so that opens up opportunities for the for for people who

[00:30:56] Sabrina
Local players local

[00:30:57] Jianggan
players who understand the the mindset of this Chinese player as well And who can actually find ways to to work together tap into their supply chain

[00:31:03] Sabrina
And I think something that you mentioned in your book as well Is that obviously sometimes these leaders don’t have the bandwidth, right?
Because if you’re looking you’re managing china and you’re thinking of expanding overseas as well You You’re kind of splitting your attention between two countries because you can’t just leave China to run. China’s very competitive.

[00:31:21] Jianggan
It’s quite hard. It’s quite hard. I, I had a, I had lunch yesterday. Yeah.
Yesterday in Shanghai with with, with one of the top, like a P investors in China and he, and, and, and, and he invested in the Haidilao and the associated business of Haidilao law, the hotpot chain. And I was asking him, why do you think Haidilao can do so well in Southeast Asia while other hotpot chains from China are not doing as well as Haidilao in Southeast Asia.
Then he almost went without thinking. He said, Oh, Haidilao’s owner is based in Singapore. So he’s in the market and he knows exactly how the consumers feel. He can feel it and he can make decisions. It’s

[00:32:00] Sabrina
important to have some knowledge. Of course so we’ve talked a little bit about China’s supply chain, right?
And how developed it’s . supply chain actually is.

[00:32:09] Jianggan
Yeah. So so many of the MCNs and, and TikTok shop partners and enablers who went with us on the street, they’re saying that, okay, we’re looking for Chinese brands who, who we can work together with to distribute in these markets. But after like quite a number of discussions, we went deep into the supply chain.
So the photo you see on the right of this image is is at Lazbao . Lazbao is, it started as a logistic service provider for Chinese supply chain to go into Vietnam and Thailand. They are the ones doing the tracking and warehouses. But now they have evolved to one of the largest, probably the largest e commerce seller in Southeast Asia.
And, and, and then we discussed a lot about supply chain. We also talked about supply chain with other players. And people are just highlighting a very, very interesting issue, right? I mean, if you say, if you’re in Vietnam working with the Chinese brand who you invest in brand building, who you invest in inventory.
So and and and of course they will say that, okay it should be the brands, right? And then, but that then goes back to the problem that does the brand have enough sort of bandwidth to manage. Because brand building each market can be different. If you look at all the FMCG brands, they have some different products for different markets.
So, so their advice from many people is to, hey, you should, instead of like looking for brands from China, you guys understand, I mean, you guys from Vietnam, from Thailand, from Singapore, from Indonesia, you understand your consumers well, you know what consumers are looking for. Come to the supply chain in China to see what can be built there.
Skip the brand premium because there Whatever brand that’s famous in China, chances are they’re not known in your market. Somebody needs to pay for the brand building anyway. So why don’t you just go there and make frequent trips to China. Really tap into the supply chain. Search for the goods which can sell in your market.
Slap your brand on it,

[00:33:58] Sabrina
I think this was very interesting for a lot of the participants because they, I mean, when we were speaking to the participants before the immersion, a lot of them kind of wanted to know brands because they want to see what kind of Chinese brands can do well. So to share with them that you don’t need these brands because the chances are nobody in your country has heard of these brands.
Then you need to educate the market.

[00:34:18] Jianggan
And also a practical issue we have heard of, I will not name the name of that brand. But a very, very, very famous cosmetic brand from China. So they have been talking to a few partners about like selling in Southeast Asia. So one challenge is I have the portfolio of these products.
They’re all premium products, beautiful, beautiful premium consumers in China. And then the people in charge of the Southeast Asian market come and tell the boss and look in this market, consumers. I mean the skin care whatever is different.

[00:34:52] Sabrina
I need a different kind of

[00:34:54] Jianggan
product and and the boss saying that I already have like 40 products.
Can’t you just use one of them and I don’t have time to To to dedicate it build a product just for your market But if you’re a player from from vietnam from from thailand you go to china just go to

[00:35:09] Sabrina
the manufacturers And it’s

[00:35:11] Jianggan
much easier to negotiate with them

[00:35:12] Sabrina
That’s something we did in March, right?
We actually brought one of our clients to a cosmetic manufacturer because they were also deciding between Oh, you were there actually? Yeah, they were deciding between bringing a Chinese brand into their country versus just manufacturing their own product. And I think after visiting the manufacturers and the distributors, they’ve realized that it actually makes a lot more sense for them to just develop their own products and do the branding and all themselves.

[00:35:36] Jianggan
Yeah, I have been So, talking about supply chain since like 2017 while I was like, you know, working for one of the e commerce platforms in the Middle East and, and, and what I do realize is that effectively working with the supply chain takes time. You need to build trust. I mean, sometimes it’s just simple things, right?
I want to order this. Do you want to like, you know, start building it without a, I don’t know, fixed commitment? That needs trust because as long as I don’t know how much commitment I can give you. By

[00:36:02] Sabrina
the way, that’s what

[00:36:03] Jianggan
defines SHEIN’s success, which I’ve talked a lot about. Trust

[00:36:06] Sabrina
with all the factories and suppliers that they’ve worked with, right?
It takes

[00:36:10] Jianggan
time to build.
Number eight.

[00:36:12] Sabrina
Okay. Last point.

[00:36:13] Jianggan
So there was one question from from one of the participants. She was asking, saying that, Hey we do not see a lot of, we don’t see videos on Temu yet because I mean, Temu is on everybody’s mind, right?
Yes. So does that mean that they are not prioritizing the video and stuff? The answer is that they have the capabilities. They’re probably just, just not prioritizing that yet because because they have other priorities to do. But one proxy to look at is their domestic business in China, Pinduoduo.
They have more than a hundred million daily active users of their video, video platform. You’ve watched some videos.

[00:36:48] Sabrina
Yes. So we were showing some of the participants on the bus, cause I think you have to have the Chinese app store to download Pinduoduo. So we were just kind of scrolling through them and letting them look at the interface and everything.
They were very amazed, they were filming the whole, so we were scrolling them and like, so for example, you see this she’s doing a product showcase, right? When you click into that product, like what’s the, what’s the page that appears? I don’t know, maybe that’s a filter. So like when you click into that product, what’s the product page that appears, how the interface works, and of course, what kind of video content do they have?
So I think one question they had about.

[00:37:21] Jianggan
It says that it’s not buy now pay later. It’s use first, pay later.

[00:37:26] Sabrina
Good model. I think one, we were also discussing about their live commerce feature. So I think some of the MCNs and platforms are also asking like, Oh, if I’m watching a live, can I look at the past products?
Can I look at, I think Pinduoduo shows what is the best selling product from this live? And then they extract a snippet of the live, even while the girl is still doing live and shows it to you. If you’re interested in like, A product that she mentioned previously. So it’s very, it’s very well developed.
Their video.

[00:37:55] Jianggan
I, I also saw, I mean that, hey, it’s just a super weird video and then it’s somebody who built a bird trap. So, so he is counting the number of birds who walks through that trap and got trapped.
[00:38:07] Sabrina
Was he selling something or just no? Just, if I look, he probably

[00:38:11] Jianggan
is not, not selling anything, but. They have

[00:38:14] Sabrina
entertainment videos as well.

[00:38:15] Jianggan
So I think, I think this is, this is a strategy that Shopee is trying to take, right? I mean, you use that to try to retain the users. You will probably not do as good a job as, as Douyin, but it will be probably a good enough job that people will come. I mean, people who come to Shopee or Pinduoduo will once in a while check all the videos, have some fun.
, the investors I was talking to you about, right? I had a dinner with him yesterday in Shanghai. So after we walked out from dinner, he said, let me show you something. I said, what? We walked out of the restaurant and we went to the street you see like lots of like delivery riders I mean food delivery logistics , whatever All of them have different kind of lives on their camera just constantly showing what they’re going around

[00:38:57] Sabrina
just I’ve seen this

[00:38:59] Jianggan
you’ve seen this

[00:38:59] Sabrina
and it concerns me because I was in a car

[00:39:01] Jianggan

[00:39:02] Sabrina
And the driver was watching live videos while he was driving.
No, no,

[00:39:06] Jianggan
no. He was probably not watching. He was like, probably just Like,

[00:39:10] Sabrina
maybe listening. But I was very concerned. And my sister has told me this before. So, she was in the car. And while she was in the car, her driver was swiping Douyin.

[00:39:20] Jianggan
In China?

[00:39:20] Sabrina
Yeah, in China. While he was driving. So, he was swiping, like, when they are on the red light.
He would continue swiping and then he would drive and he would come back and swipe. So they watch a lot of content in China. So,

[00:39:32] Jianggan
so yeah, Pinduoduo, I mean, 100 million DAUs. So for Temu.

[00:39:37] Sabrina
But then again, that’s also linking back to the scale of China, right? How big can this daily active users be elsewhere?
This is compared to like 1 billion, a population of 1 point something billion.

[00:39:50] Jianggan
Bear in mind that they just started this like a year or something. Yeah. So, it shows the aggression that, that, that Pinduoduo has. So for Temu.

[00:39:59] Sabrina
And of course, for Temu, it’s just a matter of time, right? They replicate a lot of what Pinduoduo does.
I think currently it’s probably, It’s the same team. Yeah. It’s the same team. Currently it’s probably not their focus, but I do think in the future they will want to embed it into their app.

[00:40:14] Jianggan
Yeah. Yeah. So you, take a bit more time because, I mean, a simple issue like copyright and all that stuff is much more complicated because you have to deal with different countries, different jurisdictions.
Right. Yeah. So, but but knowing that organization, if they put their mind on something, they put people on the ground and they execute it. And it will happen.

[00:40:34] Sabrina
So I think that nicely summarizes sort of the eight key learnings that we’ve had for this immersion. But of course, like we mentioned, we learned, we’ve learned a lot from this immersion and we have a lot more topics to cover.
So do stay tuned and we’ll be diving deeper into some of the topics that we’ve discussed as well as new topics. And of course, we’re also hoping to invite some guests that can share a little bit more about the life commerce scene in China and in the region. Thank you guys for tuning in to another episode of the Impulso podcast.
We hope that you guys enjoyed today’s episode. And if you did do like our podcast and follow us on YouTube, Spotify, Apple podcasts, or your preferred podcast platform to stay up to date on the latest happenings and trends in tech, new retail, and the broader digital economy. Thank you. Bye bye.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].