Live Commerce in China: Insights and Future Implications

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Antibiotics are failing. The US has a plan to launch a research renaissance. - by Jess Craig

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While drug resistant infections are becoming more common across the world, the pace of new antibiotic discovery is continuing to slow since they are not profitable. The rampant use of antibiotics to treat simple infections in humans and to fatten up livestock is threatening to make anti-biotic resistance a global concern. To mitigate this and to incentivize Pharma companies, US is bringing something called the PASTEUR Act. With this Act, the US Govt would be able to enter into subscription agreements with Pharma companies that develop newer microbials. This way, the companies are assured a profitable outcome and the development of new antibiotics continues. This Act also raises a lot of questions around equitable access to new medications - how will lower income countries with higher prevalence of drug resistant infections get access? Read the article to know more.

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Live Commerce in China: Insights and Future Implications

Live commerce is rapidly transforming the way people shop online, and nowhere is this trend more apparent than in China. The explosive growth of this market, driven by platforms like Douyin, Kuaishou, and Taobao, has not only redefined e-commerce but also created a complex and dynamic ecosystem that could soon reshape global retail practices. This article will explore the factors behind the meteoric rise of live commerce in China, its potential expansion into other markets, and the lessons it holds for businesses worldwide.

It’s no secret that live commerce is big in China, but the scale of its success is staggering. In 2022, the gross merchandise value (GMV) of the top three live commerce platforms—Douyin, Kuaishou, and Taobao—was estimated at an astonishing 2.77 trillion yuan, equivalent to about 384 billion US dollars. To put this in perspective, this figure dwarfs the total GMV of e-commerce across entire regions, including Southeast Asia and even the United States.

What's more, this trend shows no signs of slowing down. Between 2021 and 2022, Douyin and Kuaishou alone experienced nearly 40% growth in GMV. This growth trajectory is indicative of a thriving ecosystem that has become a crucial pillar of China’s digital economy.

What Drives Live Commerce Growth?

Several factors contribute to the success of live commerce in China, but at the core lies the behavior of Chinese consumers, who have become accustomed to the seamless integration of entertainment and shopping. This cultural alignment with live commerce has allowed platforms to flourish, fostering a massive ecosystem that includes multi-channel networks (MCNs), suppliers, logistics partners, and specialized software as a service (SaaS) providers.

However, the story of live commerce in China is also one of intense competition. The sophistication of operations behind each live session is a testament to how companies are continually evolving to outdo one another. MCNs meticulously craft scripts, manage extensive customer interactions, and strategically buy traffic to maximize the reach of each live session. It's a level of operational complexity that rivals that of any traditional media production house.

Can Live Commerce Thrive in Other Markets?

As successful as live commerce has been in China, the question remains: can this model be replicated in other parts of the world, such as Southeast Asia, Europe, or the United States? The answer largely depends on how local platforms and ecosystems adapt.

In Southeast Asia, there are already signs that live commerce is gaining traction, thanks in part to Chinese platforms like TikTok, which have been actively promoting this model. The region’s growing digital infrastructure and its young, tech-savvy population make it a fertile ground for live commerce. However, the same cannot be said for markets like the US and Europe, where consumer behavior and platform priorities differ.

The key to success in these markets will be the willingness of platforms to invest in building the necessary ecosystem. Platforms must be prepared to spend significant resources to encourage content creation and nurture consumer engagement. If they do, there’s potential for live commerce to gain a foothold. Otherwise, it might remain a predominantly Asian phenomenon.

The Role of Hosts and KOLs

One of the unique aspects of live commerce in China is the influence of Key Opinion Leaders (KOLs) and hosts, who can drive staggering amounts of sales in a single session. Some top hosts in China can generate sales of up to 100 million yuan in just a few hours. This phenomenon has led to the rise of MCNs that manage these hosts, helping them script, produce, and broadcast their sessions.

However, replicating this model outside China presents challenges. The success of a live commerce host often depends on cultural resonance and trust, which are difficult to build in new markets. Moreover, the platform itself plays a crucial role in amplifying the reach of these hosts. If platforms in the US or Europe don’t prioritize live commerce, it’s unlikely that hosts will achieve the same level of influence as their Chinese counterparts.

The Competitive Landscape and Innovation

The live commerce industry in China is not just about selling products; it's also a hotbed of innovation. The fierce competition has pushed many MCNs and platforms to experiment with new technologies and business models. For instance, some companies are now exploring AI avatars and virtual hosts as a way to engage audiences. These innovations are not just gimmicks but are backed by substantial investments in technology and talent.

Moreover, the competition has driven many MCNs to expand their operations vertically. Some have acquired logistics companies to streamline their supply chains, while others have developed SaaS products to better manage their vast networks of suppliers and clients. This vertical integration allows them to maintain a competitive edge in an increasingly crowded market.

Implications for Global Markets

As Chinese live commerce players eye global expansion, there are opportunities for collaboration with local businesses. Southeast Asia, in particular, stands out as a market with high potential. While Chinese players have the resources, they often lack the deep market knowledge necessary for successful localization. This opens the door for partnerships that can blend local expertise with Chinese operational know-how.

However, the key takeaway for businesses outside China is the importance of adaptability. The success of live commerce in China was not a given; it was the result of continuous experimentation and adaptation to consumer behavior. Companies looking to capitalize on this trend must be prepared to do the same.

The Future of Live Commerce

Live commerce in China has evolved into a multi-billion-dollar industry, reshaping the way people shop and how businesses sell. Its success offers valuable lessons for companies worldwide, particularly in how to integrate entertainment with commerce and how to build robust ecosystems that can support rapid growth.

As this trend continues to expand beyond China’s borders, the question is not whether live commerce will succeed elsewhere, but rather how it will adapt to different markets. For businesses willing to innovate and collaborate, the opportunities are vast. The next few years will be crucial in determining how this exciting new form of e-commerce will shape the global retail landscape.

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