Welcome to this week’s Skinny on China; we hope it was a great break for those who were off over Golden Week. Aside from the annual inundation of tourist sites, transport hubs and highways, the most talked-about news of the break was the reappearance of China’s most famous actress, Fan Bingbing, who vanished without a trace three months ago.
Whilst there was countless speculation as to her whereabouts, the most plausible explanation of her being held for tax fraud turned out to be true, following a public spat with TV presenter Cui Yongyuan who circulated Fan’s tax-evading employment contract.
Fan Bingbing’s comeback was marked with a grovelling confession to her 63 million Weibo followers and a whopping ¥883 million ($129 million) fine for tax evasion. Less than a third of the fine was for unpaid taxes and overdue fees and majority for hiding income through studio fees and contract fraud.
Fan earned an estimated ¥1.4 billion ($204 million) between 2003 and 2016 and has been China’s highest paid celebrity for the past four years. It’s no surprise that her profile contributed to her being made an example of, in what will likely become a far wider crack down on China’s commonplace tax dodgers in showbiz. Much like we’ve seen in China’s gaming industry with no new game approvals since March, Beijing is becoming more resolute in wide scale influences that it sees as negatively contributing to Chinese society.
Brands should pay heed to the latest developments in the Fan Bingbing saga. The use of celebrity and KOL endorsements has become commonplace in China marketing plans seeing China’s influencer economy double since 2016 to $17.2 billion this year. 78% of Chinese consumers are receptive to brand recommendations from celebrities – two to four times the rate of consumers in the US, Japan, UK, France and Germany.
Beijing sees the fetishism around money and power of China’s nouveau celeb culture getting a little out of hand, and humbling the queen bee will be a reminder for others to stay grounded and ‘pure’. Brands should already be doing extensive due diligence before engaging brand ambassadors and endorsers – particularly as almost 70% of KOLs partake in fraudulent practices such as fake fans and engagement according a 2017 study. With the latest crackdown, brands should also be considering whether there is a likelihood that their influencers will be targeted for such behaviour.
On the subject of KOLs, last week saw an interesting stunt by beauty blogger Hao Yu – ‘Doctor Big Mouth’ – who sued Estée Lauder of deceiving Chinese consumers over the ability of its Crème de la Mer to heal burn scars, while taking a jab at foreign brands overall. The lawsuit follows a similar strategy Luckin Coffee used by suing Starbucks in May to get some cheap airtime. Don’t be surprised if you see more lawsuits creeping into Chinese strategies to build awareness. Hao Yu’s litigation is further reinforcement that marketing claims need to be airtight, not just to keep on the right side of the regulators, but also to avoid being targeted by KOLs and competitors using it to build their own brands. Go to Page 2 to see this week’s China news and highlights.