Regulator Fines Livestream Operator for Selling Fake Bird’s Nests

What’s new: The market regulation bureau of the southern metropolis of Guangzhou has levied a 900,000 yuan ($137,475) fine against a company run by Xin Youzhi — the most popular livestreamer on video-sharing platform Kuaishou — for marketing and selling counterfeit medicinal bird’s nests.

Xin controls nearly 95% of Guangzhou Heyi Electronic Commerce Technology Co. Ltd., which was commissioned by the supplier Guangzhou Rongyu Trading Co. Ltd. to hawk the phony bird’s nest products, which were actually made of sugar and water, during Xin’s livestreamed sessions.

The regulator said in a statement on its official WeChat account Wednesday that the punishment was based on the two companies’ violation of China’s law against unfair competition by “distributing misleading information in commercial advertising.”

Guangzhou Rongyu was fined 2 million yuan by the regulator, and Xin’s 53 million-strong account on Kuaishou was suspended for 60 days as of Wednesday, the platform’s e-commerce unit said on its Weibo account.

The background: The decision to penalize the company follows the market regulator’s investigation into a case that was first uncovered earlier this month, after a high-profile consumer activist Wang Hai accused livestreamer Xin, who goes by the name Simba, of advertising and selling fake bird’s nest products.

Xin is the livestreaming sales champion on Kuaishou after he sold a record 1.25 billion yuan worth of products in one session this year. The amount was roughly one-third of Kuaishou’s e-commerce gross merchandise volume last year.

Bird’s nest is prized in China for its supposed nutritional and disease-fighting properties, but the scientific evidence for these claims remains slim.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)

Support quality journalism in China. Subscribe to Caixin Global starting at $0.99.