China has slapped Three Sheep Group with a 69 million yuan (US$9.8 million) penalty after the company founded by one of the country's top-earning influencers was accused of falsely marketing mainland-made mooncakes as "made in Hong Kong".
The market regulator of Hefei, capital of eastern Anhui province, on Thursday ordered the influencer agency to suspend its live-commerce operations, which sell products online through live-streamed sessions.
Three Sheep apologised for "falsely advertising and misleading consumers" and vowed to "conduct thorough rectifications within the company", according to a statement published on Thursday on the company's official account on Douyin, the Chinese sibling of TikTok.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
Founded by Zhang Qingyang - better known by his online name Crazy Little Brother Yang, or Crazy Xiaoyangge - Three Sheep has nurtured some of China's biggest short-video stars. In 2022, Zhang became the first influencer in the country to reach 100 million followers on Douyin. He earned an estimated 3.12 billion yuan last year, surpassing his peers, according to a list published by the Guangdong E-commerce Summit Forum.
Zhang Qingyang, known as Crazy Xiaoyangge, presents mooncakes during a live-streaming sale. Photo: Weibo/新浪热点 alt=Zhang Qingyang, known as Crazy Xiaoyangge, presents mooncakes during a live-streaming sale. Photo: Weibo/新浪热点>
The penalty handed down this week included a fine, as well as an undisclosed sum of seized illegal income, authorities said.
Controversies around Zhang and his agency erupted earlier this month after he started promoting "Hong Kong Meisun Mooncakes", calling it a "high-end brand" from Hong Kong dating back to more than two decades ago. It later emerged that the maker of those mooncakes, Guangzhou Meisun Food Company, was not registered in Hong Kong. Neither were its products ever sold in the city.
Mooncakes are traditionally consumed during the Mid-Autumn Festival.
To boost sales, Zhang invited famous Hong Kong actor Eric Tsang Chi-wai to jointly host a live session. Tsang was appointed representative of Three Sheep's Hong Kong subsidiary, which opened last month, according to various local media reports citing Zhang's previous videos.
Tsang did not immediately respond to a request for comment on his current relationship with Three Sheep.
Mooncakes are typically consumed during Mid-Autumn Festival. Photo: LightRocket via Getty Images alt=Mooncakes are typically consumed during Mid-Autumn Festival. Photo: LightRocket via Getty Images>
Hefei's market regulator also took issue with claims by Three Sheep influencers that the grain-fed beef they sold were raw cuts, even though they were in fact seasoned.
Three Sheep promised to refund customers who bought the mooncakes and beef in question, and provide additional compensation as much as three times the product prices, according to an automated response generated by the agency's Douyin account.
This is the latest product quality scandal involving the fast-growing live-streaming e-commerce sector. In late 2020, live streamer Xin Youzhi, or Xinba, incurred a fine of 900,000 yuan for selling fake bird's nests made with sugar and water. Real bird's nests, an expensive Chinese delicacy, are formed from the saliva of swiftlets.
In the aftermath, Xin was blocked from hosting live-streaming sessions on short-video platform Kuaishou Technology for two months.
In a separate incident, police in the Hefei High-tech Industry Development Zone said a widely circulated audio clip, which purportedly showed Three Sheep co-founder Lu Qingwen admitting to engaging in improper relationships with several female employees, was fake and created with artificial intelligence.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.