China fines influencer agency Three Sheep $9.8 million for ‘made in Hong Kong’ mooncakes

China has fined Three Sheep Group 69 million yuan ($9.8 million) after the company, founded by one of the country’s top-earning influencers, was accused of improperly marketing mainland-made mooncakes as ‘made in Hong Kong’.

The market regulator of Hefei, the capital of eastern Anhui province, on Thursday ordered the influencer agency to suspend its live commerce operations, which sell products online through livestream sessions.

Three Sheep apologized for “false advertising and misleading consumers” and promised to “carry out thorough rectifications within the company,” according to a statement published Thursday on the company’s official account on TikTok’s Chinese sibling Douyin .

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Founded by Zhang Qingyang – better known by his online moniker Crazy Little Brother Yang, or Crazy Xiaoyangge – Three Sheep has produced 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 livestream sale. Photo: Weibo/新浪热点 alt=Zhang Qingyang, known as Crazy Xiaoyangge, presents mooncakes during a livestream sale. Photo: Weibo/新浪热点>

The punishment imposed this week included a fine and an undisclosed amount of seized illegal earnings, authorities said.

Controversy surrounding Zhang and his agency erupted earlier this month after he began promoting “Hong Kong Meisun Mooncakes,” calling it a “high-end brand” from Hong Kong dating back more than two decades. It later turned out that the maker of those mooncakes, Guangzhou Meisun Food Company, was not registered in Hong Kong. The products were also never 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 named representative of Three Sheep’s Hong Kong subsidiary, which opened last month, according to several 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.

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Mooncakes are usually consumed during the Mid-Autumn Festival. Photo: LightRocket via Getty Images alt=Mooncakes are typically consumed during the Mid-Autumn Festival. Photo: LightRocket via Getty Images>

Hefei’s market regulator also addressed 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 purchased the mooncakes and beef in question and provide additional compensation that could amount to 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 livestreaming e-commerce sector. In late 2020, livestreamer Xin Youzhi, or Xinba, was fined 900,000 yuan for selling fake bird nests made with sugar and water. Real bird nests, an expensive Chinese delicacy, are formed from the saliva of swifts.

In the aftermath, Xin was banned from hosting livestream sessions on the 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, in which Three Sheep co-founder Lu Qingwen reportedly admitted to having inappropriate relations with several female employees, was fake and made with artificial intelligence. .

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice covering China and Asia for more than a century. For more SCMP stories, explore the SCMP app or visit the SCMP Facebook page Tweet pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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