The Rise of the Wanghong Economy in China

Fan Bingbing, Zhang Dayi, Ling Ling, do these names sound familiar? If you are an active user on social media in China, you have most likely heard or seen these wanghong of the Wanghong economy on platforms such as Sina Weibo. Outside of Chinese social media, the Wanghong economy may seem completely foreign.

However, in the Western world, most social media users are aware of influencers, especially with the growing trend of using KOL Marketing.

What are Wanghong?

Wanghong, which translates to internet celebrity in Mandarin Chinese, is a term used to describe Chinese Internet celebrities who leverage their popularity and influence to get their fans to purchase goods or services that they have endorsed.

The Wanghong economy is, therefore, the fast-rising economy built on digital and social media influencer marketing. These online celebrities have created an image of a life of beauty, class, and perfection on the internet and can rake in millions of Yuan from a single post. In fact, the Wanghong economy is so big that it is set to overtake the Chinese cinema box office in a few years.

The tools of the trade of this budding economy include social media platforms like Twitter, Facebook, Instagram, and Sina Weibo. Wanghong, and influencers in the Western world, have a large number of loyal followers and a fan base who are ready to buy whatever product their influencers recommend as they put real faces on products rather than lifeless company logos.

By posting pictures or video streaming themselves using or wearing a product, they get their followers to buy these products because followers develop trust with the Wanghong and hope that by using these products they will be brought closer to them and their lifestyles, mimicking their favorite Chinese celebrities.

They also appear on websites and partner with online shops to convert their fan base into customers for these online retailing businesses. Xiaohongshu is a great example of this as the social media platform surged to popularity in China by maintaining quality and trustworthy reviews with an engaged community. The platform became so popular that now the app has transformed into a shopping experience platform by sourcing their own products for customers who want to buy directly. The app does not allow anonymous reviews or one-click ratings. Moreover, a user cannot simply click high ratings if a certain period of time has elapsed. This has kept its community faithful in the quality of its reviews and more engaged over a longer period of time.

Wanghong economy

On video streaming sites, many Wanghong post tutorials or reaction videos of themselves using a product, listening or singing a song, or simply sharing their views on trending topics and pop culture issues. These tactics increase interest and exposure to brands and products long term.

Business Models of The Wanghong Economy

Papi Jiang, a famous Wanghong, charges over 20 million yuan for an advertising video. Zhang Dayi is a fashion influencer who dominates the Weibo platform. Looking at the pictures they post can cause wonder about the science behind influencer marketing. How is it that they are seemingly able to convince their fan base to take action so effortlessly?

Wanghong, and influencer marketing in general, employs certain business models that enable them to draw a high number of monthly active users. There are two kinds of business models used in the Wanghong economy, online retailing and social media marketing.

With the online retailing model, the online influencers sell their own products by posting pictures, live streaming videos, or posting content about their very own products they have created. Sometimes they work in collaboration with a brand or manufacturer to create a product that they have designed and have a creative license for, which they then post on their social media and e-commerce pages for their fan base to see and purchase.

They greatly influence their customer’s decision to buy as fans feel as if they can relate more to products created by regular people like themselves who just happen to have a large number of followers compared to other celebrities in China. The consumers also influence the kind of products their Wanghong create because these online celebrities have a strong relationship with their fan base and interact with them often. They learn what they like and dislike about similar products and incorporate this feedback into the creation of their own products.

Wanghong economy

With the social media advertising model, Wanghong work with established brands to advertise the brand’s products and services to their fanbase. They charge the company per post and create engaging content that will inspire their high number of followers to purchase products from the brand.

Many fashion influencers work this way by partnering with clothing and make-up brands through strategies that include posting pictures of themselves in outfits from the brand on their social media pages along with details on how to purchase these outfits from the main brand. Since their fanbase is loyal to them and may have a desire to dress in similar makeup, shoes, or bags as their favorite online celebrities, they rush to patronize the brand endorsed by them.

Companies choose a Wanghong with a similar style to the products they sell and work with them to promote their brand. For instance, a beauty brand will be more inclined to work with a makeup influencer than with an influencer whose target audience is graphic art or Comic-con fans, even though both might deal with makeup and dress choices.

Brand pages can also become Wanghong in their own ways by utilizing these methods to adopt a more personalized tone, encourage discussions, and drum up creative ways to interact with their followers and target audience.

How The Wanghong Economy is Flourishing in China

China, as one of the most populated nations in the world, has an unusually high amount of buying power and as standards of living continue to rise, influencers and Wanghong set realistic images of potential lifestyle.

Such a large population of people also provides many specific target audiences for various niches, ranging from tech junkies to fashion and beauty enthusiasts, who capitalize on the powerful influence of social media platforms such as  Weibo and Taobao. Each individual is able to follow the lives of their favorite online celebrities to shape their own identities and interests, hanging off their words, videos, pictures, and recommendations.

This digital economy is also thriving in China because of the many regulations surrounding online activity in China. Restrictions, such as posting sensitive information about the government, inciting ethnic violence, posts that promote brutality or posts that damage the states honor and political climate, as well as other prohibited content, is against the law. This leaves more room and gravitation to posts on fashion, lifestyle, music, and entertainment which are the key parts of the Wanghong economy.

In Chinese culture, people are more likely to purchase products based on the recommendation of others and since fans have a close relationship with their online celebrities and friends on social media, they are more likely to buy what they recommend instead of generic mass targeted advertising campaigns. The Wanghong economy values putting a face on products rather than lifeless company logos.

The Takeaway

The Wanghong economy is gaining more traction as consumers become more aware of what they want to get out of advertisements. As Wanghong’s main form of selling is the content they put out, they have a bigger advantage as brand ambassadors over other Chinese celebrities who only sell a product with their personality.

Wanghong economy

Wanghong are set to completely take over the online retailing business through their digital marketing campaigns. As businesses look to gain greater relationships between influencers and branding, Wanghong culture continues to be a new frontier for businesses and consumers alike.

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