Chinese authorities have banned financial brokerage firms from hiring social media influencers to attract new clients.
Follow BloombergOn November 8, the China Securities Regulatory Commission (CSRC) sent a notice to financial companies, saying that these businesses are not allowed to hire celebrities to advertise and attract new customers. . According to the above notice, calling for investment through live streaming is also prohibited.
CSRC believes that brokerage firm employees should maintain objectivity and professionalism when commenting on economic and market conditions on the Internet. In addition, these people must also refrain from using “shocking language” or “odd costumes” to attract customers.
China bans securities companies from hiring celebrities to livestream to attract new customers. Photo: Getty.
Beijing authorities have launched new initiatives to build a “healthy” online environment, creating conditions for sustainable economic and social development. The country is tightening controls on the national economy. At the same time, the authorities have made many moves to curb financial risks related to fintech and real estate.
When China fully opens the financial industry is worth up to 54 trillion USD country for foreign investors, more than 130 domestic brokerage firms are under greater competitive pressure to maintain market share and expand their business. To get more customers, big players like Huatai Securities Co. and East Money Information Co. or smaller companies must hire influencers on social networks to advertise.
“The latest move could have a huge impact on securities firms that focus heavily on social media platforms to attract customers. Many celebrities have poor expertise, often using exaggerated language to attract customers’ attention, leading to unreasonable investment,” said Liu Yiqian, Analyst at Shanghai Securities Co. said.
At the end of November 2020, the State Administration of Radio, Film and Television of China issued a notice on strengthening the management of livestream and live broadcast of e-commerce. In particular, the regulation applies methods such as facial recognition to implement real-name management for broadcasters and users.
The new rule also limits the number of rewards users receive by time, daily and monthly, if there are too many rewards, there will be a reminder message and the reward function will be paused if the limit is exceeded.
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