Chinese influencer’s company Three Sheep Group fined $9.8 million for false publicity

A joint investigation group in Hefei, capital of East China's Anhui Province, announced in a statement on Thursday that it will confiscate illegal gains and impose a fine totaling 68.9491 million yuan ($9.83 million) on Three Sheep Group, a company based in the city that was founded by online influencer Zhang Qingyang. The company has recently been hit by criticism of false publicity.

The company apologized for misleading consumers, and vowed to comprehensively conduct internal rectification and protect consumers' legal rights.

Short video platform Douyin said on Thursday that the platform has suspended the livestreaming function of Three Sheep Group's account since September 21, and will further urge the company to commence self-rectification and properly resolve the after-sales compensation issues for consumers.

According to the statement, the Three Sheep Group marketed mooncakes from the Meisun Fine Cake brand as a "Hong Kong-based product" with "over 20 years of history." But in fact, the mooncakes are produced in Guangdong Province and are not sold in Hong Kong.

Three Sheep Group also marketed an "Australian grain-fed beef roll" product as original meat despite not obtaining the original meat inspection report, and the product actually involves a mixture of meat.

The two cases were defined as false commercial publicity by the investigation group, and another case regarding discrepancies between some shipped products and advertised items is under further investigation.

Aside from the penalties, the investigation group required Three Sheep Group to commence rectification within a defined time limit and take legal responsibility. The department of discipline inspection and supervision will initiate investigations into individuals who neglect their duties according to relevant laws and regulations, said the statement.

On September 17, Hefei's market supervision administration launched an investigation into Three Sheep Group for allegedly "misleading consumers" during its livestream sales on social media platform Douyin.

Analysts said the incident serves as a warning for the livestreaming industry, and will help to promote stricter regulations and reforms.