On China’s livestream platforms, there is now a good chance that the influencer urging you to buy some heavily discounted product is an artificial intelligence-generated digital avatar.

Live commerce is a massive industry in China. Millions of people host livestream shows, selling everything from lipstick to luxury real estate. In 2023, the country’s livestream e-commerce market was worth 4.9 trillion yuan ($691 billion), up 35% year over year.

But e-commerce companies are increasingly replacing their human hosts with AI bots, which are cheaper to hire and can livestream for 24 hours a day without getting tired, state-run news agency Xinhua reported Thursday.

AI livestream hosts first began to appear on Chinese platforms a few years ago, and they are now rapidly gaining traction. There are now over 993,000 digital avatar companies listed on the Chinese business database Tianyancha, with more than 400,000 of those being set up just last year.

In June, digital avatars hosted livestreams for more than 5,000 brands as part of the “618” shopping festival, a Black Friday-style discount period in China, according to e-commerce platform and founder of the event JD.com. These AI-hosted shows reportedly received over 100 million views and generated over 5 million interactions.

Chinese vendors are mostly turning to AI hosts as a way to cut costs. A digital avatar can be bought for as little as a few thousand yuan (equivalent to a few hundred U.S. dollars). It also saves businesses from needing to pay to hire a livestream studio, sound engineers, make-up artists, and other support staff.

The AI bots often aren’t exactly the greatest hosts: They are known for sticking woodenly to the same script and being prone to glitches. But as AI content generation technology advances, digital avatars are getting better at interacting with customers, according to an industry report published in March.

In 2023, digital avatars drove revenues worth over 333 billion yuan in China, according to data from research firm iiMedia. By 2025, this figure is forecast to reach 640 billion yuan.

But not everyone is on board with the AI livestreaming revolution. Xinhua spoke with both consumers and merchants who complained about digital avatars still being “too standardized, saying everything in the same way, and sometimes not making sense.” They also struggle to answer specific questions from customers.

Live commerce industry insiders said they remained cautious about using digital avatars. A brand’s reputation often rests on the trust and emotional relationship it builds with consumers, and AI bots in their current form risk damaging that, they suggested.

The rise of AI hosts is also creating legal issues in China. As digital avatars become ever more realistic, it’s becoming harder for consumers to tell if they’re talking to a human or AI.

And this is presenting an opportunity for scammers, who are using digital avatars to con shoppers into buying counterfeit goods, Xinhua reported. By the time consumers have realized their mistake, the vendor has already disappeared.

Douyin, China’s version of TikTok, introduced guidelines to regulate the use of virtual avatars last May. According to these new rules, all creators must clearly label whether their content is AI-generated. The owners of digital avatars must also register using their real identities on the platform, and any AI livestream must be supervised by a human.

The Chinese government is also seeking to regulate the use of AI and digital avatars in e-commerce, with a focus on ensuring accountability and transparency.

Ying Jie, a lawyer at Shanghai Kangming Law Firm, told Sixth Tone that the operator of a digital avatar is considered legally liable for any false advertising or other issues that occur during a broadcast.

“It’s no different from cases where a person or legal entity uses real humans to falsely advertise a product during a livestream,” Ying said.

Yu Zhinong, a senior partner at Hansheng Law Offices in Shanghai, stressed that the creators of digital avatars face myriad potential legal risks. Using a person’s real voice can put a creator at risk of being prosecuted for fraud. Producing fake audio for illicit purposes can also result in criminal liability.

Given that digital avatars are engaging in commercial activities, it is essential for creators to obtain consent from any individual whose likeness they wish to use before commissioning a digital avatar, Yu added.

But he acknowledged that digital avatars can bring real benefits to businesses seeking to promote sales and enhance their brands, if deployed correctly. “Whether it’s the digital avatar technology itself, the businesses using it, consumers, or the relevant laws and regulations, greater standardization will allow it to be applied more broadly,” Yu said.

(Header image: VCG)