Xi's Purge of Douyin Kings: $2B Empire, 100M Followers, Collapses in Scandal!

On September 26th, Douyin, China's mega popular platform, dropped a bombshell. It suspended its top livestream sales account, 3Sheep. And if that wasn't shocking enough, its star streamer, CrazyXiaoyangGay, was also banned from going live. The Yang brothers, Dayang and Xiaoyang, are absolute legends in the livestreaming game. These guys weren't just popular, they were trailblazers. Their account was the first to hit 100 million followers, and in 2023, they ranked as some of the highest-paid online influencers in China. How much are we talking? A jaw-dropping 3.2 billion yuan, about $451 million. For context, the runner-up, Xinba from Kuaishou, made 3 billion yuan, while Taobao's Li Jiaqi came in third with 2.2 billion yuan. So here's the million-dollar question, if Xiaoyang was Douyin's golden goose, why Turns out, Douyin had no choice. The 3Sheep brand got caught in a scandal for selling fake products, which landed them a hefty fine of 68.94 million yuan, approximately $9.4 billion. And just when you thought things couldn't get worse, Xiaoyang found himself in hot water over a messy affair with a female streamer from his company. The public backlash? Brutal. His reputation nosedived overnight. But there's more to this story. Rumors are swirling that this isn't just about scandals and bad press. Some believe the Yang brothers' dramatic fall from grace might have deeper ties to the Chinese government. What's the real story? Let's break it down in today's video. From village boys to Douyin kings, Xiaoyang Ge, whose real name is Zhang Qingyan, and his older brother, Zhang Kaiyan, better known as Da Yangjie, have an extraordinary story. Born in 1995 in a poor village in Luan, Anhui Province, the brothers faced a tough start. Their parents left the village to work far away when they were just two years old, leaving them to be raised by their grandparents. Their childhood can be summed up in one word, poverty. The family couldn't afford a phone, so for years, they could only hear their parents' voices through the village loudspeaker. In middle school, to save 3 yuan, less than 50 cents, on lunch every day, they cycled 10 kilometers back home to eat. This financial hardship defined their first 20 years of life. By 2015, short video platforms were emerging in China. At the time, Xiaoyang Ge was attending college in Hefei. His grades plummeted due to his obsession with online gaming, and an internship he had lined up fell through. Feeling lost, Xiaoyang Ge decided to create a short video account called Crazy Xiaoyang and began filming himself. Initially, he only gained a few hundred followers, but a humorous ink bottle video suddenly went viral, earning him 600,000 followers overnight. This gave him a taste of success and a new sense of direction. He quickly brought his brother, Da Yangjie, into the mix. Together, they roped in their parents and even their spouses to create quirky, family-centered videos with a rustic charm. Their humorous and offbeat content resonated widely, and by 2020, Xiaoyang Ge's Douyin account boasted 40 million followers. The brothers soon leveraged their growing fame to monetize their platform, pioneering a concept they called reverse advertising. This strategy involved testing products in extreme, often ridiculous ways to prove their quality. For instance, Xiaoyang bit into slippers to show their durability, gnawed on leather bags, and even wiped a mop across his face to demonstrate the power of a floor cleaner. These antics drew massive audiences to their livestreams, skyrocketing their sales and catching the attention of major investors. In March 2021, they partnered with another entrepreneur to launch the company 3Sheep. Today, 3Sheep has grown into one of Douyin's most prominent and organized e-commerce enterprises. By November 2022, the Yang brothers' fanbase had surpassed 100 million, making them the first Douyin celebrities to reach this milestone. Xiaoyang didn't stop there. He invested over 100 million yuan, around $14 million, to purchase a building in Hefei's high-tech zone, transforming it into 3Sheep's global headquarters. The facility includes a 15-story office building, a 6-story dormitory and cafeteria, and three factory buildings, all branded with the company's iconic logo. The brothers' livestreaming room has hosted a who's who of entertainment, featuring celebrities like Julian Chung, Cecilia Chun, Wong Feng, and Li Chen, as well as prominent internet influencers and sports stars. Their sales skills have also attracted major corporations, including brands worth tens of billions of yuan, eager to collaborate. The Yang brothers consistently rank at the top of China's livestreaming sales charts. In September 2023 alone, they hosted 20 livestreams, each drawing an average of over 12 million viewers. Their revenue per session ranged from 10 to 25 million yuan, approximately $1.4 to $3.5 million. Including contributions from their in-house team, the company achieved monthly sales of over 520 million yuan, around $74 million. In 2022, 3Sheep's total transaction volume on Douyin reached nearly 6 billion yuan, $850 million, with profits of 860 million yuan, $120 million. They paid 200 million yuan, $28 million, in taxes. In the first quarter of 2023, their operational income surged over 60 times compared to the same period the previous year. Annual revenue was projected to hit 15 billion yuan, $2 billion. In just seven years, the Yang brothers transformed from impoverished villagers into the driving force behind one of the most successful livestreaming e-commerce companies in China. Their journey is intertwined with the evolution of Douyin's e-commerce history, cementing their legacy as pioneers in the industry. Low-Quality Products – How the Yang Brothers Lost Their Crown The Yang brothers built an empire on trust, winning hearts and wallets across China to become the undisputed kings of livestreamed sales. But what happens when the kings betray their own kingdom? It started, innocently enough, a mid-autumn festival livestream featuring mason mooncakes. Xiao Yang, with his usual enthusiasm, sold the mooncakes as a premium Hong Kong brand, priced at over 200 yuan in stores but offered exclusively through 3Sheep for just 169 yuan. A sweet deal, right? Wrong. Netizens smelled something fishy, and the truth came out fast. These weren't premium mooncakes. They weren't even from Hong Kong. They were unbranded mooncakes made in Guangzhou, with a wholesale price of 59 yuan for 3 boxes. Furious buyers flooded social media, feeling duped and betrayed. The brothers quickly pulled the mooncakes from their store, but the damage was done. The trust they had so carefully cultivated was now under siege. And it didn't stop there. By late 2023, another scandal hit. Hubei-brand beef rolls sold on their livestream were accused of being synthetic. Customers complained the rolls, priced at 89.9 yuan, tasted nothing like beef. Investigative vloggers took it further, estimating the rolls were likely made from composite meat, costing just 10 yuan to produce. The premium beef that was promised? Nowhere to be found. What made the Yang brothers legends was their upfront, no-nonsense style. They called out bad products during livestreams and took on wild viewer challenges to prove quality. Their charm wasn't just selling, it was their authenticity. But as they climbed to the peak of China's 500 billion livestream industry, that authenticity began to fade, replaced by questionable products and even more questionable decisions. In February 2023, Xiao Yang promoted a baby moisturizer and cooling cream that was later flagged by Hangzhou regulators for false advertising. The product's manufacturer was fined, but the brothers' reputation took another hit. Meanwhile, consumer complaints about their products continued to pile up online, painting a grim picture of declining quality and broken trust. Instead of taking responsibility, issuing apologies or improving their product lineup, the brothers went silent. Worse, they slapped disclaimers on their livestreams, stating, Please contact the seller for issues. In other words, not our problem. This move poured gasoline on an already raging fire. Customers were furious, accusing the brothers of shamelessly dodging responsibility while still cashing in as the faces of these products. The Affair Scandal This scandal can be summed up like this. Xiao Yangjie secretly had an affair with Momo, a junior employee at his company. Things escalated when Momo became pregnant and demanded that Xiao Yangjie take responsibility and marry her. When Xiao Yangjie's wife found out, she was furious and demanded that the company fire Momo immediately. Like many men caught in such situations, Xiao Yangjie vanished into the background, leaving his wife to handle the fallout. Momo, now jobless and enraged, demanded 3 million yuan as compensation for her lost youth, threatening to expose everything and ruin his reputation if he didn't comply. To protect his image, Xiao Yangjie had no choice but to meet and negotiate with Momo. However, during their discussions, he secretly recorded their conversations. He later used the recordings as evidence to accuse Momo of blackmail. At the time, Three Sheep was a prominent business in Hefei, and Xiao Yangjie was seen as a model entrepreneur. In July 2023, the Chinese government introduced 31 policies to support private enterprises. With this context, Xiao Yangjie's report couldn't be ignored by the local authorities. One day, Momo received a call from Three Sheep's finance department telling her she could come to collect her compensation. But when she arrived at the company, she was unexpectedly arrested by the police on the spot. Instead of receiving money, Momo ended up in handcuffs. After a series of scandals, Three Sheep faced severe repercussions. Within just 30 days, the company lost millions of followers on its channels. Daily revenue plummeted from 1 million yuan to a mere 100,000 to 250,000 yuan, a staggering 90% drop in just half a month. While many believe the scandals were the main cause of the collapse, some argue that the situation was far more complex. A company as large and influential as Three Sheep doesn't crumble overnight without deeper, underlying reasons. On September 26, Duyan abruptly announced a ban on Three Sheep's livestreams. Around the same time, Kuaishou followed suit, announcing that Xin Ba, another major streamer, was also banned from broadcasting. The simultaneous takedown of the number one and number two in China's livestream industry stunned the public. Soon after, both Duyan and Kuaishou issued statements explaining that, in line with government directives on common prosperity, they would begin redistributing platform resources more equitably instead of favoring top-tier streamers. It was only then that people began to connect the dots. At the seventh session of the standing committee of the 14th Chinese People's Political Consultative Conference in June 2024, the primary focus had been on improving income distribution systems and promoting societal equity. For those in the know, the significance of this move became clear. From the government's perspective, the massive influence wielded by these two top streamers, each commanding millions of followers and dominating public discourse, was a phenomenon that couldn't be ignored. Under the banner of common prosperity, authorities decided to act, effectively silencing both streamers with an even-handed approach, metaphorically giving both 50 lashes and banning them from broadcasting altogether. The government crackdown, how Three Sheep met its fall. While common prosperity was a major factor in the downfall of Three Sheep, it wasn't the whole story. Another twist came in September, when the Yang brothers made a move that shocked many, expanding their business to Hong Kong. This seemingly bold step into one of the world's financial hubs minned the nail in the coffin. Why? Because Hong Kong isn't just a city, it's a political powder keg. The decision to set up a 500-square-meter office there, at a time when the Chinese government remains deeply cautious about Hong Kong's activities post-political turmoil, was seen as reckless. For Beijing, the move raised alarms. Was this an innocent expansion, or a signal of defiance? To the Chinese government, it could have been interpreted as an attempt to shift assets abroad, especially amidst strict measures to prevent the outflow of yuan and combat capital flight. Three Sheep suddenly found itself under a cloud of suspicion, its motives questioned at the highest levels. The Hong Kong expansion didn't just stir the government, it alienated domestic consumers. In China, patriotism runs deep, and anything perceived as prioritizing foreign interests over national loyalty can trigger outrage. What once was seen as a proud homegrown business, now looked like a potential sellout to some consumers, further eroding public trust. This story rings eerily familiar to the case of Jack Ma. The once unstoppable founder of Alibaba stepped on political toes in a 21-minute speech where he criticized China's banking system, calling it outdated and driven by a pawnshop mentality. His words reportedly upset President Xi Jinping, and the fallout was swift. Ma was summoned by security authorities, lost $10 billion overnight, and watched Alibaba's stock tumble 10%. Once an icon of innovation, Ma virtually vanished from the public eye. The parallels are hard to ignore. The government's message? Grow the economy, innovate, and succeed, but never step outside the control of the state. The Yang brothers, like Jack Ma, may have thought their success could shield them. But their bold decisions, particularly the expansion into Hong Kong, placed them directly in the crosshairs. Once hailed as live-stream kings and entrepreneurial icons, the Yang brothers now stand as a cautionary tale. They lost public trust, alienated their home audience, and fell under the scrutiny of the government. Their spectacular rise was matched only by their swift and dramatic fall. A stark reminder that in China, even the mightiest must tread carefully under the watchful eye of Beijing. If you found this story as fascinating as we did, there's plenty more where that came from. For the latest insights, compelling stories, and in-depth breakdowns of the trends shaping our world, don't forget to hit that subscribe button. Thank you for watching.