Published on: July 5, 2023
As millennials get older and become the largest consumer group, companies are now shifting their focus to the next generation. Xiaohongshu, a rising e-commerce and social media powerhouse in China, has emerged as a crucial platform for businesses aiming to attract Generation Z customers (commonly referred to as the “95s” in China).
Xiaohongshu, also known as Little Red Book (or simply “Red”), is a Chinese social media platform that combines e-commerce, user-generated content (UGC), and product reviews. It offers a variety of content such as photos, text, and short videos, all focused on lifestyle trends and products.
With over 200 million monthly active users, Xiaohongshu is considered a thriving lifestyle community platform. In 2019, the company’s value reached $3 billion following an investment round that included $300 million from Alibaba Group.
According to Xiaohongshu, around 70% of the platform’s registered users were born after 1999, making it a popular marketplace for Generation Z. Additionally, the platform is predominantly used by females, making up almost 90% of its user base.
These users are generally from more affluent backgrounds in Chinese society, which explains the platform’s focus on topics such as beauty, fashion, cosmetics, and travel.
Given Xiaohongshu’s emphasis on lifestyle content and its predominantly young and female user base, it can be compared to Instagram and Pinterest, which are two popular Western social media platforms. Using these comparisons beyond a basic understanding, however, would be a mistake.
While Instagram and Pinterest have recently started recognizing the potential of integrating e-commerce features, Xiaohongshu has been successfully doing so since 2015.
Chinese consumers highly value product reviews. According to a survey conducted by McKinsey, 64% of respondents considered word-of-mouth reviews when making a purchase. Xiaohongshu, a popular community platform, leverages this preference by showcasing comprehensive “shopping notes” created by its users.
These notes consist of text, photos, and short videos, aiming to influence and guide other users in their purchasing decisions.
Xiaohongshu is often hailed as the go-to sharing platform for Chinese celebrities. This popular platform not only attracts music and film stars but also other influential figures known as KOLs (key opinion leaders).
When these celebrities and KOLs post shopping notes like regular users, their presence lends an extra layer of authenticity. As e-commerce sales focus more and more on KOLs, their adoption and fondness for Xiaohongshu become incredibly appealing to companies looking to export to China.
Xiaohongshu launched RED in 2014, which is a cross-border e-commerce platform. It allows Chinese consumers to directly purchase products from overseas through its app.
Exporting to China can be a complex process without the assistance of an experienced China marketing agency. This is why Xiaohongshu’s openness to foreign brands is appealing to global companies. In fact, Xiaohongshu has already established strategic partnerships with international brands such as Lancôme.
If your brand targets an audience that is predominantly female and focuses on travel, cosmetics, and other aspects of lifestyle, it might be exactly what you need. However, this isn’t the case for every brand.
Just like North American brands are realizing that it’s not always essential to be present on every social media platform in their own country, the same applies to your company’s approach when expanding into the Chinese market.
Depending on your specific market and goals, it might be enough to be aware of the existence of Xiaohongshu without necessarily incorporating it into your overall marketing strategy.
Xiaohongshu, a popular platform, charges a relatively high commission fee, typically around 15 to 20%. In addition to this, there is an up-front deposit cost of 20,000 Yuan (approximately US$2,900), and a monthly platform fee ranging from 10,000 to 60,000 Yuan (US$1,450–$8,900).
Moreover, there may be other fees and costs such as ad spend and fees for engaging with KOLs. However, these expenses should not discourage companies from utilizing the platform. It is crucial to understand these entry barriers.
Before venturing into the e-commerce and social media realm in China, brands should seek guidance from industry experts, particularly a reputable digital marketing agency in China. These professionals will offer insights into the current landscape and its future direction.
It is crucial to recognize that Xiaohongshu might not be suitable for every company. A proficient China marketing company will furnish you with all the necessary information to determine whether incorporating Xiaohongshu into your long-term strategy is advisable.
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