China

Foreign brands have a new fast-track into China's market: the addictive app Red

The shopping app holds its users' attention three times longer than Pinterest.

Foreign brands have a new fast-track into China's market: the addictive app Red

An ad for Xiaohongshu: "find good things from around the world."

Protocol screengrab via Baidu

Laijiang has a second life. The 30-year-old Tokyo-based tech worker is also a fashion influencer on Chinese social media and ecommerce platform Xiaohongshu ("Red" in English). The Chinese national stumbled upon the lucrative side-hustle in 2018 by sharing tips from her travels in Japan. Less than two years later, Laijiang has amassed over half a million followers and collaborated with dozens of clothing, accessory and cosmetic brands.

Originally a cross-border shopping guide that lived on PDFs in 2013, Xiaohongshu has since grown into one the world's largest lifestyle-focused social media platforms by user numbers. Valued at $5 billion and backed by both Alibaba and Tencent, it's now a mega app equivalent to a combination of Instagram, YouTube, Pinterest, TripAdvisor and The New York Times' Wirecutter. Marrying user-generated content with ecommerce, Xiaohongshu thrives by catering to fashion-forward young women and luring them to spend ever more time on the platform. According to Beijing-based analytics firm Analysys, Xiaohongshu was China's third-largest ecommerce platform by active users in December, after Taobao and JD.com. In 2020, its monthly active user numbers grew steadily from 83 million in February to 138 million by December, a 66% increase.

Key to Xiaohongshu's popularity is an obsession with "stickiness" that the world's other big social-and-shopping apps can't match. On average, each Xiaohongshu user last December spent 40 minutes per day on the platform — almost three times longer than Pinterest users — and opened the app more than four times each day, according to Analysys. Each day, it raked in 8 billion views on hundreds of thousands of review articles churned out by influencers and regular users alike. This creates an ocean of user data that then allows algorithms to see and predict trends more accurately and determine what people might be interested in buying, rather than pushing ads based on searches or purchases on other sites.

The algorithms that make this all work are a focus for imitation and debate. Sellers have tried to write hacks — for example, reverse engineering the scoring system that made a post go viral — to game Xiaohongshu. Frequently updating content is certainly rewarded. Laijiang tells Protocol that certain actions, like linking to items on other sites like Taobao or WeChat, will hurt her traffic. "Xiaohongshu hates when you divert traffic to other platforms," she said.

A fast track to relevance

Laijing's first clients were domestic, but her latest are global.

At first, Chinese designer brands collaborated with her on brand launches, sales events, livestream shows and product reviews. During the pandemic, some smaller, independent Japanese brands whose offline businesses were hit hard started approaching her for promotion opportunities. Now Laijiang is in talks with an independent French purse maker that's hugely popular on Instagram, as it plans its Xiaohongshu debut.

Global brands are still learning that they have to go to China, and that a social network nearly unknown five years ago can help them get there faster. More than most, Chinese consumers look within their trusted networks, not at conventional ads, when making purchase decisions. That includes influencers, who can "dai huo" (带货), or generate sales for, products they back.

It's hard work. Twice a month, Laijiang spends five hours livestreaming outfit-matching and product presentations to thousands of followers. On top of that, she shares images and short video-packed product reviews or shopping lists, which the platform calls "notes,'' with her followers — mostly affluent, urban young professionals with a taste for minimalism. If she forgets to leave a link to a featured item in her notes, a parade of followers will ask where they can buy it. Some of her popular reviews — which users call baokuanbiji (爆款笔记), or "explosive notes" — can garner tens of thousands of likes, and conversion rates can be as high as 20%.

Compared to advertising on traditional ecommerce platforms, working with influencers on Xiaohongshu is more costly. Independent agencies that manage influencers can eat as much as 100% of the revenue from sales, according to Jacob Cooke, CEO and co-founder of WPIC, a Beijing-based, big data marketing consultancy. But it's a game global brands feel they must play to grab a quick slice of the Chinese market. Laijiang says the commission each agency or influencer gets depends on the specific partnership. After her agency and Xiaohongshu eat away their shares of the commission, she ends up getting about half of the commission. For example, if a brand offers a commission rate of 10%, she ends up with 5%.

"Xiaohonghsu allows you to build up that awareness really quickly," Cooke said. "Especially if you've got something that people want to share or it can go viral, you can squish that awareness part down to three or four months."

Laijiang says she will consider starting her own business or going full-time as an influencer when the time is right. Smaller international brands are getting more curious about the platform while treading carefully; those with tiny budgets are offering her a bag or a piece of clothing in exchange for a livestream show. Still, Laijiang's earnings as a part-time Xiaohongshu influencer already exceed that of her well-paying, full-time job.

Correction: An earlier version of this story misstated Laijing's age. This story was updated Feb. 12 2021.

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