Source Code: Your daily look at what matters in tech.

chinachinaauthorShen LuNoneDavid Wertime and our data-obsessed China team analyze China tech for you. Every Wednesday, with alerts on key stories and research.9338dd5bb5
×

Get access to Protocol

Your information will be used in accordance with our Privacy Policy

I’m already a subscriber
Protocol | 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.

Protocol | Workplace

The pay gap persists for Black women

"The pay gap is a multifaceted problem and any time you have a complex problem, there's not a single solution that's going to solve it."

For every dollar paid to white, non-Hispanic men, Black women are paid just 63 cents, according to the American Community Survey Census data.

Photo: Christine/Unsplash

Last year's racial reckoning following the murder of George Floyd led many tech companies to commit to promoting equity within their organizations, including working toward pay equity. But despite efforts, the wage gap for Black women still persists. For every dollar paid to white, non-Hispanic men, Black women are paid just 63 cents, according to the American Community Survey Census data.

Black Women's Equal Pay Day on Tuesday represents the estimated number of days into the year it would take for Black women to make what their white, non-Hispanic male counterparts made at the end of the previous year, according to the organization Equal Pay Today. And while the responsibility to fix the pay gap falls mostly on companies to rectify, some female employees have taken matters into their own hands and held companies to their asserted values by negotiating higher pay.

Keep Reading Show less
Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.

pay

What comes to mind when you think of AI? In the past, it might have been the Turing test, a sci-fi character or IBM's Deep Blue-defeating chess champion Garry Kasparov. Today, instead of copying human intelligence, we're seeing immense progress made in using AI to unobtrusively simplify and enrich our own intelligence and experiences. Natural language processing, modern encrypted security solutions, advanced perception and imaging capabilities, next-generation data management and logistics, and automotive assistance are some of the many ways AI is quietly yet unmistakably driving some of the latest advancements inside our phones, PCs, cars and other crucial 21st century devices. And the combination of 5G and AI is enabling a world with distributed intelligence where AI processing is happening on devices and in the cloud.

Keep Reading Show less
Alex Katouzian
Alex Katouzian currently serves as senior vice president and general manager of the Mobile, Compute and Infrastructure (MCI) Business Unit at Qualcomm Technologies, Inc. In this role, Katouzian is responsible for the profit, loss and strategy of the MCI BU, which includes business lines for Mobile Handset Products and Application Processor Technologies, 4G and 5G Mobile Broadband for embedded applications, Small and Macro Cells, Modem Technologies, Compute products across multiple OS’, eXtended Reality and AI Edge Cloud products.
Protocol | Workplace

Tech company hybrid work policies are becoming more flexible, not less

Twitter, LinkedIn and Asana are already changing their hybrid policies to allow for more flexibility.

Photo: FG Trade/Getty Images

Twitter, LinkedIn and Asana are all loosening up their strategies around hybrid work, allowing for more flexibility before even fully reopening their offices.

In the last week and a half, Twitter announced it's adopting an asynchronous-first approach, and both Asana and LinkedIn said they would increase the amount of time their employees can work remotely.

Keep Reading Show less
Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.
Power

Activision Blizzard scrambles to repair its toxic image

Blizzard President J. Allen Brack is the first executive to depart amid the sexual harassment crisis.

Activision Blizzard doesn't seem committed to lasting change.

Photo: Allen J. Schaben/Getty Images

As Activision Blizzard's workplace crisis rages on into its third week, the company is taking measures to try to calm the storm — to little avail. On Tuesday, Blizzard President J. Allen Brack, who took the reins at the developer responsible for World of Warcraft back in 2018, resigned. He's to be replaced by executives Jen Oneal and Mike Ybarra, who will co-lead the studio in a power-sharing agreement some believe further solidifies CEO Bobby Kotick's control over the subsidiary.

Nowhere in Blizzard's statement about Brack's departure does it mention California's explosive sexual harassment and discrimination lawsuit at the heart of the saga. The lawsuit, filed last month, resulted last week in a 500-person walkout at Blizzard's headquarters in Irvine. (Among the attendees was none other than Ybarra, the new studio co-head.)

Keep Reading Show less
Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Protocol | Workplace

Alabama Amazon workers will likely get a second union vote

An NLRB judge said that Amazon "usurped" the NLRB by pushing for a mailbox to be installed in front of its facility, and also that the company violated laws that protect workers from monitoring of their behavior during union elections.

An NLRB judge ruled that Amazon has violated union election rules

Image: Amazon

Bessemer, Alabama warehouse workers will likely get a second union vote because of Amazon's efforts to have a USPS ballot box installed just outside of the Bessemer warehouse facility during the mail-in vote, as well as other violations of union vote rules, according to an NLRB ruling published Tuesday morning.

While union organizers, represented by the Retail, Wholesale, and Department Store Union, lost the first vote by more than a 2:1 margin, a second election will be scheduled and held unless Amazon successfully appeals the ruling. Though Amazon is the country's second-largest private employer, no unionization effort at the company has ever been successful.

Keep Reading Show less
Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Latest Stories