Will Xiaohongshu become China’s top app?

What happened Chinese social media platform Xiaohongshu is expected to double its overall profit to over $1 billion by the end of 2024 — and possibly go public as it pivots from a user growth-oriented strategy to one that prioritizes profitability, according to reports. Xiaohongshu’s sales in Q1 2024 slightly surpassed $1 billion, with a net profit of $200 million. Prior to this, the company achieved profitability for the first time in 2023, with a revenue of nearly $3.7 billion and a net profit of $500 million. The company was valued at $20 billion in its last funding round in 2021, and this year, it completed a secondary share transaction, reaching a valuation of $17 billion. Investors in this latest round included DST, Sequoia China, Hillhouse Capital, Boyu Capital, and CITIC Capital. The Jing Take Is China’s own version of Instagram poised to become the biggest social media app in 2025? Founded in 2013 by Charlwin Mao and Miranda Qu, and originally serving as a shopping guide platform for Chinese tourists, the platform is often likened to Western apps such as the aforementioned Instagram, as well as Pinterest. In its current iteration, the app remains a recommendation and “edutainment” platform where users can research and mine posts for referrals on everything from the best skincare products, to lifestyle inspiration, relationship tips, as well as where to travel during the next break. By 2023, Xiaohongshu had amassed 300 million users, over half of which comprised Gen Z. Seventy percent of the platform’s users are female. In recent years, brands have placed significant importance on building a presence on Xiaohongshu due to its users’ spending power, which differs greatly from other platforms, according to industry experts. The platform’s trends and data have also provided valuable insights for brands, helping them understand consumer preferences, popular lifestyle trends, and effective public relations and marketing strategies. Experts speculate, should Xiaohongshu fully pivot toward monetization, its earning potential may soon rival that of major players such as Tmall, JD.com and Pinduoduo, which combined make up over 90% of China’s Gross Merchandise Volume of $2.78 trillion, according to Reuters. Only time will tell if the platform will realise its full earning potential. However, according to press reports, brands like L'Oréal and Tapestry are already keeping an eye on Xiaohongshu, and looking to gain access to the millions of “niche” consumers the app may soon connect them with. As Xiaohongshu evolves, its growing profitability and unique consumer base signal that it could become a pivotal player in China’s ecommerce landscape. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Will Xiaohongshu become China’s top app?

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Published December 18, 2024

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Will Xiaohongshu become China’s top app?