What happened
Xiaohongshu is racing to expand its reach.
On Chinese New Year’s eve (February 9), Xiaohongshu collaborated for the first time with the Spring Festival Gala, an annual televised extravaganza that has become a key element of the contemporary Lunar New Year experience since its inception in 1983.
As well as placing its merchandise on stage, Xiaohongshu broadcast a live show titled Everyone’s Spring Festival Gala, during which performers were invited to share their Gala experiences backstage.
Leveraging the Gala’s immense influence in China, Xiaohongshu attracted a huge influx of traffic to its platform during Chinese New Year. According to the company’s data, the live broadcast show garnered more than 27 million views and 170 million user interactions.
While audiences watched the gala on their TV screens, they discussed the event on Xiaohongshu. By February 10 (the first day of the Chinese New Year), more than 80 million users had searched for gala-related content, and more than 25 million users commented about the extravaganza on Xiaohongshu.
The Jing Take
Although Xiaohongshu boasts 100 million Daily Active Users (DAU) and is often lauded as the platform in China with the highest number of millennial women and users with high disposable income, its growth trajectory is cloudy as it enters its 11th year of operations.
The company had shed up to half its implied valuation over 2022.
Advertising makes up 80 percent of its revenue, making it more vulnerable than competitors with diverse revenue streams. Its business model has been criticized as being too simple – it’s seen as a platform for cultivating interests, but not for purchases.
In 2020, Xiaohongshu ventured into e-commerce to close the loop from buzz to sale. In 2023, its management merged the company’s e-commerce and livestreaming operations under a new department.
This Spring Festival, in addition to participating in the world’s most-watched TV program – the show attracts about a third of China’s population of 1.4 billion – Xiaohongshu introduced a “nearby” function, facilitating easy access for users to an interactive map showcasing notes, group chats, and livestreams related to food, drink, and entertainment in their immediate surroundings. The move is another attempt to tap into the local life service sector, dominated by Meituan.
While other platforms have plateaued, Xiaohongshu’s commercialization efforts present huge opportunities for luxury brands.
In 2020, Louis Vuitton and Givenchy launched livestreams on Xiaohongshu and gained a fivefold increase in followers within a few days. Last year, Gucci hosted its 2024 Spring Show on Xiaohongshu, which attracted 330,000 viewers, boosting the account’s follower count.
Furthermore, building brand recognition on Xiaohongshu can be very effective as content is primarily driven by users, not brands.
Thanks to the vast ocean of user-generated content (UGC) produced daily on the platform, Xiaohongshu has cultivated many fashion trends.
The virality of trends that stormed Chinese social media in 2023, including “dopamine dressing,” “new Chinese style,” and “quiet luxury,” which boosted recognition of brands like Ralph Lauren and Loro Piana, is down in part to Xiaohongshu.
Though Xiaohongshu lacks the commercialization opportunities other platforms in China provide, it is an important channel for brands to boost engagement and shape the narrative.
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.