What Happened: Today, Chinese beauty lovers may be sad to find their favorite brands missing online. That’s because, on December 16, the lifestyle sharing platform Xiaohongshu (also known as Little Red Book) blacklisted 29 popular brands, including Nivea, Dove, Neutrogena, and Wonderlab, on suspicion of false marketing. When searched for on the site, posts related to these names no longer appear, although their flagship stores remain up and running.
While the platform did not specify the nature of the content in question, a statement from Xiaohongshu, given to Business of Fashion, states: “Xiaohongshu has been targeted by many brands because of its reputation as a trusted platform for recommendations and reviews… By cracking down on the brands themselves, Xiaohongshu’s latest action contributes to tackling the root cause of this industry-wide problem of false marketing.” Xiaohongshu did not say if or how the brands could get rid of their bans.
The Jing Take: Indeed, China has taken more aggressive steps to curb false advertising ever since its new advertising law went into effect in September of 2015. Among those provisions is a ban on the use of superlatives, such as “national-level,” “the most,” and “best.” Other no-nos include fabricating the efficacy of using a commodity and using falsified scientific research.
Several brands had already been flagged for misleading consumers. In 2015, Procter & Gamble was served a nearly $1 million fine for touching up its images, while Xiaomi ran into trouble for claiming its smartphones were “the best.” And more recently, luxury parka maker Canada Goose was slapped with a $71,000 fine for claiming that its down coats are made from “the warmest material from Hutterite” even though most of its products are made with other materials.
Since the consequences of violating this advertising law usually range from hefty fines and civil liabilities (in cases where the advertiser intended to cause detriment to the lawful rights of consumers) to a full cancellation of the advertiser’s business license in China, this ban on Xiaohongshu seems mild in comparison. That said, losing the platform puts brands at a disadvantage as it offers access to 100 million monthly active users, most of whom are female Millennials and Gen Zers who live in Tier-1 and Tier-2 cities — a key demographic for luxury and beauty brands.
Global players should be cautious about how they market themselves in China, especially since Xiaohongshu has been hush-hush about what exactly got those 29 brands in trouble. With local social media sites becoming an increasingly important way for young users to discover new trends and products, brands cannot afford to lose this vital cog in the pre-purchase consumer journey.
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.