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Can Xiaohongshu be Instagram’s Chinese version?

Instagram's Chinese imitator, Xiaohongshu, has reached a valuation of $20 billion in just under a decade and has come out with a unique path of its own style.

If you know the Internet environment of all countries in the world, you will find an interesting thing: the Chinese Internet has a mirror ecology of the international Internet. Almost all common appS of European and American users can find their corresponding products in China. Just as Micro-blog, one of China’s biggest social networking sites, is to Twitter, Huaban is to Pinterest.

But for a long time, Instagram had no app counterpart in China. Many Chinese startups have tried to make a Chinese version of Ins. Even Sina, one of China’s largest Internet companies, has developed an app called Oasis, imitating Ins. However, none of them successed.

This situation has continued until the emergence of the Xiaohongshu, or Little Red Book in some articles.

Rapid growth without a word

Xiaohongshu didn’t start with the goal of becoming China’s Instagram, and it never even claimed that during its development.

Before Xiaohongshu was born, its founders, Mao Wenchao and Qu Fang were not yet well known. But they discovered something at the same time – with the rapid development of China’s economy, young people’s spending power is increasing, and the demand for overseas shopping is growing.

So what to buy? And where to buy?

In 2013, the two founders, also from Wuhan, China, met and hit it off. They decided to create an “authentic word-of-mouth” platform where users can share their overseas shopping experiences and add price, brand, and source tags to their purchases. Other users can use these “shopping notes” to get the information they need more easily and intuitively.

In June of the same year, the R&D company of Xiaohongshu, Xingin Information Technology (Shanghai) Co., Ltd. was established in Shanghai. In December, Xiaohongshu launched an overseas shopping sharing community. Because of the existence of this community, it has first-hand information about the needs of Chinese users of oversea shopping. This also provides the conditions for the subsequent transformation of its product form.

What we can find here, is that Xiaohongshu was born with the gene of e-commerce.

In March 2014, Xiaohongshu completed a multi-million dollar Series A round of financing; in August, the Android version of Xiaohongshu was launched; in November, Xiaohongshu completed a $10 million Series B round of financing led by Granite Global Ventures (GGV).

In May 2015, Xiaohongshu entered a strategic partnership with Blackmores, Australia’s largest health product brand. Without any advertising, the marketing volume of Xiaohongshu Welfare Club exceeded RMB 200,000,000 in six months. During the anniversary celebration on June 6, the Xiaohongshu app was ranked No. 2 in the Life category and No. 4 in the overall list in the apple app Store China in one fell swoop. Its number of users exceeded 15,000,000.

On the first day of the anniversary alone, its sales exceeded the sales of the entire month of May. Later, Xiaohongshu entered into a strategic partnership with Cosme, a comprehensive Japanese beauty website, Panasonic Japan and Kirindo, a Japanese drugstore group.

In January 2016, Xiaohongshu won the Most Groundbreaking app of the Year Award in the Fashion Shopping category on the “2015 Star app for All“ List released by Tencent, one of the largest Internet companies in China. In the same year, Xiaohongshu expanded its third-party platforms and brand merchants, and the full category SKU (Stock Keeping Unit) grew rapidly.

In 2017, Xiaohongshu topped the Apple App Store China shopping download chart during the third-anniversary sale. Only two hours after the campaign started, it achieved 100,000,000 RMB in sales and the number of Xiaohongshu users exceeded 50,000,000.

In May 2018, a new round of financing was led by one of the highest market capitalization companies in China, Alibaba, with new and existing investors such as GSR Ventures, Tencent Investment and GGV. The financial financing amounted to over $300,000,000, valuing Xiaohongshu at over $3,000,000,000.

In June of the same year, Xiaohongshu’s first offline retail store, REDhome, opened in Shanghai. In October, the second offline experience store of Xiaohongshu opened in Shanghai CITIC Pacific Wanda Plaza, while the number of its users exceeded 150,000,000.

In January 2019, the number of Xiaohongshu users exceeded 200,000,000. In October, Xiaohongshu was ranked 84th on the 2019 Hurun Global Unicorn List released by China’s leading ranking agency, Hurun Research Institute. And it ranked third in the 2019 Forbes list of the most innovative companies in China.

As of November 2021, Xiaohongshu closed a new $5000,000,000 round of funding, at which point it was valued at $20 billion.

The popularity of Xiaohongshu is not only limited to mainland China either, the app is also very popular in Taiwan, China and Hong Kong, China. Mainland China usually uses Simplified Chinese, while Taiwan is used to using Traditional Chinese. But because of the Xiaohongshu app, some young Taiwanese have even sparked a boom in learning simplified Chinese to be able to use it more easily. From here you can also see how popular Xiaohongshu is with young people today.

Like Instagram, but not the same

bigger pictures, more texts

It is said that Xiaohongshu is the Chinese version of Instagram. Yes, there are similarities. Both of them are mainly pictured social function app. Users upload their pictures and communicate and share them with people who have the same preferences through features such as messages. In that respect alone, they are indeed very similar.

However, after the first impression, it becomes clear that there are still many differences between the two. Ins has taken this feature of photo socialization almost to the extreme – after users upload photos or short videos, they can barely add text notes below to share their feelings. Interaction between people is more often done with “likes”, “comments” and “retweets”.

Compared with Ins, Xiaohongshu is not only have lots of photos, its tests also include more words. Usually, Chinese users will send photos with a message, commenting on the photo or expressing their feelings at the time.

For example, user A who loves sports, uploaded a photo of herself working out and wrote: “on the 40th day of keeping fit, all the exercisers are shining brightly. Only with everyone’s company can I could keep going. Stick to it together and be better ourselves”. At this time, fans may reply in the message: “it’s great that you can keep exercising for so long! Let’s work out together afterward!”

People will be especially enthusiastic to interact if there are topics for discussion below the picture. If you want to achieve a similar effect in Ins, it requires the user to open photoshop and add text to the image. This certainly raises the threshold for users and somehow affects the desire to interact.

Perhaps because of this large picture and text display, Xiaohongshu and Instagram have different information flow patterns in the “discover” list.

Ins’ listings have photos next to each other, showing users more options in the same page. The list in Xiaohongshu is divided into two columns, left and right, displaying photos and some text at the same time so that users can find the content they are more interested in.

Not just posting photos

With text as a carrier, Chinese users share more content on Xiaohongshu than on Instagram. Users with different interests will form different groups here.

Just like Ins users, Chinese Xiaohongshu users also love to share images – selfies, landscape photos, and other types of photos. In addition, people also like to share all kinds of snacks and beauty products, share travel tips, share their treasured models, etc.

For Chinese users, Xiaohongshu is more like a Yelp. Users can look up or post descriptions of any goods/services and locations.

For example, “a restaurant that is very hot on the Internet, although the appearance of its dishes is very sophisticated, but the taste is very general.” Or, “the clothes from one store and the shoes from another store look good together, why not try it out ?”

As long as they are willing to search, Chinese users can always find the “tips” they need on Xiaohongshu.

Online community and e-commerce formed a commercial closed-loop

The biggest difference between Xiaohongshu and Instagram is undoubtedly the commercial pattern.

Users can buy what they want in Xiaohongshu without switching to another App after being recommended by the online community. After its launch, Xiaohongshu completed the business loop from online community to e-commerce platform in just a few years.

As mentioned before, the e-commerce gene of Xiaohongshu has been there from the very beginning. Soon after the app launched, it had several million users. Then it started to take the next step – launching an e-commerce business.

The first product launched on Xiaohongshu is the Apivita Cleaning Solution from Greece. The product was so hotly talked about and well-received in the community that it sold out almost as soon as it was launched. This further confirms the two founders’ belief that a community like Xiaohongbook is a natural fit for selling goods.

The core of the Xiaohongshu community is to share overseas shopping experiences. As the number of users continues to grow, what products do users focus on the most? What are the most concerning issues? You can find the answers to all of them here. It has first-hand information about the demand for overseas goods. Therefore, the transformation of Xiaohongshu from a vertical community to an e-commerce platform is also logical.

After this, the two founders chose to establish partnerships with international brands such as Chanel and Versace to ensure the quality of the products. Xiaohongshu has even established a set of international logistics systems, the origin of goods, flights, warehouse information is clear. It has set up bonded warehouses covering a huge area in Shenzhen and Zhengzhou, and a stock preparation warehouse in Shanghai, which greatly shortens the logistics time. It takes only two or three days for a user to place an order and receive the goods.

The online community and e-commerce platform complement each other, and the commercial pattern of Xiaohongshu has finally taken shape and entered a rapid development stage.

In the first five months of 2015, Xiaohongshu sales exceeded RMB 2000,000,000. By the time it closes its latest round of funding in November 2021, it reached a valuation of $20 billion.

Facing new controversies

Xiaohongshu has also faced a lot of controversies over the years. For example, the filter of the landscape photo which uploaded by a blogger was extremely strong — so strong that other users could not even recognize it when they truely went there. In 2019, Xiaohongshu was found that some of the recommendation notes were written by ghostwrite, or even falsified and other problems, which attracted a lot of attention.

Even the app itself has been removed from various application markets for a time. The Company was released, claiming that Xiaohongshu has launched an investigation and rectification of the station to ensure the optimization and enhancement of the users community.

One of the biggest controversies is “whether Xiaohongshu is a trap of consumerism”.

A user posted a note on Xiaohongshu saying that “if you don’t go online, you live a good life. As soon as you go online (Xiaohongshu), the world tells you what you’re missing and tells you to buy something.” It is also the common view of the Chinese public.

This is the problem that Xiaohongshu was destined to face from the beginning of its birth, as it is an app that shares products and recommends commodities. As the years have passed, this issue has become even more obvious. When you open the app, it seems that every Xiaohongshu blogger is living in a five-star hotel and using big-name jewelry and skincare products — unfortunately, some of these are not even true. This makes the platform hard to aviod the critiscism of promoting consumerist.

Recommendation notes on Xiaohongshu often carry tags such as “practical”, “cheap” and “cost-effective”. The exaggerated tone of “this thing is super good, not buying is your loss” is obviously a result of commercialization, aiming to reinforce the user’s impulse to consume. It is one of the reasons why Xiaohongshu is criticized as a trap of consumerist.

Objectively speaking, Chinese people’s spending power is increasing year by year. According to the relevant data, by the end of 2019, the number of Chinese households with RMB 6,000,000 in assets had surpassed 5,000,000. And the number of households with ten million in assets had exceeded 2,000,000.

Such a large group of people also seems enough to support a Xiaohongshu type of exquisite life.

According to the data, Xiaohongshu users are trending younger. Of the approximately 148 million monthly active users, 67% are women, 44.99% are under 24 years old, and 75.62% are middle and high-level consumers in total.

Its user composition makes the troll within the platform very little, and the users themselves have enough economic base and resolving ability. Indeed, a small percentage of the notes on Xiaohongshu are exaggerated and over-embellished. But to accuse the platform of being a consumerist trap would be biased.

If Xiaohongshu wants to get rid of so much controversy, future control of the platform content is essential and it still has a long way to go. Bt for now, this Chinese version of Instagram has taken a big step ahead of its development path.

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