What is Xiao Hong Shu and is it right for your business?

Not to be confused with Chairman Mao Zedong’s Little Red Book, Xiao Hong Shu (or ‘little red book’) is yet another successful business created in China.  Commonly called RED in English, Xiao Hong Shu combines the community values of social media with the practicality of e-commerce into a user-friendly platform for Chinese consumers.  Initially built for users to review foreign products, the app has since introduced the ability to purchase products directly from merchants.

Xiao Hong Shu offers high-end products from all around the world that have been reviewed by other users and are available to be purchased directly through the app.  Unlike other online retailers in China, customers are guaranteed legitimacy of the products they purchase because they are filtered through a trustworthy corporation.

Founded in 2013, the app now has over 70 million users with around 200,000 users being added daily.  Their website claims to be the largest electronic business platform community in the world; however, the user base is not at all diverse: around 80% of the users under the age of 30 and 90% of users are female.  The market, consequently, is dominated by cosmetics, beauty products, and nutrition supplements from international brands.  Clothing and high-end fashion are also increasing in popularity as the app gains recognition.

Xiao Hong Shu usage around the world

Among all of the recently emerging e-commerce apps, one might wonder why Xiao Hong Shu has been so dramatically successful apart from the rest.  This is greatly attributed to the company’s encouragement of users to share their experiences and reviews of the products.  Unlike other social media platforms in China such as WeChat or Weibo, Xiao Hong Shu encourages people to share their purchases without fear of bragging to their coworkers or family.  The interactions generated are genuine and public with a large focus on the quality of the international products.  This not only provides the consumers with extensive reviews to help determine which purchase is suited for them, but also gives the users a community to share experiences of shopping worldwide.

A more economic reason for the success of Xiao Hong Shu is that it cleverly utilizes the price gap between foreign products and the Chinese market.  Popular luxury brands such as Alexander Wang or Michael Kors typically have higher prices when sold in China because of high import taxes.  This means that even if branding on Xiao Hong Shu doesn’t generate direct revenue within China, it is a fantastic way to get your brand in front of Chinese consumers.

As a foreign business owner, Xiao Hong Shu may sound like the perfect platform to market your products to Chinese consumers. Considering the majority of app users however, more successful companies on this app generally sell high-end cosmetic products and apparel targeting women under thirty.

With an increasingly competitive interface for the Xiao Hong Shu app, it is important for incoming businesses to be strategic in using this platform to advertise their products. At Tolmao Group we are dedicated to helping international companies comfortably adjust to marketing for the Chinese consumer. Our years of expertise are essential in navigating the world of e-commerce and brand imaging for the virtual consumer world.  For example, we can help connect you to a key opinion leader (KOL) who is an app user with a large dedicated following that can help you communicate your brand to thousands of other users.  We can also help you to plan your campaign around special Xiao Hong Shu events to maximize your brand’s reach. Let us know if you want to set your company up on Xiao Hong Shu or want help with anything else that you might find challenging while here in China.  At Tolmao Group we are here to help.