Xiaohongshu (Rednote) after the TikTok Refugees’ dust has settled
A look at the impact of the trend on Xiaohongshu’s internationalisation and cross-border plans. Plus an update on its domestic goals.
Contents
Things that caught our attention
Rui Ma was a guest on The Negotiation podcast with Todd Embley to talk about the US-China AI race. You can listen to the two parts of the episode below.
Rui was also interviewed by Channel News Asia about the unexpected popularity of Chinese webshops like DHGate. You can read the article here and read Rui’s note on the matter here.
History repeats itself as Meituan Xiao Xiang opens offline stores
What the 2025 Shanghai Auto Show Revealed About the Future of Intelligent Driving
Only 30% of the competitors crossed the finish line in this gruelling humanoid robot marathon
Introduction
Last January, in the midst of the ‘TikTok refugee’ craze, we published an article that attempted to answer some of the questions about the international version of Xiaohongshu, Rednote.
In the past months, we have uncovered some new insights that we would like to share with you. This article takes another look at the question of whether Rednote and Xiahongshu are separate apps, evaluates the impact of the influx of TikTok Refugees and the platforms’ plans for internationalisation. It also examines Xiaohongshu’s recent ventures into cross-border e-commerce. And while we are at it, we also update you on Xiaohongshu’s 2024 results in its domestic market and its plans for 2025.
The text below is partially taken from interviews with staff members of Xiaohongshu's overseas operations at the end of January. From the impact analysis onwards, the article is accessible to paid subscribers. Please consider supporting our work and getting a paid subscription as well.
Cheers,
Ed Sander – Research Editor
Same same, but different
To start, let’s look again at the question of whether Rednote and Xiaohongshu are the same app.
Xiaohongshu faces fierce competition in the international market. In the Chinese market, it competes with Douyin and Weibo, while in the North American market, it faces challenges from YouTube, Instagram, and the popular TikTok. Unlike Douyin and WeChat, which adopt a dual-version strategy, Xiaohongshu has chosen to use a single version to serve global users through the same app. Xiaohongshu shares a database system in the domestic and international markets.
The purpose of this unified design is to simplify the user experience, improve work efficiency, and build a strong global ecosystem. This unified global app strategy has an essential impact on the development of Xiaohongshu and helps it establish a more consistent and powerful brand image in the international market. The content of the international and domestic versions of Xiaohongshu is the same, and the only difference is the language interface, so there is no need to release separate versions.
Even before the TikTok Refugees trend, Xiaohongshu achieved globalisation through a unified platform, initially attracting many Chinese students and overseas Chinese. Unlike TikTok, which needs to set up a branch in North America, Xiaohongshu thinks it reduces regulatory risks through a unified platform. If an independent overseas business unit is established, expenses will rise by 40% to 50%. In general, Xiaohongshu has adopted a cautious and effective internationalisation strategy while maintaining its core advantages; it is also gradually expanding its global influence (see ‘Internationalisation?’).
Xiaohongshu currently has no plans to make operating in different regions in overseas markets a priority but continues to focus on developing the domestic market. The company has a small number of employees, about 4,000 to 5,000, which is minimal compared with its competitors. This only allows them to focus resources on their core business. Launching a new international version would take a lot of resources while using the existing version can significantly reduce expenses. In addition, dividing operations into multiple versions may increase management complexity and the difficulty of collaboration between departments.
Xiaohongshu does allow eligible overseas users to turn on the live broadcast function, but they cannot currently earn income through rewards or advertising. Overseas users need to pass identity verification to obtain live broadcast permissions. Suppose overseas users want to receive reward income. In that case, they need to sign an employment contract with a content agency in China, and the income will be regarded as wages and subject to personal income tax. The income from personal accounts is viewed as labour remuneration and is subject to individual income tax.
Since relevant policies have not been fully liberalised, Xiaohongshu's commercialisation function is still experimental. In terms of technical architecture, Xiaohongshu relies on Alibaba Cloud as its primary cloud service provider to ensure the server's normal operation and achieve load balancing. Xiaohongshu enhances the system's stability and scalability by using a distributed architecture to allocate each functional module to an independent node. This system was developed by Xiaohongshu's internal team and uses Alibaba Cloud's resources to handle faults and improve performance.
Regarding data storage, Xiaohongshu has not yet decided how to store overseas data and may adopt a dual-line mode: domestic data is stored domestically, and overseas data is stored locally. This dual mode will not affect the cross-border usage experience but will only change the physical storage location of the data. Still, it may need to be adjusted according to policies in the future.
Xiaohongshu developed a translation feature and rolled it out on January 19th, the same day TikTok returned online after about half a day of absence. Earlier reports suggested that some Xiaohongshu teams had been working overtime since Jan. 13 to handle the sudden surge in user traffic and translation demands. [1]
The new feature is not a typical machine translation tool but an AI-powered model. The translation function handles Chinese-to-English and English-to-Chinese translations and identifies and explains common internet slang terms. Besides English, German, and French, the translation feature appears capable of handling a wide range of languages. [1] XHS recognises that the translation function is crucial to attracting international users, so it is increasing its investment in artificial intelligence.
Xiaohongshu User Statistics
Compared with major social media platforms in the United States, Xiaohongshu's user scale and growth are impressive. By January 2025, YouTube's daily active users was 155 million, Facebook's 127 million, TikTok's 85 million, Instagram's 63 million, and Twitter's 26 million. In contrast, Xiaohongshu's global daily active users reached 143 million by the end of 2024, a YoY increase of 32.4%; the monthly active users was 376 million, an increase of 30.5%.
The average usage time of Xiaohongshu users has also increased significantly, reaching 76.4 minutes, an increase of 17.9% YoY. Daily post views have reached 9.12 billion times, an increase of 41.4%.
The rest of this report is available to paid subscribers.
The Impact of the TikTok Refugees
After the TikTok Refugee incident, the number of Xiaohongshu users in overseas markets increased significantly. Specifically, from January 14 to 20, 2025, Xiaohongshu's downloads on the overseas app store reached 3.84 million, of which 700,000 new users were added in the last two days, topping the free app download list.
In the US, Rednote was number one in the Apple app store from January 13 to 23 and one day longer in the Google Play store. And it wasn’t just the US; in 42 of the 63 non-Western countries tracked by Sensor Tower, the app ranked in the top three spots on the charts at some point between January 13 and January 21. [2]
The introduction of international content has had a multi-faceted positive impact on the Xiaohongshu platform. First, it has increased domestic users' frequency, duration, activity, and retention. The number of posts on TikTok has exceeded 50,000, and the total number of views has exceeded 10 million. In addition, users' interactive behaviours, such as comments, likes, and shares, have also increased significantly.
Second, Xiaohongshu's content has become more colourful due to the participation of international creators, and the platform's content range has expanded from life guides to themes of cross-cultural communication. This diversification not only enhances the vitality of the community but also inspires the creative enthusiasm of existing creators.
The platform's primary resource is still local creators. However, XHS also noticed that the participation of domestic and foreign creators can be improved through the combined effect of new traffic and hot topics. This approach not only attracts more creators but also brings new vitality to the platform. More importantly, evenly distributing resources and integrating diversity can provide all creators with broader development opportunities. This inclusive strategy will ultimately enhance the overall strength of the platform and make it stand out in a highly competitive market. To attract international users, Xiaohongshu is committed to optimising content recommendations and improving user experience and strives to differentiate itself from its competitors.
A quick sidenote. Although the outside world may compare Xiaohongshu with platforms such as Bilibili, Zhihu, and Weibo, Xiaohongshu does not consider them direct competitors because they have specific industry attributes. Internally, Xiaohongshu considers Douyin and Kuaishou its main competitors, mainly from a commercial perspective. XHS plans to penetrate multiple business fields in which Douyin is already active, such as games, home improvement, automobiles, and real estate. In the future, Xiaohongshu's development direction will be more inclined towards Douyin and Kuaishou.
Finally, this content diversification can meet different users' needs while providing a new direction for the platform's innovation. European and American markets have shown a strong interest in new and diverse forms of social media. XHS thinks it will undoubtedly help it continue to attract and retain new users. It will continue to pay attention to market trends and optimise the platform experience according to user needs to maintain and expand our user base.
Xiaohongshu's search volume growth and changes in user interest reflect some interesting social and cultural trends. Nearly 70% of monthly active users have search behaviour on Xiaohongshu, and one-third of monthly active users go straight to searching as their first action upon opening the app. Since the fourth quarter of 2024, Xiaohongshu's daily search volume has reached nearly 600 million (73% of daily active users perform searches), doubling in a little over a year. This growth has primarily been taken from Baidu, which still leads the market with an estimated 1 billion daily searches. At this growth rate, XHS could surpass Baidu in 2025. [3]
In particular, from January 13 to 16, 2025, there was a significant increase in search volume due to the influx of new users and the influence of hot topics. Foreign users have shown a strong interest in topics such as Chinese culture, tourism and food. At the same time, XHS observed that more and more domestic users have begun to pay attention to foreign lifestyles, which is reflected in the increased number of related searches.
This two-way interaction may profoundly impact the future development of Xiaohongshu. It enhances the platform's information exchange function and highlights the key role of search in maintaining user activity. This trend shows that Xiaohongshu thinks it is becoming an essential platform for connecting Chinese and foreign cultures and promoting cross-cultural exchanges.
When the trolls arrived TikTok refugees started telling them to behave.
Internationalisation?
Many people wonder how serious XHS was about internationalisation and if the TikTok Refugees were an unexpected headwind of a sudden worry for the platform. Is it serious about internationalisation after its other international apps (Unikk, Spark, Takib, Catalog, habU and S’more, all launched between 2021 and 2023) were all killed or failed to make much of a dent.
If XHS is to be believed, it now sees the internationalisation of Rednote as the way forward.
XHS has 380 million monthly active users worldwide, including domestic Chinese and international users. Although Xiaohongshu has attracted some international users, its scale is still much smaller than TikTok's. In the future, Xiaohongshu will focus on developing specific areas and improving the recommendation system to consolidate its unique market positioning.
Xiaohongshu has 8.5 million international DAU and more than 35 million international users per month. Users spend an average of 81 minutes on the app every day. The company has an ambitious growth plan: by 2025, it aims to reach 30 million daily active users and 83 million monthly active users in the international market and extend the average user time to 88 minutes.
The company has made ambitious plans to increase the number of monthly active users to 500 million in the next 2-3 years, of which more than 20% will be from overseas. To achieve this goal, Xiaohongshu plans to hold a series of events, including an international cultural exchange festival and overseas food-sharing sessions, to attract global users to participate. In addition, Xiaohongshu also plans to increase its cooperation with international brands and Internet celebrities to enhance its global influence.
Xiaohongshu's leading user group in foreign markets comprises young people aged 18 to 35. As of January 15, the proportion of users in this age group has increased significantly from 60% to 73.2%, showing the platform's continued appeal among young users.
During market fluctuations, excellent product experience can create opportunities, achieve short-term growth, and optimise long-term strategies. Xiaohongshu's global daily active user number increased to 153 million as of January 16, 2025, including millions of overseas users. Note that these include overseas Chinese and Chinese diaspora who are already using the app. For instance, XHS has 1.5 million users in Malaysia and over half a million in Singapore. [4]
The number of users in the United States has increased significantly, becoming the primary source of growth, far exceeding other regions. In addition, Mexico, Spain and EU countries have also contributed to user growth.
In January, the number of daily active users in the US market was expected to remain between 2.4 million and 2.5 million. According to data from January 18 to 20, although the US market's growth rate slowed, it remained high. This rapid growth supports Xiaohongshu's global expansion strategy while creating new opportunities and challenges for its long-term development.
XHS attracts and retains users from different countries and regions through diversified content. It covers content in multiple fields, such as beauty, fashion, food and travel, which can cater to the interests of users from different backgrounds. In terms of community building, the platform has created a very friendly atmosphere, and Chinese users have warmly welcomed new overseas users, which has promoted positive cross-cultural exchanges.
To further promote user participation, the platform allows the uploading of short videos, graphic notes and long pictures, providing European and American users with more opportunities to create and share content. The platform is committed to enhancing community building, advocating active exchanges between Chinese and foreign users, and striving to create an open and friendly platform environment.
The platform has taken several specific interface optimisation measures to attract and retain users. First, it adjusted the button position and feed display method of the video playback interface to make it more in line with the usage habits of TikTok users. It thereby reduced the difficulty of users migrating from other platforms. Secondly, the platform adopted a single-column feed display method through interface redesign. This change significantly improved the user experience and helped to cope with fierce market competition. These improvements can lower the usage threshold for new users and arouse users' interest, thereby increasing user stickiness and long-term retention rate. These interface optimisations positively impact the platform's user experience and competitiveness.
Although the globalisation strategy will raise costs in the short term, it also offers the platform long-term growth opportunities. The platform can enhance its reputation by strengthening content management and laying a solid foundation for long-term development. At present, overseas users have not yet brought significant commercial benefits to the platform, and the primary source of income is still other platforms, such as TikTok. Although the direct benefits are not high, the significant increase in new users has greatly expanded the platform's scale.
Due to the increase in international users, the cost of acquiring customers has dropped from RMB 50-60 per person to RMB 15-20, a drop of more than 50%. These data show that despite the challenges that may be faced in the short term, the platform's globalisation strategy is gradually showing its value.
Another sign that Xiaohongshu is serious about internationalisation is that it has launched a global MCN recruitment program to onboard international video creators. They must bring in at least 50 influencers monthly during a three-month trial period. It has also secured an office space next to Alibaba in Hong Kong’s Times Square. [5]
A Xiaohongshu feed in February 2025, filled with international content.
Retention of international users
According to information revealed by iFeng Technology Channel, Xiaohongshu's unexpected international popularity has brought "global challenges that are greater than the surprise of traffic flow" to the platform. Xiaohongshu has received "traffic dividends" from large-scale registrations by foreigners before, but ultimately, the conversion effect on monthly active users was minimal. [6]
During the TikTok refugee influx, the retention rate of new international users remained between 50% and 56% on the second day after registration. Still, it began to show a downward trend on the third or fourth day.
Getting a few million new users thrown in your lap is one thing. Retaining them another.
In the week that TikTok ‘came back’, US daily active users dropped by more than 50% this week, according to data from Similarweb. The app’s daily active users fell to 16.25 million on Monday, down from a peak of 32.5 million when the ban was first announced. Sensor Tower data revealed a 17% decline in average US mobile users between Jan. 20 and 22 compared to the previous week. [7]
According to Sensor Tower, daily active users in the U.S. averaged 800,000 in March 2025, down from its peak of 1.3 million in January, though still up 114% from December 2024. Global daily active users outside of China fell to 6.1 million in March, down from the January high of 8 million, but a 28% increase from December 2024. Note that the 7 million overseas users XHS had before 2025 are mostly of Chinese descent. [27]
XHS is aware that changes in the external market environment may impact user traffic. For example, if the policy risks of TikTok are alleviated, it may lead to the return of some users. Nevertheless, even if TikTok resumes normal operations, XHS believes that with the platform's rich content and smooth user experience, it will still be able to retain a considerable number of newly acquired users.
TikTok's resumption of operations may indeed impact Xiaohongshu, but it needs to evaluate this impact from both short-term and long-term perspectives. Although some users will (and did) transfer back to TikTok, this situation is difficult to predict accurately.
Xiaohongshu has successfully attracted a group of loyal users with its unique features, such as picture posts and long-form content. In addition, the platform's innovative social media tools cater well to the needs of Western consumers, and these core advantages will remain even when competition resumes. Finally, XHS thinks it cannot ignore the user growth effect caused by emergencies, which will not completely disappear and provide additional support for Xiaohongshu to maintain its market position.
The platform has the technical and operational capabilities to support large-scale user growth. However, in the long run, the continued growth in the number of users will depend on whether the platform can enhance its content review (see ‘The compliance costs of globalisation’) and supervision capabilities promptly to adapt to the speed of international user growth. In addition, the degree to which users' needs for different content formats (such as pictures and texts, notes, and long pictures) are met will affect their long-term retention rate. The platform must continuously optimise its content strategy to maintain users' long-term interest and activity.
When cultures started to clash, there was a need for stricter moderation.
And then there are Western influencers. To join XHS’ Dandelion Program, which connects influencers with brands and allows them to monetise their followers, the influencers must upload a photo including their face and passport photo page. Still, they can’t live stream and run stores, since this requires a Chinese ID. Foreign influencers also can’t withdraw commission fees without a Chinese bank account. They can, however, receive payments by connecting to overseas marketing agencies. [27]
The compliance costs of globalisation
The following is an extensive enumeration of Xiaohongshu's measures to improve global compliance.
XHS is famous for its unique atmosphere and high-quality content, and the increase in overseas users may impact the existing ecosystem. Therefore, content auditing will be strengthened to ensure the community's high quality and attract more new users. These measures aim to maintain the platform's core values while adapting to the new challenges of internationalisation.
Xiaohongshu says it fully fulfils its corporate responsibility to ensure compliance with relevant domestic and international laws and regulations. The platform has launched the most stringent content correction policy ever, mainly targeting various types of harmful information. It has implemented an absolute ban policy for recommendations that exaggerate the effects of cosmetics and content about unhealthy lifestyles.
Xiaohongshu says it is committed to creating a positive and healthy online environment. In response to regulatory issues, it has launched a series of improvement measures for content, advertising and data management. Since the beginning of this year, it has begun to conduct regular internal inspections and established a transparent risk management system to deal with security issues promptly with the help of third parties. External agencies are hired to perform data security inspections to ensure compliance with regulations and security. The platform's data protection measures cover the entire process from data generation to destruction.
Xiaohongshu says it is committed to meeting the requirements of domestic and foreign regulators regarding data privacy protection. While complying with Chinese laws, it also actively responds to regulatory challenges from other countries and regions. It is upgrading its systems to meet world-class compliance and data management standards to ensure that it can pass future security and data compliance reviews.
The company improves efficiency and manages risks by combining manual and AI review methods. At the same time, Xiaohongshu is seeking professional translators to enhance the quality of translation, promote communication and avoid misunderstandings. Its automation level reached 95%-96% in the early stages. However, with the increased business complexity, the current proportion of automated processing has dropped to 80%-85%, and 15%-20% of the work still requires manual intervention. In some complex situations, manual intervention is still needed to ensure accuracy. In general, Xiaohongshu is constantly improving internal processes to cope with the growth and complexity of the business. These measures improve the company's operational efficiency and strengthen its risk management capabilities.
During the content review process, XHS uses a variety of automated tools to improve efficiency and accuracy:
Detecting banned words in multiple languages
Reviewing various forms of content and providing modification suggestions
Processing large amounts of data and has risk warning functions
Short video data analysis in the e-commerce field
Deep learning technology to update sensitive word libraries in real time
Efficiently handle large amounts of search tasks
Xiaohongshu plans to increase its content review investment by more than 30% between 2025 and 2026. Specifically, the platform plans to invest RMB 200-300 million in content review in 2025, and this figure will increase by at least 30% by the following year. This growth rate far exceeds the annual growth rate of 7-8% in the past few years, reaching an all-time high.
To achieve this goal, the platform will take several measures. First, they will form two independent teams responsible for manual review and AI system optimisation. Secondly, it plans to expand the size of the content review team from more than 500 people to more than 1,500 people within a year. This large-scale investment will undoubtedly have an impact on the company. Investing in recruitment and technology upgrades will increase operating costs in the short term. However, these resources are used to meet the challenges of globalisation, such as compliance with local laws and regulations and providing multilingual support, which is crucial to the company's long-term development strategy.
With the rapid growth of Xiaohongshu's international user base, there are several significant challenges in content management and auditing. First, the main reasons for the budget increase include cross-cultural management, the complexity of multilingual auditing, and maintaining the uniqueness and image of the platform. Cultural diversity places higher demands on content management because content widely accepted in China may be controversial or violate regulations abroad, requiring more resources to ensure compliance. In addition, foreign users communicate in non-Chinese languages such as English, which poses difficulties for the existing audit team.
In countries with deep religious traditions or where consumer rights are highly valued, Xiaohongshu has strengthened content review standards to prevent publishing information that conflicts with local beliefs or customs. At the same time, advertising and commercial activities in these countries are more strictly regulated to ensure compliance. Finally, Xiaohongshu has implemented stricter regulatory measures on cross-border advertising to prevent consumers from being misled or encountering fraud.
XHS has strictly followed the latest version of the Advertising Law of the People's Republic of China, including the revisions in 2024 and 2025. It has increased the proportion of manual reviews from less than 5% to 10%. At the same time, it requires advertisers to submit authentic and valid qualifications and will strictly review the effect of publicity and data sources. In addition, it has more strictly managed the form and location of advertisements to reduce interference with user experience.
The platform has adopted two strategies to address these challenges: attracting multilingual talent and improving the AI system's multilingual processing capabilities.
Xiaohongshu has developed detailed strategies in accordance with the laws and regulations of various countries, involving content review, language translation, and data processing. By January 15, 2025, the company's number of reviewers increased from 317 to 502, and it plans to reach 1,000 by mid-2025. To ensure that the content complies with regulations, Xiaohongshu has added auditing proficiency in English, French, Spanish, and Arabic and familiarity with local cultures.
The company strengthened internal supervision measures and invited external agencies to conduct audits to enhance privacy protection. In the US market, Xiaohongshu faces the risk of data security review due to political factors. Although the US government has not yet conducted a large-scale investigation into Xiaohongshu, the company has taken preventive measures. Xiaohongshu has formed a team of Chinese and foreign lawyers to ensure its data operations comply with US laws. In addition, the company is updating its systems according to the world's top standards to cope with possible future reviews.
Xiaohongshu says it strictly complies with GDPR in the EU market, one of the world's most stringent data protection regulations. When operating in the EU region, the platform obtains users' explicit consent and signs relevant agreements before collecting and processing personal information. The platform has established procedures to ensure users can view and delete their personal data. These measures aim to avoid huge fines or severe penalties for violating GDPR.
Still, the Xiaohongshu app comes with potential risks. In February, Citizen Lab released a report on Android and iOS network security issues, reporting that all versions of Xiaohongshu/RedNote fetch viewed images and videos over HTTP, which enables network eavesdroppers to learn precisely what content users are browsing. Some versions contain a vulnerability that allows network attackers to learn the contents of any files that RedNote can read on the users’ devices. All analysed versions also transmitted insufficiently encrypted device metadata, sometimes over TLS without certificate validation, enabling network attackers to learn device and network metadata, such as device screen size and the mobile network carrier. [8]
The launch of cross-border e-commerce
Before 2025, XHS has already taken its first steps in cross-border e-commerce. It hosted its first U.S. business partner recruitment fairs in New York, Los Angeles and Las Vegas in December and February, announcing it was targeting Southeast Asia, North America, Hong Kong, and Macau. Most attendees were business owners of Chinese descent. [27]
According to data from Similarweb, on January 13, Xiaohongshu reached approximately 3.4 million daily active users on iOS and Android platforms in the US, even briefly topping the US App Store’s free application download chart on January 14. However, the number of daily users from the US had halved by mid-February, from 1.2 million to 500,000. But despite this exodus, Xiaohongshu has opened a (temporary) office in Hong Kong at Times Square in Causeway Bay to help it expand its international business operation. [24] [25] [26]
XHS also released several overseas job openings, recruiting individuals for industry operations, legal affairs, and data privacy roles, as well as other related positions. [26] Xiaohongshu has also started recruiting at many universities, including the University of Hong Kong. Currently, it has only released one position for management trainees in cross-border business. Xiaohongshu is also hiring high-paying AI positions, hoping to use AI to reduce operating costs. [29]
On February 10, Xiaohongshu launched a plan to recruit overseas MCN agencies, requiring them to have experience in cooperation with platforms such as TikTok and Instagram. It is reported that Xiaohongshu will focus on localised operations in the future, and further enrich its content ecology by cooperating with overseas MCN agencies, recruiting overseas celebrities, and introducing overseas brands. [28]
According to Xiaohongshu, "TikTok Refugees" had seen products on the app and inquired about how to purchase them. On March 11th, Xiaohongshu announced its “Overseas E-commerce Pioneer Program,” helping merchants sell cross-border. [25]
Xiaohongshu e-commerce announcement [26]
Introduction to the Overseas Pilot Program
“Overseas E-commerce Pioneer Program” is an overseas solution created by Xiaohongshu for merchants, integrating full-link services such as online transactions, trade exports, cross-border payments and localised operations to help merchants reach global users. After signing the agreement to become an overseas merchant, you can use the Xiaohongshu content ecosystem to display in multiple fields such as notes, live broadcasts, and stores.”
“At present, the first phase of the "Xiaohongshu E-commerce Overseas Pilot Program" has covered the US, Hong Kong, China and Macau markets. Relying on Xiaohongshu's domestic and overseas content and community advantages, it helps merchants break through the geographical limitations of operations and achieve cross-border sales growth. By connecting content and e-commerce scenarios, the “Overseas E-commerce Pioneer Program” has become a key link in connecting merchants and overseas consumers.”
”Currently in the beta stage, some merchants will receive invitations.”
Merchants would be able to enjoy the following benefits: [26]
Acquiring global users and expanding into overseas markets: Merchants can accurately reach overseas users through "post seeding + algorithm recommendation";
Intelligent translation: Products, notes, customer service, account homepages, etc. support automatic multi-language conversion to ensure the shopping experience of overseas users; automatic intelligent translation to help merchants handle inquiries from overseas users;
Official cooperative logistics: Xiaohongshu will collaborate with international logistics service providers to offer comprehensive logistics solutions.
One-stop operation in the merchant backend: order processing, product management, marketing campaign settings, and other related businesses can all be completed at one stop in the Xiaohongshu Qianfan system.
XHS will review product categories and products under the conditions for overseas export. For existing merchants, joining the overseas expansion plan does not require opening a new store, and no deposit is required. In addition to the technical service fee charged based on the main agreement, the Xiaohongshu e-commerce platform does not currently charge merchants any additional service fees. [26]
Regarding payment, merchants do not need to open foreign exchange accounts. When users place an order, they will see the reference price in the corresponding currency, which includes currency exchange fees and exchange losses. Merchants do not need to bear the relevant fees, and the platform will ultimately settle in RMB to the merchant's domestic account. [26]
Regarding logistics, taxes, and international shipping costs are all borne by the consumer. Merchants only need to send the goods to the transhipment warehouse designated by Xiaohongshu according to the promised delivery time. The transhipment warehouse will then carry out customs clearance and logistics transportation. Users can see the entire logistics track on their mobile phones. [26]
Regarding operations, merchants do not need to prepare English materials, as the system will automatically translate according to the user's language settings. However, Xiaohongshu officials stated that for merchants in the clothing and shoe industry, adding pictures of overseas sizes to the product details page is recommended to facilitate user understanding. [26]
After the order is shipped, consumers can apply for after-sales service due to product quality, logistics and transportation issues, and the merchant authorises the platform to handle after-sales. Once the platform verifies that the problem does exist, it will negotiate with the merchant to provide compensation or a refund to the user. The platform can deduct the merchant's remaining payment based on after-sales responsibility and compensate the consumer. [28]
Xiaohongshu cross-border versus others. Source: [28]
The first batch of products selected for Xiaohongshu's overseas expansion mainly consisted of daily consumer goods such as home textiles, home furnishings, shoes, clothing, luggage, and small appliances. Some niche categories, such as handmade accessories and cultural and creative products, which are difficult to find on other overseas e-commerce platforms, were also unexpectedly selected. These popular categories mainly target young women (accounting for 78.64%), who have high spending power and pursue quality of life. [28]
Within a month of the trial of the overseas expansion plan, Xiaohongshu made adjustments and further expanded the categories, and sellers of pet supplies, porcelain, jade, gardening, handicrafts and other categories were invited to join. In addition, it has begun to lower the entry threshold, which may mean that the time for full opening is not far away. [28]
Merchant experiences so far
Chinese merchants on XHS have not been impressed by the cross-border operations so far. [27] [28]
Livestreams mainly reach mainland Chinese, and there is no paid option to adjust it to a US target audience.
New sellers needed to pay a RMB 600 certification fee that would not be refunded if certification failed.
Delivery times to US consumers is long (12-17 days) compared to other platforms like Temu (7-10 days)
As we have also seen with Temu, sellers are dissatisfied with the platform’s rules for refunding consumers. The after-sales mechanism is tantamount to a "hidden cost" for merchants, and may even eat up their already meager profits.
Xiaohongshu claims to "value featured products", but in reality, it only opens standardized categories such as home textiles and home furnishings, and the algorithm screening criteria are not public. This has led many sellers to question the invitation criteria.
XHS's standards for removing products have also been questioned. Some sellers reported that Xiaohongshu identified their products as not meeting the overseas standards shortly after they were put on the shelves, and were removed. However, after a period of time, the product was automatically put on the shelves again. One seller said he did not receive explicit notification of the specific overseas standards his product did not meet.
Many merchants reported that Xiaohongshu's translations are prone to cultural taboo errors. For specific professional fields, such as beauty, fashion, and technology, the translation function may not accurately identify professional terms, resulting in inaccurate translation results.
Meanwhile, in China …
Now that we are back on the topic of Xiaohongshu (our latest deep dive into the company was in 2023) let’s look at how the platform is doing in China. [Note that specific data points can differ in value depending on the interviewed expert.]
The platform's total revenue reached RMB 30.68 billion, an increase of about 30%, with diversified sources, including advertising, e-commerce commissions, local service commissions, live broadcast rewards, and value-added services. Xiaohongshu's e-commerce monetisation rate was 8.61% in 2024.
Looking ahead to 2025, Xiaohongshu has set a higher goal, expecting the total e-commerce payment to reach RMB 120 billion, the settlement amount to reach RMB 95 billion, and the monetisation efficiency is expected to increase to 8.65%.
According to Fortune, Xiaohongshu doubled its profits to over $1 billion in 2024. [9]
Source: [9] [10]
To achieve this goal, Xiaohongshu has formulated content development plans. First, Xiaohongshu will strengthen the ‘seeding’ system - seeding or ‘grass-growing’ refers to building brand awareness and preference - and refine product reviews and shopping guides, such as providing detailed reviews for personalised needs. At the same time, the platform plans to strengthen the review of content authenticity, improve the evaluation mechanism, and support and reward high-quality creators.
Second, Xiaohongshu plans to expand into various content areas, such as life services, technology, health, etc., and cooperate with professional institutions to improve content authority.
In addition, the platform will strengthen local life content and cooperate with merchants to enrich information, such as city store exploration and travel guides. Xiaohongshu will also release local life rankings, such as restaurant and travel guide lists, to facilitate users' access to high-quality information.
Xiaohongshu started testing local life business in April 2023. By September 2024, it had opened group buying for catering businesses in 49 cities, charging merchants a technical service fee of 0.6%. XHS has also tried hotel & travel but quickly cancelled it. A small team within the Transaction Department handles the project. The team has no business development staff but works with third parties to expand merchant relationships. XHS uses an elimination system for such service providers based on monthly new merchants (≥20), monthly orders (≥600) and customer complaint rates. [11]
Local life business is not easy for Xiaohongshu as it has to compete with Meituan’s ‘iron army’ in the field and Douyin’s conversion from enormous traffic, as well as the low prices of these players (see our report What’s up with…? - Part 4: Douyin Local Services from a year ago). Many merchants are also not interested in opening another channel to promote their offerings. Merchants need to open an XHS business account for RMB 600 and pay the service providers for services like content creation. [11]
In 2024, Xiaohongshu did not initially focus on overseas markets. However, after the events of January, it began to pay attention and formulate a clear growth plan. This shows that Xiaohongshu is adjusting its strategy to adapt to the changing market environment.
e-Commerce
Xiaohongshu's e-commerce business performed well in 2024. The platform's payment GMV reached RMB 73.5 billion, an increase of 64% year on year, while the settlement amount was 57.7 billion yuan, an increase of 65% year over year.
Mid-2024, XHS had reported a 4.3 times increase in purchasing users since the previous year. The proportion of searches with purchase intentions had reached 25%. [12]
From the perspective of various business segments, the total transaction volume of live e-commerce was the most prominent, reaching 42.2 billion yuan. Post link e-commerce and (search-based) shelf e-commerce also performed well, achieving transaction volumes of 17.5 billion yuan and 13.8 billion yuan, respectively.
In 2024, XHS invested the most in livestreaming, a sales channel that matches well with its positioning as a source of peer-to-peer information and advice. In August, livestreaming sessions were placed first in search results, facilitating users' placing orders with just one click. [13]
But for many merchants, it is also a much more expensive channel than making short videos and posts with images. One F&B merchant had to invest RMB 100K to hire hosts and venues for one month. KOLs can often earn the same income with less effort by making content instead of hour-long livestreams. [14] This is precisely what is also hampering the growth of TikTok Shop in the UK and US, as we have seen in our report TikTok Shop update: Part 3 – A reality check on live commerce.
In the livestreams on Xiaohongshu, merchants may not be able to directly convert new users who happen to click into the live broadcast room. KOLs selling goods on Xiaohongshu must continuously post videos previewing the products 3-7 days before the broadcast to complete the ‘seeding’ process. Through content in posts, users will become interested in products. This rarely happens on other platforms. "If a business wants to achieve monthly sales of 3-5 million on Xiaohongshu, I think there is a chance," Dean said. "But if it wants to reach the 10 million level, it will be difficult for most businesses at present." [15]
The F&B merchant shared that Taobao's input-output ratio (sales divided by advertising spend) is generally around 20 but much lower on XHS. [14]
Furthermore, KOLs will largely depend on their own followers for sales. Merchants tend to focus on KOLs with larger numbers of followers that can ‘move volume’. Small KOLs cannot get deals with merchants and end up reselling goods they bought as consumers. Even if they can get products, they don’t have the number of followers to negotiate a low price. Meanwhile, XHS’s subsidised vouchers and discounts are a fraction of those on Douyin. [14]
The average price of goods sold by a typical livestream host on Xiaohongshu is 1.5 times that of Douyin, and the median value is 1.9 times that of Douyin. XHS users are also friendlier to merchants, and the overall return rate is 25%, lower than half of its competitors. KOLs often promote unique and desirable products to avoid price comparisons with other platforms. [14]
In 2024, the number of new merchants on the platform increased by 8.1 times, the number of merchants with annual sales of over RMB 100 million increased by 3.3 times, and the number of merchants with annual sales of over RMB 50 million increased by 4.6 times. [16]
The number of merchant store livestreams increased by 3.3 times, and the number of livestream studios with a GMV of over one million yuan tripled. In addition, the transaction volume of store livestreams in various industries increased significantly, among which women’s apparel increased by 3.6 times, sports products increased by 4.5 times, clothing and shoes increased by 3.6 times, home furniture increased by 7.1 times, food and nutrition increased by 5.3 times, beauty and personal care increased by 3.9 times, cultural products and accessories increased by 5.2 times, family products increased by 9.2 times, and hobby-related items increased by 6.5 times. [16]
DT Finance recently found five trends in Xiaohongshu’s e-commerce: [17]
Xiaohongshu is an app for younger users. Those born after 1995 account for 30% of its leading 100 bloggers and 15% of the top 100 businesses. Young influencers are adept at selecting products that resonate with younger. The young scions of factory-owning families also use Xiaohongshu to promote their business’ products.
Use of geographical advantages to promote items. For example, merchants in Jingdezhen, a city known for its porcelain production in Jiangxi province, sell items such as tea sets by showing customers the local supply chain to gain their trust.
Popularity of Chinese traditional aesthetics and intangible cultural heritage among people aged 25 to 35.
There is a growing focus on niche needs. One-third of the top 100 vendors on Xiaohongshu cater to specific demographics, needs, or scenarios, such as petite fashion or skin-sensitive clothing for kids.
Xiaohongshu has become a business startup platform where people from all walks of life can turn their hobbies and passions into new careers and businesses. One key reason these individuals choose Xiaohongshu is that the app is friendly to new users. Even accounts with low followings can notch up substantial sales. Among Xiaohongshu’s top 100 influencers, just over two-thirds have fewer than 500,000 followers, and 19% have less than 100,000. The person with the lowest follower count had just over 10,000.
Latepost reported that more than a year after setting up a dedicated e-commerce department, XHS has refrained from aggressively pushing e-commerce. In the past two years, the proportion of Xiaohongshu e-commerce content on the recommendation page has not changed significantly. In August 2023, XHS integrated the e-commerce and livestream businesses to establish the ‘Transaction Department’, which operates on the same first level as the ‘Community Department’ and ‘Business Department’ (responsible for advertising). [14]
Unlike large e-commerce platforms that concentrate traffic on a few live broadcast rooms or products, lower prices, and ship in large quantities, attracting more merchants and users and expanding rapidly, XHS has a different approach. XHS matches (niche) brands with influencers that match the unique atmosphere of its community, connecting smaller-size supply and demand. [14]
Regarding brand classification, emerging brands contributed the largest share, reaching RMB 33.7 billion. Leading brands followed closely behind, contributing RMB 24 billion, while unbranded goods contributed RMB 15.9 billion. It is worth noting that these data reflect total revenue, and commissions have not yet been deducted. In general, Xiaohongshu's e-commerce business in 2024 has achieved significant growth and progress in all aspects.
Xiaohongshu also avoids product categories for which all products can be found on Taobao and Douyin. It prioritises categories such as clothing, beauty, furniture, and collectables that attract much discussion on the site. The non-standard nature of the products also leaves Xiaohongshu with plenty of room for differentiation. [14]
Initially, few merchants were successful on XHS. Leading brands saw only a fraction of sales on other platforms, and white-label merchants did not understand the platform's content marketing. [14]
After a round of eliminations, new brands with a sense of design became a breakthrough - they have small teams, make decisions quickly, have good creativity and quality control, but the high prices coupled with low production volumes make them destined to be niche; they have no money to buy traffic and do not understand the gameplay of big promotions and discounts, which makes it more difficult for these brands to survive on other e-commerce platforms. [14]
Xiaohongshu also distributes traffic to influencers more equally than some of its competitors. For instance, on Xiaohongshu, KOLs with less than half a million followers get almost three-quarters of all traffic. In contrast, on Douyin, they get less than 30%, according to data by Questmobile. [14]
XHS operates two e-commerce operations centres, one of which was opened in Yiwu in October. It provides merchants with operations training guidance, platform policy resources, brand operation customisation, and other full-scale incubation and empowerment services. [18]
In March 2024, XHS was internally testing a new feature. Some promotional content on the Xiaohongshu will display a ‘buy button’, which users can click to take them directly to the merchant's WeChat mini program. [19]
Advertising income
Different industries and brands present their own strategies and trends regarding advertising investment. L'Oreal's advertising expenditure ranks first in the beauty industry, followed by Hanshun and La Mer. Although Estee Lauder's market share has declined, its advertising investment still exceeds RMB 8 million.
Other examples of top advertisers are:
Domestic beverage brand Yuanqi Forest: RMB 44 million
Sports and outdoor field brand Decathlon: RMB 42 million
Xiaomi: RMB 42 million
Home customisation brand Sofia: > RMB 35 million
Uniqlo: RMB 33 million
XHS saw an advertising revenue target of RMB 24.7 billion in 2024.
While XHS has been trying to diversify its revenue sources to become less dependent on advertising income, the share of advertising in its revenue has remained at 80% in 2024, the same as in 2022. [23]
Looking ahead to the advertising market in 2025, XHS expects significant growth in advertising spending in several industries.
Advertising spending in the automotive industry is expected to grow by 30% to 40%, with Ideal Auto and Xiaomi Auto likely to spend billions of yuan on advertising. Notably, BYD has already invested more than RMB 51 million in advertising.
Advertising for short video dramas is expected to grow by 35%, reflecting the continued popularity of this emerging media format.
The food and beverage industry is not far behind, with advertising expected to grow by 30%, including the milk tea category.
In the fashion field, advertising budgets for high-end custom clothing and footwear brands are expected to increase by 20%.
Advertising in the house decoration and other soft furnishing industries is expected to grow by 20%-25%.
These growth trends reflect the diversified consumer market development, with consumers' increasing demand for high-quality life, personalised products, and emerging technologies.
XHS will continue to focus on traditional advertising forms, including brand promotion, search engine marketing, and feed advertising. At the same time, it intends to develop a new form of advertising that increases interactivity between users and advertisements through small games, questions and answers, or sliding. This interactive advertising will increase user interest and participation in advertising while also bringing it more revenue sources.
Putting Xiaohongshu’s e-commerce in perspective. [Note: GMV of JD and Kuaishou are estimates based on available data].
Application of AI
Xiaohongshu is actively investing in the development of AI technology, which could significantly impact its future development.
Xiaohongshu plans to significantly improve its search function and content review system in the next few years. By 2025, it will combine traditional search functions with AI algorithms to give users a unique and personalised search experience.
Currently, Xiaohongshu is testing the self-developed AI model Xiao Digua, which is mainly used in content analysis and personalised recommendation. By combining technologies such as content review, artificial intelligence, and big data, Xiao Digua has greatly improved the efficiency and accuracy of reviews. These technological advances are supposed to promote the healthy development of the community and provide users with a higher-quality service experience.
To accelerate the advancement of AI technology, XHS has also cooperated with companies such as Dark Side of the Moon and introduced external talents. In terms of technology application, Xiaohongshu uses multimodal learning technology to integrate various forms of information to improve the accuracy of the recommendation system. In addition, it has introduced an AI-driven content creation tool and launched a chat function called "Da Vinci," all of which aim to improve the user experience.
In December 2024, XHS announced consolidating its commercial, community, and e-commerce algorithm departments into a new division called the Application Algorithm Department. [20]
2025 targets
The platform has set a series of specific user growth goals. In 2024, the platform's daily active users are expected to have reached 125 million, the number of monthly active users is 320 million, and the average daily usage time of users is 80 minutes.
By 2025, the goal is even more ambitious, with plans to achieve 200 million daily active users, 550 million monthly active users, and an average daily usage time of 95 minutes.
Looking ahead to 2026, the platform hopes to have 250 million daily active users, 700 million monthly active users, and an average daily usage time of 110 minutes.
Xiaohongshu plans to take several measures to achieve user growth and improve user stickiness. First, it will introduce new features to meet user needs, such as optimising the complaint system and developing search direct services to achieve the annual user growth target.
At the same time, by optimising the personalised recommendation system and increasing social interaction scenarios, Xiaohongshu aims to improve user stickiness and retention, thereby driving traffic growth. To attract a wider audience, Xiaohongshu will encourage content creators to produce high-quality works covering more fields.
In addition, XHS plans to increase advertising budgets and use social platforms, partners, and offline activities to increase brand awareness and expand the user base. Xiaohongshu will also work closely with KOLs and Internet celebrities to improve communication effects. These measures are expected to significantly affect the platform's overall development and market competitiveness.
In 2024, Xiaohongshu missed its initial advertising revenue target (RMB 30 billion) and e-commerce GMV target (RMB 80 billion).
In 2025, Xiaohongshu plans to achieve advertising revenue of RMB 30 billion (a 21% increase), a total e-commerce transaction volume of RMB 120 billion (63% increase), and a total revenue of RMB 39.2 billion (28% increase).
To achieve these goals, the platform mainly relies on expanding the sinking market (lower-tier cities and lower-income regions of first—and second-tier cities) and expanding the male user group to increase the number of domestic users.
In the sinking market strategy, the platform will optimise content, promote commercialisation, and strengthen user operations while maintaining the community's uniqueness and the balance of the ecology. Specific promotion methods include using local media for publicity, organising community activities, carrying out grassroots promotion, and cooperating with local partners.
Xiaohongshu is working hard to optimise its traffic structure, especially to attract more male users. The platform has added new content such as cars, digital, technology, games and sports, opened automobile, military and financial sections and created dedicated communities. It has also added content related to men's wear in the fashion field.
Currently, women account for between 70% and 80% of the platform's user base, but to achieve a more balanced user structure, the platform will strengthen its appeal to male users. Note that in our 2023 report on Xiaohongshu, we reported that the platform intended to increase the percentage of male users to 38% by the end of 2022. It clearly has not succeeded. XHS is treading carefully with this strategy since it does not want an influx of male users to damage the community's atmosphere.
Without an influx of male users, the platform would reach a ceiling of 400 million MAU and 150 million DAU, which it expects to reach in 2025.
While Xiaohongshu has specific expansion plans in terms of gender, it has not set new goals in terms of age level and still focuses on young user groups. However, XHS’s growth potential partially lies in more people outside the existing traffic pool. Xiaohongshu has been running typical Chinese offline recruitment campaigns, giving consumers free eggs, laundry detergent and other goods for signing up with the app (which usually appeals to older generations). Field promoters get paid RMB 34-38 per new user. Assessment is based on the retention rate on the second and seventh days after downloading. Field promoters only get paid RMB 10 for users who are not retained on the second day. [21]
Image source: 36Kr [21]
On January 6, Xiaohongshu’s latest data showed that by the end of 2024, the number of monthly active users over the age of 60 exceeded 30 million, and the number of elderly creators has tripled in the past two years, with a total of more than 100 million posts published. According to Mob Research Institute data, the top five types of short videos preferred by China's elderly population are news, history and culture, military, health and wellness, and positive energy. [21]
All in all, 2025 should be an interesting year for Xiaohongshu. Several big fund houses, including a Citic Group fund affiliate and Loyal Valley Capital, scooped up shares of Xiaohongshu at a valuation of around $17 billion-plus in the second half of 2024, and the company might go public at a valuation of over $20 billion. [22] However, a lot will depend on how the TikTok situation in the US plays out and where its ‘refugees’ will have their home.
Source: [10]
Key Takeaways
Xiaohongshu (XHS) does not distinguish between domestic and international versions like Douyin and TikTok, using a single version to serve global users to simplify user experience and improve work efficiency.
By the end of 2024, Xiaohongshu's global daily active users reached 143 million, a 32.4% year-over-year increase, with monthly active users at 376 million, up 30.5%.
The platform experienced a significant increase in overseas users due to the "TikTok Refugee" incident, with 3.84 million downloads in overseas app stores between January 14 and 20, 2025.
Xiaohongshu is focused on attracting and retaining international users by optimising content recommendations, improving user experience, and differentiating itself from competitors.
The platform has ambitious international growth plans, aiming for 30 million daily active users and 83 million monthly active users in the international market by 2025.
To improve global compliance, Xiaohongshu is increasing investment in content review between 2025 and 2026 by more than 30% and expanding its content review team.
In 2024, Xiaohongshu's total revenue reached RMB 30.68 billion, a year-on-year increase of about 30%, driven by advertising, e-commerce commissions, and other services.
E-commerce payment GMV reached RMB 73.5 billion in 2024, a year-on-year increase of 64%, with live e-commerce being the most prominent sales channel.
For 2025, Xiaohongshu aims for RMB 30 billion in advertising revenue (a 21% increase) and a total e-commerce transaction volume of RMB 120 billion (63% increase).
To achieve its goals, Xiaohongshu is focused on expanding into lower-tier cities and increasing its male user base while maintaining its community's uniqueness.
The following summary video was created using Google Notebook.
Sources
This article has been compiled from an analysis of exclusive expert interviews of the Six Degrees Intelligence network, augmented with the articles below.
Images by Tech Buzz China’s Ed Sander unless stated otherwise. These images may not be reproduced without Tech Buzz China's prior consent.
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