Table of Contents

• TLDR

• Part 1: The Heist

• Part 2: Origins

• Part 3: Product & Brand

  • Differentiators

  • Integrated Social Commerce

  • Value Proposition - Commodifying Authenticity

  • Unique Features and Capabilities

  • Onboarding

TLDR

Originally called Hong Kong Shopping Guide, an app for Chinese travellers, Rednote/Xiaohongshu (“Little Red Book”) has transformed into a leading social commerce platform, attracting a demographic of young, predominantly female users. According to estimates, Rednote generated $4 billion in revenue in 2024, marking a 30% increase from $3.7 billion in 2023, with over 300 million monthly active users, most of which are Chinese, and a $20 billion valuation.

More on TikTok soon (I’m doing a deep dive into the TikTok algo so don’t miss it).

Part 1: The Heist

Origin of The Heist

January 12, 2025. A TikTok user posts a video about the TikTok ban. The US Government wants to ban TikTok due to national security concerns. TikTok is used by 170 million US users - that’s almost half of the US population.

She proposes an idea:

“It would be so funny and the biggest f*** you to the government if we all downloaded this Chinese app called Rednote and moved over there.”

Others comment, “What's Rednote?”

Another user comments, “It’s #21 on the App Store. Let’s make it #1.”

This video sparks a trend, flooding TikTok with Rednote promotion as users scramble to find a TikTok replacement post-ban.

And within 24 hours, Chinese Rednote users wake up to find their feed flooded with Tiktok refugees. The #tiktokrefugee hashtag gains 36 million+ views.

Then Rednote users welcome American users and introduce “The Real China” to a largely American audience. At one point, a Rednote livestream is held with 50,000 new users asking questions about Rednote etiquette, Mainland China-Hong Kong relations, American employment and the cost of healthcare. Others report back on TikTok, “It’s so nice over there you guys” and “I guess we’re all gonna learn Mandarin this year.”

It’s like this digital iron curtain between the two nations has been lifted.

And it’s the plot twist of the year.

But it’s not 100% clear if Rednote engineered the initial video on Jan 13 or simply benefitted from it - but I suspect the former. On TikTok, it's not easy to tell whether an idea is being pushed externally, going viral organically or a combination of the two. I think Rednote seeded a trend (remember this for later). Then they capitalised on an inflection point (the TikTok ban) to drive a change in behaviour.

They capitalized on this surge of interest by contracting American influencers to promote the app ahead of the TikTok ban (which would take place on January 19, 2025).

In the end, 3 million+ users move over to Xiaohongshu in light of an impending US TikTok ban and in protest of Meta and Google whom they blame for lobbying against TikTok. And despite the app being primarily in Mandarin - with some translation features, the app becomes a hub of cultural exchange.

Part 2: Origins

Xiaohongshu's Origins

Xiaohongshu, also known as Rednote, was founded in 2013 by Miranda Qu and Charlwin Mao who met while shopping in the US. Initially, a PDF guide for overseas shopping recommendations aimed at China’s growing middle and upper middle class, it has evolved into a social commerce hub seamlessly integrating user-generated content and e-commerce.

In 2021, it reached a valuation of $20 billion in its last funding round. Rednote is VC-backed and investors include Alibaba, Tencent, GGV Capital, and the former Sequoia China venture capital firm, Sequoia. It’s rumoured that the app has plans to IPO on the Hong Kong stock exchange this year.

Part 3: Product & Brand

Positioning

Xiaohongshu has been dubbed China’s response to Instagram since Instagram is banned in China. It’s become a visual search engine and a lifestyle platform for young, affluent users, primarily targeting female Gen Z and millennial users (with an almost even 39% split between 18-24 market and 38% - 25-35 market).

Its core target demographics are Chinese-speaking international students, the Chinese diaspora and Chinese tourists (including Malaysia and Singapore). It combines social media features with e-commerce, promoting a community-driven environment.

The platform excels at helping users discover value quickly through curated content that highlights trending products and community favourites. This is achieved through algorithm-driven recommendations that align with user preferences and behaviours.

Differentiators

Its key differentiator is combining social interaction and shopping - primarily targeting female-led interests. It’s a heavily e-commerce-centric app. Primary competitors include Douyin (Chinese TikTok), Weibo, and other social commerce platforms like Pinduoduo (the parent company to Temu). But Xiaohongshu differentiates itself through its unique blend of content and commerce.

Integrated Social Commerce

Xiaohongshu's moat lies in its strong brand loyalty among users, extensive data on consumer preferences, and a robust community that fosters trust in product recommendations. RedNote doesn’t shy away from its commercial core in the way that other social apps do (Meta, Alphabet) - infact, e-commerce is its engine and everything else is built to keep the engine going (more on this later).

Their primary monetization strategy revolves around social commerce:

• Brands looking for authentic content creators

• Content creators looking for brand or product partnerships

• Users looking for authentic product recommendations/ product inspiration

• Users looking for entertainment

• Users looking for authentic product reviews, experiences, travel tips and travel recommendations

So, the discovery and purchasing cycle is condensed because: the content creator is authentically reviewing a product or non-intrusively integrating the product into their life the product has real-life reviews the user can purchase the product immediately. Rednote priorities a 70-30 split in favour of non-branded content to maintain an illusion of authenticity.

The product purchase journey usually occurs across multiple apps, but because product integration is Rednote’s model, a user can go from product discovery to product purchase within one user session.

This works incredibly well for Rednote. It’s the perfect model. It allows brands to leverage influencer partnerships and direct sales through the platform.

This approach also aligns well with the interests of its user base, who are often looking for tried and tested lifestyle product recommendations. This ecosystem is like if you combined the functionality of Instagram and Amazon in one app. This is essentially what Tiktok shop was trying to do with its Amazon affiliate program. It’s an incredibly lucrative e-commerce model.

Value Proposition - Commodifying Authenticity

Rednote’s core values proposition is the personal narratives/ the vlog-like narrative. Most of the app’s creator features are centred around the user sharing their personal perspective, through lifestyle-driven content, which creates a seamless segue into product recommendations. But buying into a user’s personal narrative/ personal story is what keeps users ended and ultimately what drives community. It creates a sense of intimacy between users and followers.

The app feels communal in a way I’m yet to witness with Instagram or YouTube. Part of the sense of community is:

the app’s compliance with Beijing’s censorship rules, Chinese self-censorship, users modelling already established positive commenting behaviour, and Rednote’s own content moderation style.

From the kind of content that’s promoted to the comments, community conversations are encouraged. Because users can access authentic recommendations and a community-driven shopping experience, the app creates a flywheel of brand trust.

The platform leverages user-generated content to create organic growth loops; satisfied users share experiences, attracting new users who contribute their own content, enhancing community trust and engagement.

Unique Features and Capabilities

Notes

This is a personal story feature in the form of text, short video, or images. Users can upload and share product recommendations, or thoughts on places, products, activities and experiences.

Interactive Messaging
Users can leave comments and respond with images or videos. This contributes to a sense of community on the app.

Live Shopping and Integrated Shopping

Onboarding

RedNote’s onboarding is very similar to the first part of Pinterest’s except it lacks a product tour:

This is the key difference.

RedNote’s key growth drivers are:
1. Effective onboarding which drives...
2. Personalisation based on IP address and initial onboarding which makes...
3. Time to Value is short for key acquisition feature (personalized video feed) is what's promoted.

The key thing about onboarding is that Rednote focuses on one capability - the capability with the highest retention power - personalized video feed - not the myriad of other features they have (live shopping, interactive messaging) which have a much longer time to value and require more user trust.

I’ll wrap up here.

If you made it this far, send a 🟥!

See you in the next one on TikTok or Deepseek 🐳.