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How fashion and cosmetics brands can do marketing on XiaoHongShu: China Paradigm transcript #20 with Miro Li from Double V Consulting

This transcript is based on our interview with Miro Li, co-founder of Double V Consulting. Double V Consulting was founded in 2017 and helps foreign brands generate brand awareness through marketing on XiaoHongShu. XiaoHongShu is a social commerce app that is extremely common among young female consumers of cosmetics and fashion brands in Tier 1 and Tier 2 cities in China. Marketing on XiaoHongShu helps brands create a footprint in China which enables them to generate sales later on.

Listen to the full China Paradigm episode #20 here or on YouTube, Apple Podcast, Spotify, Google Podcasts, and Soundcloud.

Here is the transcript from our episode with Miro Li about how Double V Consulting is helping mostly European and American brands to do marketing on Xiaohongshu, open official accounts/stores, and target consumers

Today we are chatting with Miro Li. She is a consultant from Double V Consulting who focuses on promoting cosmetics and fashion brands in China. In this episode, she shares insights into how to do marketing on XiaoHongShu or RED successfully. XiaoHongShu offers a more organic way for brands to do marketing in China. This is because most of the content comes from Users, KOLs, and KOCs. They can review and purchase products through the app. Initially, most of the brands on the app were international brands and now there are more domestic brands. Opening a XiaoHongShu account can provide an excellent platform for small foreign brands who do not have enough brand awareness to open a Tmall or JD store. The app is also available to consumers outside of China.

How can I open an account and begin marketing on XiaoHongShu in China?

Miro Li: Before your brand starts marketing on XiaoHongShu you need to open a XiaoHongShu store. First, you must lodge $3,500 into your account. This will be used in the event of refunds. You don’t need to register a bank account in China. Payments are CBEC (cross-border commerce), XiaoHongShu will take a commission (roughly 15%) and transfer the money directly back to your foreign bank account.

You ship your inventory to the XiaoHongShu warehouse in Hong Kong. XiaoHongShu will take care of the logistics within China. It usually takes around 10 days for your inventory to reach the XiaoHongShu warehouse. Consumers in mainland China will receive the products within 3 days of purchasing.

How much does it cost to store products in a XiaoHongShu warehouse?

For the first 60 days, brands do not have to pay storage costs to have their goods stored in a XiaoHongShu warehouse. There is no minimum required amount of stock.

XiaoHongShu recommend to start with smaller quantities of stock, especially for lesser known brands.

How much does logistics cost within China for transporting goods from the XiaoHongShu warehouse to the final consumer?

It’s very cheap, roughly 30 RMB per kilogram.

How does it work with product returns through XiaoHongShu?

Foreign brands do not have to redress the consumer if the problem is simply that the consumer is unsatisfied with the product. If the product was damaged during transportation, the brand must redress the consumer.

Foreign brands can have a return address within China if they want. They can have a partner within China who can manage returns for them.

The return rate is about the same on XiaoHongShu as it is on other major platforms. Of course, it also depends on the category and the standard of your after-sales service.

Will my products have to undergo animal testing to sell in China through XiaoHongShu?

No. Animal testing is not necessary for brands that want to sell in China if they sell through XiaoHongShu. This is important for certain ethical brands who may want to enter China but don’t want to have their products tested on animals. As such, marketing on XiaoHongShu is a cheaper and more ethical way of getting their products into China and marketing them.

Quick Recap

Your brand doesn’t have to open an official store to begin marketing on XiaoHongShu. You can see if people are already talking about your brand on XiaoHongShu. If people aren’t, you can simply give regular users free samples of your product on the condition they talk about it on the social platform (presumably you will want them to say positive things). This is a much cheaper way to begin marketing on XiaoHongShu.

If this doesn’t create big enough buzz you can pay KOLs to talk about your brand on the platform.This is a more expensive way to do marketing on XiaoHongShu but it does guarantee a wider audience.

If the buzz turns into a chatter, you could pay 3,500 USD to open a store and begin selling and marketing on XiaoHongShu .

Marketing on XiaoHongShu is great, but how do you drive sales on XiaoHongShu?

It’s different from other eCommerce stores like Tmall, Taobao, or JD. Brand marketing on XiaoHongShu is highly effective but it is not actually the best platform for doing a large volume of sales. It’s more for brands that are new to China and don’t have a big presence. Marketing on XiaoHongShu is a good way to generate hype or awareness for your brand. The bigger aforementioned e-commerce platforms will only work with very established brands. Marketing on XiaoHongShu is  for a smaller brand’s first steps in China. When entering China through cross border commerce, having a XiaoHongShu account provides cheaper and slower organic growth. Other bigger platforms provide faster and more expensive growth.

I’s a social commerce app, it functions as both social media and an eCommerce platform. It is UGC-driven rather than being driven by SEO optimization or effective banner ads, etc. However, you can do direct marketing on XiaoHongShu and drive sales by managing your own official account on the app, similar to WeChat mini-accounts.

Working with KOCs, KOLs, and /or normal consumers really helps brands with marketing on XiaoHongShu and driving sales on the app. Regular users will probably be satisfied with free samples or free merchandise but marketing on XiaoHongShu through KOLs is marketing dollars intensive. Because of the social nature of the app, these users will then post content about your brand and/ or its products. In this way, marketing on XiaoHongShu provides a much cheaper way for brands to generate positive perceptions about their brand in China. And because of the review-driven nature of Chinese consumers, a positive review of your brand can go a long way towards convincing other shoppers about your brand.

Are there lots of bots/fake likes on XiaoHongShu?

XiaoHongShu is very strict on this. They are much stricter than Weibo in terms of allowing these fake likes or bots on their platform. If you’re marketing on XiaoHongShu and you buy fake likes for your post, your XiaoHongShu account might get removed.

If a brand wants to do marketing on XiaoHongShu, how will users be exposed to the brand’s content?

  • It’s according to the users search preferences. If your brand makes running shoes, your content will appear in the explore/ home page of the users who have recently been searching for running shoes and liking or commenting on posts about running shoes. Marketing on XiaoHongShu is made easier through the algorithm. This pushes the content that it thinks might be of interest to users onto the homepages of those users.

Apart from buying products, what else do users use their XiaoHongShu accounts for?

People also use XiaoHongShu as a brand-related search engine. They use their XiaoHongShu account to check product reviews, to review products themselves, and consuming branded content on XiaoHongShu by KOLs or KOCs they follow.

Also, people increasingly use XiaoHongShu as a travel review. If they are traveling abroad they will rely on XiaoHongShu for restaurant reviews. F&B content on XiaoHongShu is only behind cosmetics and fashion in terms of popularity.

Users also trust XiaoHongShu more than Baidu because they know Baidu search feed is dominated by paid advertisements, rather than genuine reviews.

Can you give us some case studies of brands you work with on XiaoHongShu?

One brand in particular that Double V Consulting worked with was a US cosmetics brand. They are fairly well known in the US but almost unheard of in China. They are using XiaoHongShu because this brand doesn’t do animal testing. We manage their marketing on XiaoHongShu as well as their eCommerce presence on the platform. Our team opened their flagship store on XiaoHongShu and we also collaborated with KOLs for the brand. We used them to produce content for the brand on XiaoHongShu.

But before we opened their official XiaoHongShu store, we did around 2 and a half months of pre-launch marketing on XiaoHongShu for them. We worked with regular users of the app as well as KOLs to spread awareness of the brand before we opened the XiaoHongShu store. That got people talking about the brand.

When it came to launching their XiaoHongShu store we also worked with KOLs and we could see that 80% of the traffic was being directly driven from the KOL’s posts.

For a foreign cosmetics brand with low awareness in China that is launching through XiaoHongShu, a good year could amount to about 10,000 orders. Remember, XiaoHongShu is not Tmall or JD, you can’t expect to be selling hundreds of thousands or millions of products a year. XiaoHongShu is for developing a buzz about your brand.

Of course, sales will also depend on price. Price is still an important factor for consumers on XiaoHongShu. Also, if your price in China is much higher that it is in other countries, marketing on XiaoHongShu won’t stop consumers going through other channels to get hold of your product.

What are the categories of products that do very well on XiaoHongShu?

Categories that do very well through marketing on XiaoHongShu are mass-market cosmetics. This is because the application and results of putting on make-up are very visible. Also, the returns rate is lower than it would be for clothing because once you use the product, it cannot be returned. In 2017 cosmetics accounted for almost 50% of cross-border purchases.

What taxes need to be paid for products sold through XiaoHongShu in China?

Just cross-border tax. This tax is around 11.2%. This tax is lower than VAT because government policies are supportive of cross-border commerce.

Quick Recap

XiaoHongShu is not the place to generate huge sales. Marketing on XiaoHongShu is effective for smaller, niche, lesser-known brands. They can generate awareness for their brand in China through consumer or KOL reviews. It is possible to generate sales if you open a XiaoHongShu store but the sales volumes pale in comparison to eCommerce platforms like Tmall and JD.

Brand’s strategy in China using a XiaoHongShu account

  1. Do social listening on the platform.
  2. Pay KOLs or KOCs to talk about you brand on XiaoHongShu
  3. When enough people are talking about your brand, open a XiaoHongShu store and start selling your products.
  4. When sales go over 10,000 transactions a year, consider generating sales on other ecommerce platforms in China

This transcript is a sample of our China Paradigm podcast interview with Miro Li, co-founder of Double V Consulting. To continue learning about marketing on XiaoHongShu in China, find the full episode on YouTube, Apple Podcast, Spotify, Google Podcasts, and Soundcloud.