Alibaba is among a group of investors that have closed a $300 million financing round for popular social and e-commerce site Xiaohongshu, which is also known as Red. The investment values the business at more than $3 billion, affirming its place among China’s ranks of unicorn companies.
As of May 2018, Xiaohongshu had 100 million registered users, with Generation Z most active. The site was cited by long-time China advertising expert Tom Doctoroff, the former Asia CEO of J. Walter Thompson, in an interview earlier this week (click here) as an example of how popular online e-commerce sites in China nowadays have a social component.
“If you take a look at NetEase Music, it’s tribal. You’ve got micro interests, and people exchanging thoughts and ideas on it. You have Xiaohongshu talking about products from the rest of the world. It’s all a platform for demonstration of social capital,” he said. “I think that this is very Chinese – the fact that NetEase Music isn’t Spotify. NetEase Music has people talking about what they prefer, who they are, and why that like it. It’s very Chinese. It’s a demonstration of sophistication and distinctiveness.”
The $300 million raised by Xiaohongshu will be used to support talent acquisition, machine learning infrastructure and user growth, the statement said.
Xiaohongshu was founded by Charlwin Mao and Miranda Qu in 2013. Qu was a member of a list of 25 up-and-coming Chinese businesswomen published by Forbes China earlier this year.