Published on December 1st, 2019
Written by Meng Liang and Han Su
Ten years ago, no one could imagine that the word “zhongcao” (Chinese as: 种草), literally meaning planting grass, could link so closely with “online shopping.” Zhongcao more recently became Chinese internet slang, referring to “the effect when someone sees something owned by a friend or family member, or an advertisement for a product, and wants it.”1 Related terms include, “zhangcao (长草),” meaning longing for the product, and “bacao (拔草),” meaning the desire finally can be quenched by purchasing the product, or “pulling out the grass” and not being willing to buy the product anymore.
RED (Chinese as：小红书, literally means The little Red book) in China is a well-known platform for the “zhongcao” activities. In fact, the term Zhongcao and the action it refers to didn’t first appear on RED—in 2009, China News already used the term Zhongcao in a commentary entitled, “Planting grass: What makes us want to buy.”2 The concept Zhongcao is not new either because manufacturing desires to buy through media advertisement has been a common consumerism tactic. Social media is transforming and accelerating this practice in China. RED is the most representative platform that we can use to explore the ways in which social media has accelerated and combined consumerism.
RED provides a very specific model of Zhongcao as a hybrid platform with both social media and e-commerce functions. But how did RED start as a business? Let us briefly review RED’s history and the social context of China with the following questions in mind. How did international shopping lay the foundations for RED? How has the Chinese cyber culture influenced the business model of RED? What roles do User-Generated Content (UGC) and social networks play in the platform?
By March 2019, RED accrued over 220 million registered users. This massive user community got started through several online PDF files that were downloaded and shared among small communities in China beginning in 2013. The rise of RED is synchronous with China’s active involvement in the global economy. RED began as a website with a series of PDF documents that provided guidance to consumers for overseas shopping and traveling.3 In September 2013, the company released an iOS version, and the guidelines expanded focus from Hong Kong to Thailand, the U.S., Japan, Singapore, etc. The travel information includes introductions of local brands, tax refund information, maps and shopping malls. The cofounders of RED, Mao Wenchao and Qu Fang, invited local online celebrities to write these guidelines, and then users were encouraged to print these PDF guidelines or download them in the app and read them off-line.4
In the beginning, RED aimed at building a community that enables users to share their overseas shopping experiences. Hong Kong’s shopping Guideline was the first example of adopting a user-generated content (UGC) model in the e-commerce platform. This was an important step for RED as the company transitioned from a traditional one-to-all media model to a social media model. During an interview, the co-founders explained that the transition was aimed at making use of the “fluidity of information” since UCG contents can serve as timely and up-to-date references to other users. Moreover, the UCG model also helps to build a more cohesive community.5
RED confronted the question common to other digital entities, that is: how was it possible to gain profit from the social network? The first attempt of RED was the introduction of an e-commerce application called Fulishe (Perks Society 福利社) within the platform in 2014. On this version of the platform, users can purchase various international cosmetics, fashions, snacks and more. The purchase links are usually inserted in the middle of the post (for example, in Figure 1 below, the link is between the image and the text). Users can both directly click a particular section to browse Fulishe, or, the commodity link can pop up when they are browsing relevant commodities and guide them to the relevant pages in Fulishe.
The year 2014 was an important turning point for RED. That year, RED established its hybrid model of the so-called “social e-commerce platform.” RED also used a branding strategy by inviting stars and online celebrities to open accounts on this platform. RED then reoriented itself as a platform for the circulation of both commodities and information. This transition is partially a consequence of external competition. RED leaders were aware that customers tend to gather information from RED, but later turn to Taobao or other traditional e-commerce platforms to purchase.6 Therefore, RED began to transfer its income source from selling tangible commodities to selling intangible brands. In 2019, RED announced a new brand cooperator platform. According to RED’s website, the platform enables direct communication between brand advertisers and brand cooperators, usually KOLs (Key Opinion Leaders). Advertisers can locate the most suitable cooperator by checking data and information related to each RED celebrity account (See Figure 2).
Now let us take a look at how “zhongcao” is popularized within the community. The first keyword here is social networks. Within a social media community, RED’s information flowing structure is not a transmission model like mass media; rather, it is largely based on interpersonal relationships. Can this model motivate people to buy more effectively than traditional advertising? The answer is yes. In fact, similar market strategies have already existed long before RED. Consider, for instance, Amway, which is famous for marketing based on an information-spreading system that relied on interpersonal social networks. Amway is an American multilevel marketing company that sells health, beauty, and home care products. When it entered into the Chinese market in the 1990s, without advanced internet connections, the multilevel marketing strategy was heavily based on social advertising. In 1999, the turnover of Amway doubled to 640 million yuan, and then 4 billion in 2001 and 6 billion in 2002.7 Now the term “Amway” has become a buzzword referring to the act of endorsement.
With the rise of social networks, the most influential node is always the internet celebrities, a.k.a KOLs, which is another important component of RED’s success. KOLs on RED can be TV stars or online celebrities—as long as they have a good number of followers. There is nothing new about the practice of inviting celebrities to do commercial promotions. RED enhanced this model based on the characteristics of social media, where less known celebrities can also be influential in their communities, and the language used do not have to be formal and succinct. Fan Bingbing, a famous TV and film star in China, shares her daily life on RED (See Figure 3):
Apart from big stars who can migrate their influence in real-life to online spheres, grassroots online celebrities are also important players on RED. For example, Li Jiaqi, a Chinese male beauty blogger and a post-1990 generation online celebrity, has accumulated more than 7 million followers and a net income of more than 10 million yuan ($1.53 million) over 2017.8 His major income is from brand sponsorship. His signature lines include “OMG!” and “buy it! Let me tell you, buy it.” The words and tone makes Jiaqi feel more like an old friend of the users, instead of star.
70% of RED’s users are born after the 1990s. Why does the young generation love RED? I argue that the social media mechanism in some ways guarantees the quality of advertisement since the users are posting their experiences about the product.
Social media also contribute to the self-identity building of users. “It is so important that you see the product works for other girls well. You will have a feeling that you will be as beautiful as them if you buy it,” said 23-year-old Shan Wenran, a recent college graduate.9 In fact, balancing the KOL’s effort to promote commodities while maintaining the trust of audiences is always a challenge for RED. RED’s crisis this year proves this point. On July 29, 2019, Southern Metropolis Daily reported there is a “grey chain” in the medical beauty industry in RED—advertisers and online celebrities are selling illicit drugs for plastic surgery such as clostridium botulinum. On July 30, the RED app was moved off the shelf in many Android App stores.10
RED’s response to this move was vague, stating they would cooperate with relevant governmental departments to adjust and censor the content in the platform. How to regulate the content is always a challenge for RED. Prior to this crisis, the company had already been aware that the quality of KOL promotions could be problematic in the platform. In May 2019, RED released a public letter, in which the platform elevated the threshold of brand cooperators. Only KOLs with more than 5000 followers and an average number of browses of the post more than 10000 per month can be the brand cooperator. With this new policy, there are only around 5000 KOLs left while more than 12000 KOLs lost the privileges to cooperate with brands on this platform.11 As Daxue consulting indicates, “RED’s success is largely due to its content-driven nature.”12 With the external market competition, it’s easy to understand why RED is so eager to maintain the trust of users–social media became the crucial factor in RED’s business model.
Although RED is now experiencing some up and downs, it is still one of the most representative Internet platforms that combined social media with UGC content and e-commerce in China. Social e-commerce has given rise to new forms of advertising based on social networks. For example, a popular model used by Pinduoduo is “asking your friends to help cut the price,” which is a means for users to get discounts while the platform advertises itself through the process. All in all, RED, as a pioneer Chinese platform adopting the social-ecommerce model, sheds a light on how new forms of media can influence traditional retailing industries and even e-commerce.
Ruonan Zheng, “9 Slang Terms That Explain Chinese Consumer Culture”, Jing Daily, June 29th, 2017, https://jingdaily.com/a-chinese-slang-primer-for-luxury-brands/
“Planting grass: What makes us want to buy”“长草族：是什么让我们长草”，ChinaNews中国新闻网, 22rd, Dec, 2009, http://www.chinanews.com/cul/news/2009/12-22/2031267.shtml
Information extracted from RED’s official website, “RED: Building a oversea shopping experience into a social application””小红书： 把海外购物做成社交应用”, http://s4.xiaohongshu.com/static/huati/81d9ed4731770a91963c1e3bc984661f.jpg
“小红书接入淘宝，各取所需的社区和电商们””RED was introduced into Taobao: e-commerce platforms take what they need”, Sohu, Dec 4th, 2018 https://www.sohu.com/a/279563781_99957087
“Living in the Shadow of Pyramid Selling: The 30 years of Direct Selling in China”, “活在传销阴影下的中国直销三十年”， Beijing News, 18th Mar, 2019, http://www.bjnews.com.cn/inside/2019/03/18/557196.html
“Male Beauty Blogger Finds Road to Wealth on Taobao”ChinaDaily, 10th Jan, 2018, http://www.chinadaily.com.cn/a/201801/10/WS5a55b328a3102e5b17371e20.html
Tracy Qu, “A red-hot Chinese shopping-review app shows the future of your online shopping experience”, Quartz, 28th June, 2019, https://qz.com/1634577/chinas-xiaohongshu-shows-the-future-of-your-social-shopping-experience/
小红书的警报终于拉响”，“An alarm for RED”, CBNweek, 31th July, 2019, https://www.cbnweek.com/articles/normal/23799
“Xiaohongshu is becoming a giant in both Social Media and e-commerce”, Daxue Consulting, 22rd Mar, 2019, https://daxueconsulting.com/latest-facts-and-insights-about-xiaohongshu-2019/j
1 Ruonan Zheng, “9 Slang Terms That Explain Chinese Consumer Culture”, Jing Daily, June 29th, 2017, https://jingdaily.com/a-chinese-slang-primer-for-luxury-brands/
2 “Planting grass: What makes us want to buy”“长草族：是什么让我们长草”，ChinaNews中国新闻网, 22rd, Dec, 2009, http://www.chinanews.com/cul/news/2009/12-22/2031267.shtml
5 Information extracted from RED’s official website, “RED: Building a oversea shopping experience into a social application””小红书： 把海外购物做成社交应用”, http://s4.xiaohongshu.com/static/huati/81d9ed4731770a91963c1e3bc984661f.jpg
6 “小红书接入淘宝，各取所需的社区和电商们””RED was introduced into Taobao: e-commerce platforms take what they need”, Sohu, Dec 4th, 2018 https://www.sohu.com/a/279563781_99957087
7 “Living in the Shadow of Pyramid Selling: The 30 years of Direct Selling in China”, “活在传销阴影下的中国直销三十年”， Beijing News, 18th Mar, 2019, http://www.bjnews.com.cn/inside/2019/03/18/557196.html
8 “Male Beauty Blogger Finds Road to Wealth on Taobao”ChinaDaily, 10th Jan, 2018, http://www.chinadaily.com.cn/a/201801/10/WS5a55b328a3102e5b17371e20.html
9 Tracy Qu, “A red-hot Chinese shopping-review app shows the future of your online shopping experience”, Quartz, 28th June, 2019, https://qz.com/1634577/chinas-xiaohongshu-shows-the-future-of-your-social-shopping-experience/
10 “小红书的警报终于拉响”，“An alarm for RED”, CBNweek, 31th July, 2019, https://www.cbnweek.com/articles/normal/23799
11“小红书“点杀”KOL 瞿芳回应一切？”，“RED eliminate KOLs, Qu Fang responds to this action”, Sina Finance, 16th May, 2019, https://finance.sina.com.cn/chanjing/gsnews/2019-05-16/doc-ihvhiqax9198651.shtml
12 “Xiaohongshu is becoming a giant in both Social Media and e-commerce”, Daxue Consulting, 22rd Mar, 2019, https://daxueconsulting.com/latest-facts-and-insights-about-xiaohongshu-2019/j
Meng Liang is a visiting graduate student in Comparative Media Studies at MIT and a PhD candidate at University College London (UCL). Her research focuses on mobile Internet and telecommunication history in China.
Han Su is a second-year graduate student in Comparative Media Studies at MIT. He has a background in human-computer interaction and Machine Learning. His current research focuses on the information capital on the Internet and decentralised web.