Against the Odds: Navigating Three Major Challenges for Western Businesses on Xiaohongshu
In January 2025, Xiaohongshu (Little Red Book) attracted a million overseas users with its “Cyber China Tour” initiative. However, just three months later, daily active users in the US plummeted from a peak of 1.3 million to 807,000. Behind this temporary traffic surge lies a complex landscape of cross-border marketing challenges. This article examines the real obstacles facing Western businesses on the platform and strategies to overcome them.
Challenge 1: Cultural Clashes and Content Moderation
When Transparency Hits Roadblocks
The spontaneous “income comparison” discussions between Chinese and foreign users quickly faced restrictions after touching on sensitive information. Xiaohongshu rushed to hire English-speaking content moderators, but their review coverage remains below 30%, with a concerning 15% false-positive rate.
Cautionary Tale: A Pet Training Business Loses Access
One pet training school lost its account after sending a physical address through private messages—a violation of platform rules that cost them over $40,000 in annual revenue. Industry experts recommend businesses strictly follow Xiaohongshu’s “Commercial Traffic Governance Rules” and use the official “Message Connect” tool instead of external contact methods.
Challenge 2: User Retention and Ecosystem Fit
The Truth Behind Fleeting Traffic
According to Sensor Tower data, Xiaohongshu’s overseas user retention rate in March was just 42%, significantly lower than TikTok’s 68%. The primary reason: the platform lacks entertainment-oriented content, causing users to migrate to specialized community platforms once the novelty wears off.
Strategic Pivot: From Viral Hits to Sustained Engagement
Ivy Yang, founder of Wavelet Strategy consulting firm, notes that Xiaohongshu needs to strengthen its “social commerce” identity. For example, Luckin Coffee boosted its monthly repurchase rate by 25% through English tutorial posts that encouraged participation in “Coffee DIY Challenges.”
Challenge 3: Cross-Border Payments and Localization Infrastructure
Monetization Barriers: Commission Withdrawal Challenges
American content creator Terry, despite gaining 70,000 followers, couldn’t withdraw collaboration commissions without a Chinese bank account. Relying on third-party intermediaries increased costs by 20%.
Infrastructure Improvements: Reverse Cross-Border Shopping and Local Services
Xiaohongshu has partnered with Youzan to launch overseas e-commerce mini-programs supporting USD settlements, though delivery times still lag behind competitors like Temu. One apparel brand cut shipping times from 15 days to 7 days using a “pre-sale + local warehouse” model.
Expert Perspectives and Future Outlook
Professor Fang Lingzhi from Zhejiang Media University believes Xiaohongshu must balance content ecosystem development with commercialization pace to avoid regulatory challenges similar to those faced by TikTok. Independent analyst Rozas Kaziunas emphasizes, “Rather than chasing traffic, businesses should focus on specialized niches like maternal and infant products or traditional Chinese clothing.”
Conclusion
Xiaohongshu’s international journey is far from over, with each challenge presenting new opportunities. As the platform’s CMO notes: “Traffic booms eventually fade, but trust and value endure.”RetryClaude can make mistakes. Please double-check responses.