“It’s true—when you buy on Xiaohongshu, there’s just no telling if you’re getting the real stuff or a fake,” Ms Fang wrote.

The social media-e-commerce hybrid is supposed to feel like your personal stylist. But to a growing number of users, it feels more like a pushy used car salesman.

The platform is part shopping guide, part shop—users can see what their friends, or favorite KOLs, are wearing, touring, or slathering on their face, and buy imported goods without leaving the app. The model has made the company a force to be reckoned with, but in social media, the price of success is scams and bots.

Ms Fang used Xiaohongshu to shop for The Ordinary-brand skin cream after receiving a recommendation from a friend overseas, according to an unhappy review (in Chinese) from last November. When the bottle arrived, it seemed a little off—the liquid looked a bit yellow, the cap wasn’t quite the same shape, and even the font on the label was not completely right. But the differences seemed trivial enough—until the cream caused her face to flare up. Since the cream in her friend’s bottle performed as advertised, Ms. Fang concluded she’d been sold a fake.

“I would recommend the real product,” she wrote. “But I’m angry, how can you sell fakes of something that people will put on their face?”

Xiaohongshu, also called Little Red Book or RED, is scrambling to respond to a crisis of trust. Many users believe that the platform is rife with fake reviews. However, its efforts to police the site have, in turn, angered content creators, some of whom have left over rule changes.

Controversy around the sales of counterfeit goods in China is nothing new. Nearly all major e-commerce platforms including Alibaba’s Taobao and JD, have been called out over the years for selling questionable products. However, the country’s consumers have wised up considerably compared with a decade ago, and product authenticity is now a key concern. This especially rings true when they shop on platforms such as Xiaohongshu where overseas products are offered and they expect to receive higher quality goods.

Credibility gap

Although the app had been accused of peddling fake content before, a new wave of negative coverage spread in March when local media reported details of a shady industrial chain in which an alleged an army of fake reviewers are getting paid to post fraudulent views and to boost fan counts.

Weibo users have engaged in heated discussions on the underhand tactics reported. One post revealed a price list for professional ghost-writers, who generate fabricated contents according to clients’ demands. Others profit from distributing these fake contents, charging different sums based on their number of followers. Users who get paid to spread fake contents have around 10,000 users, according to the posts, and the price for circulating a single article ranges from RMB 500 to RMB 2000.

“There are more and more promotional contents and some of them are blatant exaggeration,” says Wang Jia, a Shanghai-based Xiaohongshu user.

The impact of the user backlash has been compounded by a state crackdown on the platform. The app has been criticized for promoting tobacco ads, potentially putting its youthful users at more risk of targeted advertising. Local authorities found that the site contained 90,000 references to tobacco, some of which referred to specific products or was of purchasing.

Crackdown on hype

Under fire, the company is trying to clampdown on fraud, employing machine learning and humans to detect rule-breaking.

“We have been cracking down on cheating, forming a professional anti-cheating team, and using technical measures to prevent such behaviors,” Xiaohongshu told TechNode, emphasizing their “zero tolerance” on such activity.

Fake content and traffic brushing have long haunted China’s e-commerce industry. The country’s E-commerce Law that came into effect the turn of at the year includes articles aimed at protecting consumers from untrustworthy reviews.

In addition to behind-the-scenes countermeasures, co-founder Miranda Qu made major changes to the app in May. Although she claimed they had been in the works since last year and are not a direct response to the current crisis of trust, they could lead to a transformation in terms of dynamics within the content ecosystem.

KOL Purge

Well on its way to becoming a place for brands and KOLs to cross paths, Xiaohongshu launched a new tool in January to help the two groups find each other more easily. However, the new system brought more rigorous requirements for partners, an effort to reduce malpractices on the platform. The move drew the ire of the KOLs, or to be more specific, KOLs harboring commercial ambitions.

The number of validated KOLs has since fallen from 17,000 to a mere 4,700, according to Elijah Whaley, chief marketing officer at KOL marketing platform Parklu.

Whaley was blunt in expressing his dissatisfaction about the change in standards. “I think Xiaohongshu’s move was anti-creator which is ultimately anti-content consumer.” he told TechNode.

Higher entrance requirements for KOLs could result in an exodus of micro-influencers to smaller and fragmented platforms like Meitu and Keep, he noted. “If creators are penalized instead of rewarded, for making valuable educational and or entertaining content then they will leave and eventually so will their followers.”

“This type of disregard for the value of creators is what led to the collapse of Meipai and the UGC communities on video platforms like Youku, QQ Video, and Baidu video,” he noted.

His concerns were echoed on Weibo by a fashion designer and KOL known as CKJK, who said “KOL content is the cornerstone for Xiaohongshu. As a lifestyle platform, the app has to think clearly about how to drive traffic and how to create a complete circle between content and e-commerce after eliminating KOLs.”

For luxury brands, however, an ecosystem of higher content quality could be a propeller for luxury brands to join. “Xiaohongshu is already cooperating with Louis Vuitton. The move might help to bring more luxury brand partners. Xiaohongshu’s current reviews are very personal. They might cater to the taste of their young user base, but it’s not how luxury brands do their marketing,” according to a digital supervisor at a luxury brand who preferred to remain anonymous.

For platform’s founder has since clarified that although Xiaohongshu would develop in step with bloggers and content creators, it is paramount that the site’s posts are ultimately of value for its users.

Power to the users

In a move to give users more power, the app launched the new XHS Ecosystem Manager feature, which will accredit certain users as managers after passing rule-compliance tests. The ecosystem mangers will have voting rights on whether content violates rules. The mechanism aims to improve the app’s trustworthiness by giving users more power in the community.

Xiaohongshu rolled out a new review system called Xiaohongxin, or Little Red Heart in English, allowing 500,000 experienced users to give ratings to more than 3,000 products. The move was seen as a way to downplay the role of KOLs.

Voting through the system contributed to the creation of a shopping list of recommendations, comprising more than 650 goods covering 93 product categories.

Two users checking skin care products recommended by Xiaohongxin (Image credit: Xiaohongshu)

Domestic media reported that the feature was a crucial step in the app’s battle to regain its position as a trusted fashion review platform. However, co-founder Qu maintains it purely marked a return to Xiaohongxin’s roots.

User-generated content represents 97% of the content on Xiaohongshu, and daily views have hit 3 billion, according to data shared by the company.

“We are fully aware of the fact that KOLs are contributing large amounts of quality content to our community, but we want to be mindful of our core positioning. Data speaks for everything.” Qu said.

The six-year-old company has reached a critical stage of its development and faces obvious opportunities and challenges. It boasts an enviable 250 million-strong userbase – mainly made up of post-90s urban females who are willing to part with their money for high-quality products. Around 85 million of these users are active each day on average, which could provide ample opportunities for commercialization via ads and e-commerce, the firm said in May.

However, convincing all of these users that Xiaohongshu is still the place to go for product recommendations represents the key challenge.

Emma Lee

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via lixin@sixthtone.com or Twitter.

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