Xiaohongshu excels at driving product discovery and recommendation, yet faces inherent constraints stemming from this very core strength.

It's the third day since the World Cup kicked off.

Xiaohongshu has finally witnessed the scene it's been waiting for.

The proportion of male viewers has exceeded 60%. Fans have interacted more than 90 million times, and the viewership on the first day soared by 55 times.

How much did Xiaohongshu spend for this moment?

According to media reports, it invested nearly 1 billion RMB. This is its most expensive attempt to acquire new users in history and also its most anxious self - rescue effort.

Thirteen years have passed, but the company still hasn't solved the most fundamental problem: Why must users open Xiaohongshu?

This question shouldn't exist in the first place. With over 400 million monthly active users, 170 million daily active users, 800 million daily searches, and users opening the app 16 times a day on average, any internet product would envy these figures.

But Xiaohongshu is aware that while the quantity is there, the quality hasn't kept up.

Monitoring data from QuestMobile shows that from April 2024 to March 2026, in two years, Xiaohongshu's monthly active users increased from 208 million to 245 million, with a net increase of less than 40 million. This growth rate is just passable in the industry, but during the same period, Kuaishou's user base increased by 74 million, and Bilibili's by 34 million.

Xiaohongshu's expansion radius seems inadequate under the shadow of leading short - video platforms.

The World Cup is the name of that variable.

With a valuation of $50 billion, the expected profit in 2026 is about $3 billion, with a price - to - earnings ratio of 16.7. For a platform that gets 76% of its revenue from advertising, the secondary market won't give you much time to prove yourself.

I. The Most Expensive Traffic, the Shallowest Transactions

In 2013, Mao Wenchao and Qu Fang founded Xiaohongshu in Shanghai. It started with a PDF: a guide to shopping overseas for Chinese travelers. It was downloaded at the airport, read during the trip, and forgotten after returning home.

This starting point accurately predicted the company's fate. It's extremely good at helping users decide what to buy but has never learned how to help them make the purchase.

In 2025, Xiaohongshu's annual revenue was about 42 billion RMB, a year - on - year increase of 40% (industry - estimated data). Advertising revenue was 32 billion RMB, accounting for 76%, even higher than the 65% two years ago. The advertising value per user is $91.4, five times that of Weibo.

But this impressive figure is built on an awkward foundation.

Xiaohongshu has successively cooperated with Taobao, JD.com, and Meituan, launching the Hongmao Plan, Hongjing Plan, and Hongmei Plan. The names sound nice, but the essence is simple: users are influenced, click on the link, jump to Taobao to place an order, jump to JD.com to compare prices, and jump to Meituan to order takeout.

Xiaohongshu has built the world's most expensive showroom, but it's always others standing at the cash register.

In the past decade, it has also tried to handle transactions on its own. In early 2024, it shut down its self - operated e - commerce platforms "Xiaolvzhou" and the Welfare Club. After a decade of self - operated attempts, it ended with a shutdown announcement. In November 2025, it acquired Orient Electronic Payment and obtained a payment license, trying to pave the way for a closed - loop ecosystem. In May 2026, the central bank suspended the review of the license renewal application.

It tries to form a closed - loop at every step, but always falls just short.

II. Living in Everyone's Definition

But a more fundamental problem than the e - commerce closed - loop is its identity.

In the past decade or so, the most successful Chinese internet companies have found their own positions. Tencent knows it's a social platform, Alibaba knows it's a commercial platform, ByteDance knows it's about traffic, and Pinduoduo knows it's about efficiency.

Only Xiaohongshu, after 13 years, lives in all the definitions given to it.

Taobao sees it as a shopping guide channel, brands see it as an advertising platform, users use it as a search engine for consumption decisions, investors want it to transform into an e - commerce trading platform, and the founding team insists it should be a real community.

Five roles, five expectations, each pointing to a completely different business model.

The shopping guide model earns advertising fees and doesn't need to build a self - owned trading closed - loop; the e - commerce model relies on transaction commissions, but Xiaohongshu lacks the capabilities in supply chain, logistics, and after - sales service; users of the search - engine model leave after searching and don't form any transactional deposits; if the authenticity of the community is diluted by commerce, it's like self - destructing its foundation. These models can't coexist, but Xiaohongshu isn't willing to completely abandon any of them.

So everyone uses Xiaohongshu, but no one can clearly say what Xiaohongshu really is.

Even Xiaohongshu itself doesn't know. So, it can only keep looking for its own position.

In August 2023, it integrated e - commerce and live - streaming to establish a trading department; in May 2025, it formed a "Large Business Unit" and implemented a dual - line management system; on April 30, 2026, less than a year later, it announced the largest - scale organizational upgrade in history: the AI first - level department Dots was established, the Enterprise Intelligence Department and the Overseas Business Department Rednote were launched, and Conan was promoted to president. The four major sectors of community, e - commerce, commercialization, and technology were unified under her management.

But looking at the three - year adjustment as a whole, it's more like a person making repeated wrong turns at different crossroads.

The framework in 2023 was community operation plus influencing content. In 2025, it became a dual - wheel drive of community and business. In 2026, it was upgraded to community, business, overseas, and AI. It adds something new every year and changes every year.

After 13 years, the founding team finally needed someone else to build the commercial framework. Mulan (Qu Fang) stepped back to the position of board chair, Xing Shi (Mao Wenchao) focused on strategic design, and Conan, who grew up in content operation, stepped to the forefront.

It took Xiaohongshu 13 years to learn to let go.

III. 13 Years, 7 Rounds of Financing

This process isn't cheap.

Its financing history has almost gathered half of China's venture - capital circle. From ZhenFund in the angel round, to GSR Ventures in the A round, and GGV Capital in the B round, then Tencent joined in the C round, Alibaba and Tencent entered simultaneously in the D round, and Temasek led the E round. In 2024, DST Global, Sequoia China, Hillhouse, Boyu Capital, and CITIC Capital successively invested.

Almost every investor is waiting for an IPO.

The valuation has been a long - awaited matter. After the E round in 2021, it soared to $20 billion, dropped to $14 billion in 2023, and returned to $17 billion in July 2024. The turning point came in January 2025 when TikTok was briefly banned in the US. "TikTok refugees" flocked in overnight, with 700,000 new users added in two days, and the download volume briefly topped the US App Store.

By the end of 2025, when old shares were transferred, the valuation had reached $50 billion. In 18 months, it rose from $17 billion to $50 billion, almost tripling.

But behind this increase, Xiaohongshu didn't make any business breakthroughs that could change its fate. It relied on two things: an external stroke of luck and the stable growth of profit data.

The cliff of valuation is still ahead. According to Yibang Power, in 2025, Xiaohongshu's in - app conversion rate was only 0.7% to 1.2%, ranking at the bottom among mainstream e - commerce platforms. In the same year, its e - commerce GMV exceeded 850 billion RMB, but a large part of it was completed outside the platform. The platform earns referral fees rather than transaction fees. Meanwhile, its most core asset is being slowly eroded by its own business model.

In May 2026, Yu Hao, the founder of Dreame Technology, posted a series of messages on social media, accusing the platform of having a distorted value system and inaccurate data, and claiming that the ROI of brand advertising was terribly low. Regardless of the technical details, this post was widely spread because the industry has long suffered from Xiaohongshu's "high influence, low conversion" problem, and brand owners have the same doubts in mind.

All these are painful. But the most painful thing is that users' motivation on Xiaohongshu is to discover and compare, not to make direct purchases.

This is two sides of the same coin as the good community atmosphere and strong sense of real - life interaction. Precisely because Xiaohongshu isn't a noisy trading place, users are willing to stay, share, and trust here. But it also means that when the platform wants to become a trading place, its most precious asset will be gone.

This isn't a question of choosing A or B. It has tried all the options. When charging referral fees, the conversion rate is only 1.2%; when trying to build a closed - loop on its own, the decade - long self - operated business was shut down; when cooperating with Taobao, it became an upstream traffic provider and never reaped the transactional benefits.

IV. Four Tables, None of Its Own

Next - door Douyin transformed from a short - video app into an e - commerce behemoth with a GMV of 4.3 trillion RMB in just five years.

Douyin's monthly active users have reached the one - billion level. From a GMV of 500 billion RMB in 2020 to 4.3 trillion RMB in 2025, a user can be influenced by a short video, enter a live - streaming room, place an order, and make a payment all within the same app. This is the path that Xiaohongshu hasn't been able to achieve in 13 years.

In this fierce ranking competition, there are actually only four tables in the Chinese internet industry.

The first is the Taotian system, with a mature full - link system including warehouses, logistics, payment, and after - sales service. Xiaohongshu signed the Hongmao Plan with it and ceded traffic to be harvested. The second is the ByteDance system, which achieved a closed - loop transaction in five years with one - billion - level monthly active users and saturated attacks. The third is Pinduoduo, which has pushed the efficiency of "products finding customers" to the limit through social fission and extremely low prices.

And the fourth table should belong to Xiaohongshu, but it hasn't set its place yet. Its position is the most special and the easiest to be replaced.

Xiaohongshu has the strongest user recognition in the Chinese internet. Users on Xiaohongshu are looking not for cheap products, but for references on how others live.

This recognition is its most precious asset and also the heaviest burden. Because it means the platform can't convert users as crudely as Douyin, can't offer extremely low prices like Pinduoduo, and can't have a large - scale product offering like Taobao.

It can only be itself. But what exactly is itself?

Users come here to look at outfits, check travel guides, search for product reviews, and learn how to live, but the last step of these things often happens elsewhere. It's like an infinitely updated lifestyle magazine. But no one lives their life in a magazine.

Its most precious thing is the community, but what the capital market wants to see most is growth. Xiaohongshu wins users with authenticity but has to prove itself through commercialization.

It doesn't want to be Taobao, won't be Douyin, and definitely can't be WeChat.

The question is, if it always remains just Xiaohongshu, will the capital market accept it?

[Beyond the Page] Words:

The valuation system of the Chinese internet is designed based on transaction volume and user time. E - commerce platforms are evaluated by GMV, social platforms by DAU and user stay time, and advertising platforms by CPM. Every listed company lives within a proven category.

But Xiaohongshu doesn't belong to any category. It's neither a pure e - commerce platform, nor a pure community, nor a pure search engine. It's a product not born for transactions, but it has to prove its value with transactional logic. When the capital market can only measure it with the e - commerce yardstick, it's naturally considered not good enough.

This is actually not a business problem but a language problem. There isn't a word in the Chinese internet to accurately define a product that users open 16 times a day to discover lifestyles. Without this word, there's no valuation model; without a valuation model, capital can only use the closest categories: e - commerce, advertising, and then find that it's not extreme enough in any aspect.

Xiaohongshu's real dilemma isn't that it did something wrong, but that it has created a new way of use, and the market hasn't learned how to price it.

The World Cup will end, and the IPO window will close, but the real - life atmosphere and experience it creates are still unique.

The question is, how much is this uniqueness worth?

This article is from the WeChat official account "Beyond the Page", author: Ban Jun, published by 36Kr with authorization.