Source Code Capital Portfolio Companies Visit Xiaohongshu: Building Brand Moats in Three Steps

In today's era of rising new consumer brands in China, brand influence has become a mandatory course for every consumer company. Xiaohongshu, now boasting over 100 million monthly active users, has become the "search engine" of the shopping world — helping consumers precisely "plant seeds" (get product recommendations) in the dense consumer landscape through its unique approach, with post-90s young users representing the strongest spending power at its core.

Source Code Capital has been deeply rooted in the consumer track since its founding in 2014, investing in numerous outstanding consumer enterprises and deeply participating in the germination and development of a series of new consumer brands.

This time, Source Code Capital partnered with the Xiaohongshu team to customize a "Source Code Consumer Brand Portfolio Companies x Xiaohongshu Marketing Private Session" for consumer track portfolio companies. CEOs and senior executives from many new consumer brands including Blokees, Bioguo, Egg Soul, Heyangyang, Linji Convenience Store, Lan, Lanshi, Morus, RockingZoo, Suplay, SMU Shilü, Usmile, Taoyouye, Tuiquan, Woniubaoxian, and Xunweishi came to Xiaohongshu headquarters for a closed-door sharing session on "Mindshare Seeding, Brand Win-Win."

• In the foundation-building stage, how do you do the right things, find the right people, and leverage traffic tools effectively?
• In the overtaking stage, how do you expand awareness, find interest hooks, and deploy suitable messengers?
• In the category-owning stage, how do you capture users' first-mind awareness?

How to use Xiaohongshu to build your own brand advantage and occupy consumers' unique mindshare — we hope this article brings you some fresh ideas and inspiration.

Speakers: Xiaohongshu Brand Marketing GM Sherlock, Xiaohongshu Brand Marketing Planning Director Shengxiang

100 Million Monthly Active Users Co-Building a Diverse Lifestyle Platform

Xiaohongshu currently has 100 million monthly active users, with 70% from first- and second-tier cities. Among new users joining the platform, the gender ratio is actually quite balanced, with more and more men joining. Notably, the proportion of new users from third- and fourth-tier cities has already surpassed that of first- and second-tier cities. 73% are post-90s users, with 50% being post-95s. From a user structure perspective, Xiaohongshu is an extremely young platform.

When we look at user interest tags, we find that user interests are highly diverse. Different demographics all particularly enjoy trying new products and love sharing on Xiaohongshu:

• The first type is Gen Z, who enjoy exploring all kinds of things and use Xiaohongshu for learning and check-ins.
• The second type is white-collar workers, including urban trendsetters, who have strong opinions and independence in their outfits, lifestyles, attitudes, and principles.
• The third type is single elites who enjoy solo dining and solo living.
• The fourth type is refined mothers who, beyond baby products, also pay close attention to postpartum recovery, skincare, and fashion.

Every social media platform holds mindshare power. People open Xiaohongshu with a significant purpose: to make consumption choices, to research before buying, to discover fresh products and lifestyles. Xiaohongshu has gradually become the "search engine" in the minds of many young people.

Now, Xiaohongshu has a group of young, high-spending, life-loving, highly sticky users who come to the platform seeking consumer-side mindshare. This has led Xiaohongshu to create numerous trending phenomena — every so often, a wave of hit products emerges.

Going forward, Xiaohongshu hopes to work with Source Code Capital's consumer track portfolio companies to deeply cultivate and build corporate brands together. Because Xiaohongshu is a young people's consumption decision platform, and it inherently carries the DNA to birth hit products and trending phenomena.

Leveraging Traffic Tools to Precisely Build User Communities

When a brand first enters Xiaohongshu, what are the key things to do?

First, different brands have different personas and temperaments. We need to think about what a brand looks like on Xiaohongshu. Simply put: who am I. Step one: TA (target audience) profiling is crucial — this needs to be clear from the start. Second is brand temperament, including what communication style and language to adopt with your user base — all part of brand style. Finally, selling points and scenarios — every brand is different.

On Xiaohongshu, brand is extremely important, so in the foundation-building stage, never neglect brand building itself. This involves increasing user operations, user interviews, and user feedback on the platform.

Once brand positioning is clear, you need to find suitable messengers to help spread brand image and content. Who can messengers be? First, the brand itself — for example, Perfect Diary is actually a very top-tier blogger on Xiaohongshu itself, with nearly 2 million followers. Its notes contain genuinely valuable user content — content people actually want to read. When you seriously start operating your own brand account and begin interacting with your followers, there will be positive feedback effects.

The second type of messenger is KOLs. In fact, KOLs serve different functions. For instance, exceptionally beautiful KOLs can help brands produce stunning visuals — photos so good they inspire aspiration. If you need to provide credibility and want viral content, professional articles are more effective, requiring you to find professional blogger KOLs. Brands can seek out KOLs with unique temperaments to help convey brand tonality and differentiate themselves from similar brands.

The third type of messenger is KOCs. KOCs are a critical factor influencing consumers' final purchase decision. When users search for a brand on Xiaohongshu, they've been seeded by KOLs earlier. But when deciding whether to buy, whose notes do they choose to read? They actually choose notes that look more authentic, more like ordinary people — notes without many likes. This is the value of KOCs.

After starting to operate brand content, brands can try using precision traffic tools. The first is a fan-growth tool called "French Fries," which helps corporate account notes reach more people. The second traffic tool is "Performance Ads," which helps brands continuously test creatives and iterate their content capabilities. The third tool is "Windmill," which helps authentic sharing-based product experience notes reach more users. Real users' authentic sharing is key to consumer decision-making.

Four Steps to Help Brands Complete the "Overtake"

If the first phase goes very well, and now the brand wants to break from top 100 to top 30, we can achieve brand leap goals through refining memory points, designing interest hooks, high-frequency touchpoints, and content accumulation.

Step one: Refine memory points. When we analyze many beauty brands, we find that those with the best short-term exposure and performance, and highest awareness, are all products from brands that fiercely hammer on a single point. So at this stage, focus is extremely important. Simultaneously, finding selling points that truly satisfy users is equally important.

Step two: Design interest hooks — the accelerator for the brand awareness expansion stage. For example, celebrity endorsement is an excellent interest hook. We've seen in many past success cases that using the right celebrity can rapidly elevate brand awareness in a short time.

Step three: When the brand has good memory points and interest hooks, you can proceed to high-frequency touchpoints. Repeated touchpoints create long-term memory in customers. At this point, leveraging the interest hooks from the previous step can improve information touchpoint effectiveness.

Step four: Content accumulation management. Make good use of Xiaohongshu topic pages, corporate accounts, and other tools for accumulating content assets. Good content accumulation forms brand private traffic.

The Combo Move for Brands to Capture User Mindshare

After the previous two development phases, brand operations reach the stage of capturing user mindshare. First, we need to know our brand's position in the industry. Second, we must understand the competitive landscape. Third, we need insights into industry, audience, and scenarios to find the leverage point for this stage. Through exposure combo moves, platform event participation, and cross-border collaborations + co-creation, we ultimately help brands achieve first or second place in their industry.

The exposure combo move is high-frequency visibility and optimized seeding. For example, when launching a new product requiring major exposure, you can try showing it to people twice a week with intervals — like surprise boxes, using sample distribution to incentivize users to actively search. During this search process, they remember the brand and product, and get seeded through trial use.

The Xiaohongshu platform has numerous rich activities that various brands can participate in. Participating in platform activities can help brands penetrate specific scenarios, allowing more strategic resources to interact with users and giving brands more opportunities to be seen by more users.

Beyond platform activities, brands can do cross-border e-commerce co-creation activities. Downstairs at Xiaohongshu, there's a glass wall with various merchandise inside, and products in the blind box machines at the office building entrance — all from Xiaohongshu's internal RE:Design team. We can collaborate with such teams to help more brands transform their previous brand image and create images and product formats that Xiaohongshu users love.

Brands Influencing the Lifestyle of the Younger Generation

Through three stages of brand operations, the further you look, the more hopeful it seems. Many brands already laid out their presence on Xiaohongshu when they were just starting up. So brands themselves, in the foundation-building stage, established their brand presence through Xiaohongshu, adopting more innovation to make their brand image younger and more vibrant. Thus, rooting deeply in Xiaohongshu and deeply shaping your brand — the thinking across these three stages is very clear. The entire platform's ability to empower brands at various stages, including their respective phases, applicable methods, and tools, is summarized very meticulously and thoroughly.

In its commercialization process, Xiaohongshu carries a mission: to do commercialization with user value. So during rapid commercialization growth, we're constantly looking back — checking user perception, checking whether commercialization not only avoids negative impact on users but actually enhances user value. So for a long time, we've been observing and communicating with emerging brands, because we believe brands are closer to users, better able to listen to user voices, and can adjust products promptly to respond to constantly evolving user needs. So we hope all emerging brands, within Xiaohongshu's ecosystem, can deliver satisfactory marketing numbers while also paying attention to genuine user feedback about their brands.

In the future era, being able to see user feedback about brands is especially important. First, whether users are willing to express their attitudes — not just comments, but more importantly, whether users can play together with brands and products, and whether they can say things beyond "you're great, you're good, love it" — perhaps even offering some suggestions to brands and products.

On the commercial side, Xiaohongshu carries the responsibility of encouraging more brands to choose to share authentically — whether in their own content or in collaborations with brand partners and creators — giving creators enough space to sincerely discuss their genuine feelings and preferences about products. Because only this way can brands dig deep and stand firm in future competition, rather than being easily swayed by well-intentioned marketing. Source Code Capital's consumer track portfolio companies will, to varying degrees, truly influence the lifestyles and some spiritual changes of China's future young generation. At the core, this is because national strength is growing increasingly strong, which also empowers both platforms and brands to grow better and faster against this backdrop, while shouldering more responsibilities beyond providing quality products — responsibilities at the spiritual level.

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