TikTok Influencers Migrate to Xiaohongshu

Xiaohongshu seeing a surge in "TikTok refugees"

TikTok influencers who use the video platform to make short videos in the hopes of going viral are terrified the US government will force the social media app to shut down due to fears that it gives the Chinese government access to users' data.

That's because these influencers make money from their videos, and for some, that's their full-time gig.

However as a result of the impending January 19 deadline, TikTokers or content creators on TikTok are calling themselves #tiktokrefugees and "fleeing" to... another Chinese platform called Xiaohongshu.

There are fears TikTok will shut down Jan 19

Little do these influencers know that Xiaohongshu -- originally translated as "Little Red Book" -- in a satirical nod to Chairman Mao Zedong's book of quotations, is a Chinese company promoted as "RedNote" or "Red" in North America these days.

Xiaohongshu is like Instagram, where users can post pictures and videos. Initially it was called "Hong Kong Shopping Guide" to give tips to Chinese visitors to the city of where to eat, stay, and take pictures. For example they would give detailed instructions on where to have their "Instagram-worthy" shot with say a cup of Arabica coffee along the waterfront in Kennedy Town.

It was great for the cafe having lots of customers, but terrible for traffic in the area, as people blocked roads to get the perfect shot.

Started by Miranda Qu and Charlwin Mao in 2013, Xiaohongshu caught the attention of several Chinese tech giants, like Alibaba and Tencent, and last July the app was worth a staggering US$17 billion. The users are predominantly women, and as a result many beauty and cosmetic brands advertise on the app. Xiaohongshu does not have an e-commerce aspect so users need to turn to Taobao or TMall to purchase things.

Chew is invited to the inauguration

But now with so many TikTok influencers, especially those from the US trying to set up accounts on Xiaohongshu, Chinese cyber regulators may not be so keen on the flood of people, particularly those not from or in China.

Already Chinese officials have told the company it "needs to ensure China-based users cannot see posts from US users", which signals the government may see the influx of Americans to RedNote as a political security threat.

What's interesting is that already there are unfiltered interactions between Chinese and US users, sharing homework questions for example, or asking what life is like in China and getting real depictions instead of rosy pictures from government sources.

So how will Xiaohongshu get around this? Create a special area only US users can access? That might be too hard to manage, and not really beneficial to US influencers who might be providing content to a limited audience.

Or this is all moot after Donald Trump gets into office on January 20. He has already shown support for TikTok, even inviting CEO Shou Zi Chew to the inauguration on Monday. Maybe those TikTok "refugees" won't have to flee the video platform after all...

Chinese Billionaires Drop Off Rich List

Zhong of Nongfu Spring is China's wealthiest man

China's Covid-19 restrictions which severely slowed down the economy, and the depreciation of the yuan led to 229 people losing their billionaire status, according to a new rich list compiled by Hurun Report.

They accounted for more than half of the 445 people worldwide who lost their status as US-dollar billionaires, and as a result dropped off the Hurun Global Rich List. This is the biggest decline in Chinese billionaires since the list was first published in 2013.

However at the same time, China added the largest number of new billionaires at 69, based on their net worth as of January 16 this year.

Tencent's Ma has a net worth of US$39 billion

Topping the list is Zhong Shanshan, 69, founder of water bottle brand Nongfu Spring with US$69 billion, down 4 percent year on year. He is also the world's 15th richest person.

Next is Pony Ma, 52, of Tencent with US$39 billion, up two spots from last year despite losing 25 percent of his net worth. Ma is followed closely by TikTok parent company Bytedance's Zhang Yiming, 40, whose wealth shrank by 31 percent to US$37 billion. 

Alibaba founder Jack Ma Yun dropped from fifth to ninth place, as his net worth fell 32 percent to US$25 billion, and makes him the 52nd wealthiest person in the world.

Li Ka-shing continues to be Hong Kong's wealthiest person and 39th richest in the world at US$31 billion, a drop of 6 percent from a year ago.

Zhang still US$37B rich despite TikTok bans

"Interest rate hikes, the appreciation of the US dollar, the popping of a Covid-19-driven tech bubble and the continued impact of the Russia-Ukraine war have all combined to hurt stock markets," said Rupert Hoogewerf, chairman and chief researcher of Hurun Report, a consultancy.

Nevertheless, China's economy expanded 3 percent in 2022, one of its slowest rates of growth in decades because of the severe zero-Covid-19 strategy that caused multiple city lockdowns and manufacturing suspensions that have resulted in multinational companies looking elsewhere to ease supply chain issues.

However, Hoogewerf seems to think Chinese entrepreneurs will look abroad for expansion. "Chinese entrepreneurs will actively look to expand abroad from this year as they have a global perspective," he says. "The reopening gives them opportunities to copy their growth model [in China] to other countries."

Really?

Hoogewerf says China businesses will go abroad

China limits how much money people and presumably companies can take out of the country, and the central government has a more isolationist focus than wanting to go overseas. Those expansion days of snapping up foreign brands are over.

To think they can replicate their success at home to other countries is naive thinking, as business and labour regulations are very different.

Other countries' governments may not want Chinese companies coming to their shores either, with TikTok being the most recent example of being banned from civil servants' devices.

HK Stocks React to Xi

Xi and Politburo move markets in a downward direction

How did Hong Kong react to General Secretary Xi Jinping's extension of power for at least another five years and his seven-man Politburo lineup?

The Hang Seng Index plunged over 700 points to drop below 16,000 points, a 13-year low. The index fell 4.4 percent to 15,494. 24 at 11.01am local time, the lowest level since May 2009. There was a major sell off of tech stocks, with Alibaba Group falling 8.8 percent to HK$63.50, a record-low close, and Tencent Holdings slumped 7 percent to HK$216.80. Meituan slumped 9.5 percent to HK$128,10.

HSI plunged below 15,000 in 13 years

Developer stocks also dropped, with Longfor Group falling 9.4 percent to HK$17.30 and Country Garden lost 7.7 percent to HK$1.32.

In his report to the Congress, Xi called for "regulating the mechanism of wealth accumulation", signalling a tighter oversight of private capital following months of crackdown on tech companies, while also pushing his vision for "common prosperity" in a bid to close the wealth gap in the country.

China's economy grew only 3.9 percent in the third quarter when it had projected 5 percent, demonstrating a lack of consumer confidence in the retail sector, which only grew 2.5 percent in the third quarter.

Does Xi even care about economic numbers? This slide backwards is a rebuke to what Jiang Zemin/Zhu Rongji and Hu Jintao/Wen Jiabao did in the past 20 years.

Unless Xi has an economic miracle up his sleeve, stocks are going to sink further.