Every September I sit down with brands to rebuild their China media plan for the following year. This month the same question came up four times, from four people who had not spoken to each other. Why has Xiaohongshu got so expensive?
The answer was published in Chinese in June, and almost nobody outside China read it.
The news: a platform preparing to answer to shareholders
On 24 June 2026, 21世纪经济报道 reported that Xiaohongshu was preparing a confidential filing for a Hong Kong listing before the end of that month. The report is careful, and so am I: a confidential filing is not a listing, and the company has been the subject of IPO rumours for years. What makes this round different, in the paper’s words, is that the pieces are finally all in place.
The financial picture it laid out is the part fashion brands should read twice.
| Valuation, July 2024 | 17 bn USD |
| Valuation, June 2025 | 31 bn USD |
| Valuation, end 2025 | 50 bn USD |
| 2025 revenue | 42 bn RMB, +40% |
| Of which advertising | 32 bn RMB |
| Advertising share of revenue | 76%, up from 72% |
| 2024 GMV | 400 bn RMB |
Read the third and fourth rows together. Xiaohongshu tripled its paper value in eighteen months, and it did so on a business that takes three quarters of its money from selling advertising. The share went up, not down, in a year when the company was actively trying to build a shop.
Why 76% is the number that matters to you
A platform that earns 76% of its revenue from ads has one lever. When a quarter comes in soft, it cannot discount its way out or ship a new product line. It raises the price of attention, or it releases more inventory into the feed, or both.
Private companies can absorb a bad quarter quietly. Listed ones report it. That is the whole change, and it is not a small one. From the moment there are public shareholders, the pressure to grow advertising revenue becomes visible, quarterly and permanent. Every brand buying media on that platform is on the other side of that pressure.
We are already seeing it in what clients pay. I am not going to publish a cost-per-click curve, because it moves by category and by week and anyone who gives you a single number for “Xiaohongshu CPM” is selling something. But the direction has not reversed once in two years.
The other half of the story: the platform knows it has a trust problem
The same article is unusually blunt about what it calls 商业化畸形, distorted commercialisation. Advertising growing this fast on a community built on personal recommendation puts the two in tension.
The figure that stopped me: among users who had left or reduced their use of the platform, 63.01% gave too much false information as their first reason. Not boredom. Not a competitor. Distrust.
The clean-up is real too. In a single month the platform removed 109,000 non-compliant notes and dealt with 13,000 accounts, in an enforcement wave largely aimed at content involving minors. And the report lists the failures honestly: 小绿洲 closed, 小红卡 stopped after three months. E-commerce has been hard for them. Advertising has been easy. That is exactly why the mix looks the way it does.
We have written before about the enforcement side of this, when Little Red Book banned 29 brands for fake marketing. The IPO makes that enforcement more likely to continue, not less. A company heading for public markets cleans its house first.
From a conversation this month
Marketing manager, French leather goods house, ten people in China: We spent 40% more on Xiaohongshu this year than last and our saves went down. My director thinks the agency is wasting money. I am starting to think the platform is just taking more.
Cindy: Both can be true, and in your case only one is. I looked at your last sixty notes. You put paid traffic behind forty-three of them. Eleven had earned a single organic save.
Marketing manager: We boosted them because they were underperforming.
Cindy: That is the mistake, and it is the most common one I see. Paid traffic on this platform is a multiplier, not a rescue. You are paying rising prices to amplify content the audience already told you it did not want. Cut to the eight notes that earned saves on their own, put the whole budget there, and your cost per save will drop before the platform’s prices do.
Marketing manager: And if none of the sixty had earned saves?
Cindy: Then you do not have a media problem. You have a content problem, and no budget is going to fix it.
What I would change in a 2027 plan
Stop buying reach you cannot convert. The reverse funnel logic the platform itself promotes, 反漏斗种草, is not marketing talk. Find the narrow group that already wants what you sell, win them properly, and let them carry it outward. Broad reach is the most expensive thing on Xiaohongshu and the least reliable.
Only amplify what has already worked. Our colleagues at Ecommerce China Agency put it more sharply than I would in their piece on RedNote marketing: “Take the notes that already earn saves and put paid traffic behind those only. Never boost a post that failed organically.” That single rule would have saved the brand above most of its increase.
Treat search as the real estate. A note that ranks for a query keeps working after the media stops. A boosted note stops the day the money does. We went into this in detail in why search behaviour matters more than follower count.
Assume compliance tightens, and get ahead of it. Declare paid collaborations properly. A listed company enforces harder, and being made an example of costs more than the disclosure ever would.
What I am not sure about
Here is my honest uncertainty. A listed Xiaohongshu could go the other way. Public scrutiny on that 63.01% trust figure might force the company to protect the community harder, cap ad load, and push its e-commerce take rate up instead of its ad prices. That would be better for brands who actually sell on the platform and worse for brands who only advertise on it.
I have seen both arguments made well by people in Shanghai who know the company better than I do. What I would not do is build a 2027 plan that assumes prices fall.
If you are planning Xiaohongshu budget for next year and want a second pair of eyes on what you are actually paying for, that is the kind of work our Xiaohongshu team does every week.
Your turn: have your Xiaohongshu costs risen this year, and did your results rise with them? I read every reply.
Cindy Zhang is the CEO of Fashion China Agency. Fifteen years inside Chinese fashion and luxury: editorial and PR at Vogue China, brand-side experience with Guerlain, then the luxury segment at Xiaohongshu. She now leads a Shanghai-based team working exclusively with premium and luxury fashion brands in China. Read her full story →