The ongoing saga surrounding the popular video-sharing app TikTok has unexpectedly created a surge in interest for Chinese-made social media platforms, leading to a boost in the stock prices of several mainland consumer companies. As American users seek out alternatives to TikTok amidst the uncertainty of its future in the U.S., these companies are poised to tap into a potentially lucrative new customer base.
At the center of this phenomenon is Xiaohongshu, a Chinese social media app now known as RedNote in the United States. In the wake of the U.S. Supreme Court’s indication that it may uphold a law banning TikTok, RedNote experienced an influx of more than 2 million new users in just two days. This sudden surge in popularity has had a ripple effect on the stock market, with companies such as Hangzhou Onechance Tech Corp. and Yantai China Pet Foods Co. seeing significant gains as investors anticipate the potential benefits of American users discovering and purchasing Chinese-made goods through the platform.
Chen Shi, a fund manager at Shanghai Jade Stone Investment Management Co., highlighted the positive impact of this trend on investor sentiment, stating, “The cross-border discussions show that Chinese goods do have appeal and are competitive in the eyes of the U.S. consumer.” This optimism is fueled by the belief that the increased exposure to American users could open up new avenues for growth and revenue for Chinese companies.
RedNote’s meteoric rise saw it become the most-downloaded free app on Apple Inc.’s iPhone download charts and secure a spot in the top 10 on Alphabet Inc.’s Google Play store. Often described as a Chinese version of Instagram, the app has captured the attention of American users seeking an alternative to TikTok, which briefly shut down in the U.S. on Sunday before President Trump delayed the enforcement of a national-security law and granted the app’s owners more time to find a buyer.
The speculation surrounding the potential benefits for Chinese companies with a strong presence on RedNote has led to impressive stock market gains. Hangzhou Onechance Tech, a digital marketing firm, saw its shares soar more than 70% in the three days following the Supreme Court’s indication, as investors anticipated an increase in Chinese companies’ social media exposure on RedNote and a potential rise in content tailored for English-speaking users.
Similarly, Yantai China Pet Foods experienced a surge of up to 25% over three days, starting from Jan. 14. This spike was attributed to a unique trend on RedNote, where new American users were asked by their Chinese counterparts to share a photo of their pet as a “cat tax.” Analysts suggest that manufacturers of home appliances, apparel, and snacks with a strong presence on the app may also stand to benefit from the influx of American users.
Zhao Zhongping, an analyst at Sinolink Securities, emphasized the potential impact of this development in a research note, stating, “American users have great consumption potential, and if they stay on the platform, will boost Xiaohongshu’s ecosystem and benefit the multi-channel-network, cross border e-commerce, marketing companies and brands with overseas business.
While the TikTok drama continues to unfold, with shares of the affected Chinese companies experiencing mixed performance following President Trump’s order to the Attorney General to refrain from taking action against the app for 75 days, the rise of RedNote and the subsequent boost to Chinese consumer stocks serve as a reminder of the interconnected nature of the global digital landscape.
As users increasingly seek out new platforms to engage with content and connect with others, the companies that can adapt and capitalize on these shifts in user behavior stand to reap significant rewards. The long-term impact of this trend remains to be seen, but the initial surge in stock prices and the enthusiasm surrounding the potential for cross-border e-commerce suggest that investors are optimistic about the future prospects of these companies.
The TikTok uncertainty has inadvertently created a unique opportunity for Chinese consumer companies to expand their reach and tap into a new, potentially lucrative market. As the situation continues to evolve, it will be crucial for these companies to leverage their presence on alternative platforms like RedNote to engage with American users and showcase the appeal and competitiveness of Chinese-made goods in the global marketplace.
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