What is Little Red Book?
Translated from the Chinese “Xiaohongshu” the term means “Little Red Book”.The English app is also called “RED”. “Xiaohongshu” is an app created in 2013 by Miranda Cui Fan and Charlene Mao Wenchao. It was originally intended for users to post reviews of products and services purchased abroad. It was made at a time when travel was usually made by only wealthy people. The app formed a community of residents of first and second tier cities.
In 2019, the app is already used by more than 200 million people, including 30 million monthly active users (MAU). In addition, the app spans 200 countries and regions, providing its customers with an efficient service to deliver the best products from around the world.
Most Reliable platform in China
Because the app was independent of advertising, close links were established between the platform and its users. It is the trust, the sense of community and the exchange of views that arise from the fact that Xiaohongshu or Little Red Book relies entirely on user-generated content that ensures this reliability.
Thanks to the behavior of Chinese consumers, the platform is rapidly developing.
Indeed, Chinese potential buyers can assess the quality of a product or service before making a purchase. They search for information from experts or other users, as well as reviews on the products they want to buy. Thus, Little Red Book is the perfect platform to find such information.
Nowadays Xiaohongshu has transformed from a platform for reviewing and exchanging information into a platform for shopping. A year after the launch, the platform also began to host online stores. This means Xiaohongshu created a ‘shop-in-shop’ structure where different companies can promote their brands.
The Xiaohongshu platform now has an entire ecosystem where users can share clothing, DIY tips, recommendations and reviews of various products and services, while having links to these products in the description in order to buy them directly through the platform.
Little Red Book: a great platform for foreign brands
Xiaohongshu offers a new way of consumption, which is more convenient and more relevant to the interests of users
Given that Xiaohongshu occupies an increasing share in the cross-border e-commerce market, companies intending to launch their brand in China will do well to take this factor into account.
Xiaohongshu allows brands to establish a special relationship between the company and the consumer. A brand or product is promoted through a platform by a well-known consumer personality (in most cases – a key opinion leader), who in turn helps to attract more customers than if the brand itself was doing it.
In this article you will find more information on why Xiaohongshu is an excellent platform for foreign brands and companies.
What is Xiaohongshu’s place in the Chinese cross-border e-commerce market?
The cross-border e-commerce market in China is very competitive. The market leader is now the Kaola platform, which holds almost 25% of the market share, followed by Tmall Global with 20.3% and vip.com, whose market share is 15.7%.
In turn, Xiaohongshu is both a social network and an online trading platform and occupies 6% of the market. About the same percentage is occupied by its nearest competitor – “Yangmatou” with 5.8% market share.
Little Red Book Company’s market share
Despite the fact that this market share may not seem particularly impressive, in 2017, during the celebration of Singles Day (November 11) – an event in which millions of Chinese visit electronic trading platforms in pursuit of discounts, Xiaohongshu became platform number one. It was visited by 15.4 million active users. This was three times the number of active visitors to the market leader – Kaola (5.3 million).
The platform is a success not only with users, but also with companies. In 2018, Little Red Book established partnerships with many big names such as Innisfree, Est’e Lauder, Lanc’me, and Rayban.
Thus, Xiaohongshu is not just a fashionable social network and online trading platform; it is also a new platform for foreign business in China, and the company is growing rapidly. Two years after the launch, total sales at Xiaohongshu reached one million Yuan, and then within 6 months this amount increased to more than one hundred million Yuan.
In the future, Xiaohongshu is expected to become the leading social network/e-commerce platform in China. In 2018, Xiaohongshu achieved total sales of 1.4 billion Yuan and announced that the platform’s turnover will reach three billion Yuan by the end of 2019.
Chinese digital giants are investing in Xiaohongshu
Indeed, Xiaohongshu is part of a very small range of recipients of funds from such digital Chinese giants as Tencent, Alibaba, as well as GGV Capital, zhenFund, Tiantu Capital, K11 Adrian Cheng and Genesis Capital.
In early 2018, Alibaba and other major Chinese e-commerce platforms participated in the financing of the company worth $300 million. According to the representative of Xiaohongshu, this amount will be used to hire new talented employees, as well as developing market research programs and increasing the user base.
Xiaohongshu’s success has attracted many independent Chinese investors as well as China’s major digital companies. Today, the platform is one of the most observed and highly valued unicorn companies in the world.
What does the Xiaohongshu community look like? What are the main trends?
The Xiaohongshu community is mostly made up of men and women born in the 90s and 2000s. 66% of the audience is under 30, and Miranda Cui Fan even stated in an interview that this community is getting younger and younger, as 70% of users were born after 1995. It is also worth noting that 88% of users are women.
As already noted, the majority of users come from first and second tier cities (57% live in first tier cities). This means that most users of the platform have a higher purchasing power than users of other platforms, the target audience of which are mainly residents of third and fourth tier cities.
This makes Xiaohongshu one of the best platforms for attracting young and wealthy clients.
What are the main trends on the Xiaohongshu platform? What do users want to buy?
Based on the fact that Xiaohongshu is used mainly by women, the most popular products on the platform are those that interest women. Therefore, the most popular products fall into the following categories: clothing, cosmetics, food products, products for mothers, accessories, fitness equipment and vitamins.
It would be a big mistake to assume that Western and Chinese young people act and think the same way. The Chinese have their own consumer habits and their own special consumer behavior. In order to succeed on the platform, companies placing their products on Xiaohongshu must adapt to these conditions.
How does Xiaohongshu work?
We can present the company as a mixture of Pinterest (hosting various content), Instagram (where it is now possible to display products on images) and e-commerce platforms. As noted, initially the platform only hosted articles, images and product reviews.
Now Xiaohongshu is a bit of everything. Users can do the same things as before, but in addition, the pictures and articles hold shop-in-shop products that have a direct link to the store built into the Xiaohongshu ecosystem. Thus, the entire decision-making and purchase process can be made within one application – Xiaohongshu.
The display on the app’s main menu is similar to Pinterest: photos and videos displayed in the windows followed by the meta titles. The main menu corresponds to the “faxian” (“discover”) page. This page displays the content of accounts that the user has not subscribed to.
Above you’ll see two other menus: “guangzhu” (“follow”) and “fujin” (“nearby”). “Guangzhu” is dedicated of the accounts to which the user is subscribed. “Fujin” is a very practical page because it analyzes content published by nearby users. This means that if a user travels, he can use “fujin” in order to get a review of the store, restaurant and entertainment nearby.
When you open a post, you are given an in-depth analysis of the chosen topic. In this example, we have clothes with links to each product, comments on quality and so on.
Similar to Pinterest, the accounts you subscribe to are posted in the news, where you see their posts in the form of multiple photo and video windows.
When you open the “fujin” page, you have access to a list of all the shops, restaurants and cafes nearby.
When you open a post from the list, you get an in-depth analysis of a place with lots of pictures. Users can also check the comments to find out other people’s opinions about the site.
At the bottom of the page, you’ll see a small button with the “+” sign.
This is used to publish content such as small texts, pictures, and videos. To the right of this button is the notification center and your profile information. On the left is the store logo for direct access to the platform.
The “add” button is larger than the others and is located in the middle because the Xiaohongshu team would like users to actively share their experiences and impressions about different companies, products and services and be involved in the platform.
Recently, Xiaohongshu developed a sharing feature that allows users to share posts on other social networks such as WeChat and Weibo, as well as by e-mail and text messages. Initially, Xiaohongshu sought to keep its content within the platform, but now this content is becoming more and more integrated into the Chinese digital ecosystem.
Why is Xiaohongshu is the most trusted platform in the Chinese digital ecosystem?
Xiaohongshu has definitely found its niche in the very competitive environment of Chinese social networks. Chinese users usually look for detailed information about the products they are going to purchase. In this regard, Xiaohongshu has become an ideal application for achieving these goals, so it perfectly meets their needs.
Xiaohongshu is also a social network that can be an inspiration like Pinterest and Instagram. So, users like to spend time there, even if they are not going to buy anything. Xiaohongshu is an excellent social network, where you can be inspired by publications covering various subjects such as fashion, make-up, art, photography, and cooking.
In some ways, Xiaohongshu has gradually evolved into an entertainment app, a social network, and an e-commerce platform all in one.
The principle of working with Xiaohongshu is addictive – the user scrolls through the news feed, watches photos and videos, various tutorials, DIY and so on. Once a post is open, the user continues to scroll down the feed to search for similar content.
Xiaohongshu users are very active. The platform gives them the ability to share content, like and comment on posts. This is the part of the platform that attracts people, and how it builds up the trust of users.
Algorithm for up-to-date content
As with many other social networks, Xiaohongshu has an algorithm to adapt content to user preferences in order to create relevant content. This algorithm relies on what the user likes, what they watch and comment on the most, as well as the type of content that the user posts on the accounts they subscribe to.
Is Xiaohongshu a search engine?
More than an entertainment app, Xiaohongshu is positioning itself as a search engine for its users. Why? Because Chinese users trust the recommendations of experts or people who have already checked the products of interest to them. Thus, before making a purchase, Chinese users usually visit Xiaohongshu in order to study the company/brand, read reviews, look at images, and find out what reputable opinion leaders think about a particular product or service.
How to sell products on Xiaohongshu?
In order to use Xiaohongshu as a trading platform and social network, companies need to create an official account. Because Xiaohongshu relies on cross-border e-commerce, the process of creating an account is not as complex as it can be on other platforms.
In order to create an official account, the company must first create a personal account and then deliver certain documents to Xiaohongshu, including:
- The name of the company, logo and trademark
- The industry in which the firm operates
- Headquarters Address
- The name and contact details of the person in charge
- A letter indicating the company’s authentication
- Business registration or registration certificate
Registering an official account is much cheaper than on large platforms (such as Alibaba or JD).
However, the official account also has drawbacks, namely:
- Higher commission percentage for products sold
- A limited number to store products in an online store.
Opening an online store on Xiaohongshu
Before you open your online store on Xiaohongshu, you need to choose the type of business model that your company will continue to run on the platform.
There are two options:
- Xiaohongshu supports your products and buys them in advance
- The company creates its own store
Therefore, there are various steps leading to the opening of your store:
- Sign up for Xiaohongshu via company email
- Fill in registration information, including:
- Basic information about the company (responsible person, trading model, headquarters address)
- Company qualification (business registration or registration certificate)
- Financial information (bank name and address, currency for calculation, SWIFT code and IBAN)
- Additional documents for companies selling products of various brands: power of attorney from brand owners to sell products on Xiaohongshu (with the official seal of the company)
- Once these steps are complete, Xiaohongshu will analyze your registration application and process it.
- The final step is to sign the agreement online and the paper version
- The company has access to its online store, as well as to various training modules on the management platform Xiaohongshu
What will the official account and online store look like?
In general, this trading platform is similar to any other platform. The real value of posts on the platform is that the products placed on it are directly related to the online store.
This is the home page of the brand’s official account with a small entry, consisting of its history and products, as well as posts and articles from buyers.
User generated content about Gucci bags
How to manage logistics on Xiaohongshu
In March 2019, the government launched new regulations for domestic and cross-border e-commerce.
How do these new measures affect overseas companies on Xiaohongshu?
First, a company that wants to enter the market must comply with laws and regulations relating to exports to China and imports from China. Chapter 5 of the E-Commerce Promotion Act states that China should promote cross-border trade. In order to promote such development, foreign enterprises need to provide the necessary management services and tools.
In this regard, China also wants foreign companies to merge with Chinese entities, such as cross-border e-commerce companies registered at Chinese customs through a company registered in China.
Every non-registered company operating in the field of cross-border e-commerce was cut off from the Chinese market in April.
Documents needed to start a business:
Authorization letter from the firm that chooses a Chinese company
Letter of consent from a Chinese company
There are two main ways to implement logistics at Xiaohongshu:
Store goods in Chinese warehouses and use local logistics services (usually used for small, widely used goods)
Use international logistics services to deliver a product (applied for larger and more expensive goods)
If Xiaohongshu wants to maintain control of the supply chain, it means that it confirms the partnership with the company and guarantees a decent quality of goods and services for the users of the platform.
It is on this model that Xiaohongshu has developed a logistics network made of 7 international distribution centers, 10 transport centers and 9 import processing centers. In addition, Xiaohongshu warehouses check the quality of the product, and at the same time provide faster delivery to the customer.
Xiaohongshu also provides a 60-day free storage period (except for diapers, bedding, etc.). Storage fees are then applied at the end of this period. In addition, this logistics management method allows companies working with Xiaohongshu to bear very low logistics costs. Xiaohongshu’s Commission is only 5%.
Another advantage of delivery through Little Red Book logistics services is that the company does not need to sacrifice its reputation. They can adapt the packaging to the brand (color, logo, etc.).
How much will it cost to start a business on Xiaohongshu?
Xiaohongshu is a fairly expensive platform. When you create an account, you are being charged for multiple payments: a fee for opening an online store as well as its management.
When creating an account, the company must make a deposit, the amount of which depends on the type of business it conducts. This amount also depends on the type of online store that the company wants to create. The average deposit amount is 20,000 Yuan (about 2,900 Dollars).
The deposit does not include running costs, which are a fixed amount paid monthly. This amount ranges from 10,000 to 60,000 Yuan ($1,450 to $8,800)
These payments will have to be repaid once the contract with Xiaohongshu is signed. The company is charged between 15 and 20% of the sale price through the platform.
Little Red Book also charges a commission on each sale on the platform. Undoubtedly, this percentage depends on the company, as Xiaohongshu enters into partnership agreements with certain firms, thereby attracting the flow of goods. Initially, the commission was charged at 5% of the sales revenue. In 2019, this figure varies from 10 to 15% on average.
All of these payments do not take into account the cost of marketing and advertising, which are an important factor contributing to a successful launch on the platform.
These additional payments include advertising from reputable key opinion leaders (KOL), which will be discussed in this article later. Payments vary greatly. On average, the most influential opinion leaders cost between 50,000 and 100,000 Yuan (7,300-15,000 Dollars, respectively). Middle-level opinion leaders request an average of about 10,000 Yuan (or 1,400 Dollars). Finally, less authoritative opinion leaders request between 3,000 and 5,000 Yuan ($440-730).
The cost of creating an account on Little Red Book includes:
What is a key opinion leader? Why is Xiaohongshu/Little Red Book a great platform for KOL promotion?
Key opinion leaders (KOLs) are influential figures in social networks and various fields such as film, music, fashion and so on. In most cases, KOLs have hundreds of thousands (and sometimes millions) of subscribers.
Why are we talking about KOLs? Because they are one of the most important aspects of how Xiaohongshu works. Today, in order to do business and be successful in China, it is important to interact with KOLs. They are the ones that Chinese users trust. Sometimes, the opinion of KOLs becomes more important than, for example, the opinion of other users or their acquaintances.
SEM and advertising are not as effective. In this vein, KOL is a new type of advertising that has a word of mouth effect by spreading useful information about a product or service.
To get the most out of KOL marketing, it’s important to understand which person is the most appropriate to the spirit and values of the advertising brand. KOL’s image and style should be correlated with the message the company intends to send.
On any platform, the influence of KOL is very important. At Xiaohongshu, however, this impact is even greater due to the excellent reputation for the quality and authenticity of the content. This content is usually detailed, accurate, and because the platform team is working on it every day, it knows exactly what the user needs. Xiaohongshu gives opinion leaders an excellent platform to share content about their favorite brand while informing users about new products and trends.
A new platform for companies to interact with opinion leaders
In 2018, Xiaohongshu decided to facilitate the process of communication between companies and KOL. A platform has been created for this purpose (see image below). Like the Douyin Star Map platform, this platform helps companies monetize their social media accounts and improve communication with existing and potential customers.
Key Opinion Leaders working with Xiaohongshu are very important to the digital strategy of any foreign company. Their impact is built entirely on the transfer of information from user to user.
Such word of mouth has a powerful impact on users, especially when it comes from their peers or opinion leaders. The reason for this lies in the fact that before making a purchase, Chinese consumers want to fond out as much information about the product as possible.
Moreover, KOL is a real asset for the firm, as they know how to work with the platform and what content users need.
Finally, opinion leaders can talk about a brand to someone who has never heard of them, or make the purchase of the company’s products more and more desirable for a user who is already familiar with it.
Where do KOLs come from on Xiaohongshu?
Celebrities who want to develop relationships with their audience by posting about their daily lives, favorite products and so on. Thanks to the growing community, Xiaohongshu is becoming attractive to Western celebrities, such as Kim Kardashian, who created an account on the platform in 2018.
KOLs from other social networks
KOLs from other social networks such as Weibo, WeChat, Douyin and so on. These are opinion leaders who have noticed Xiaohongshu’s potential and want to take advantage of the platform’s growing community.
Ordinary users who gradually attracted a huge number of subscribers due to their style and image, which they developed on the platform. KOL data is the most influential, as they are not celebrities, but the same as everyone else. Thus, users are more likely to trust this type of KOL than, for example, actors or singers.
Which KOL will suit your strategy?
It is important to choose the right KOL for your brand’s marketing campaign. Your KOL needs to have the right number of subscribers and the right content. Indeed, the effect of the company depends largely on the audience of the KOLs it signs up. Here are some examples:
In order to achieve a short-term effect with broad brand coverage, it is best to attract very well-known opinion leaders with between 500,000 and 1 million subscribers.
Companies that need a medium- or long-term effect are suited to smaller-scale influencers. Such KOLs are recommended, because as the audiences of smaller KOLs tend to be more engaged with the KOL and are more attentive compared with those of larger-scale leaders.
Companies that are just starting out on the platform and want to increase brand awareness will suit KOLs with an audience of 5,000 to 100,000 subscribers.
What to expect from Xiaohongshu KOL?
Good key opinion leaders provide quality posts and beautiful photos, accompanied with a detailed overview of the product, which emphasises the merits of the product.
For a more measured choice of KOL, it is important to examine how active the audience it has. Options such as the number of comments and their length are important. Short comments reflect the small involvement of the audience, while the detailed and long ones shows that this KOL is quite influential and his opinion will be listened to.
About Advertising on Xiaohongshu
In order for content to reflect reality, the platform, as well as the national advertising regulations ban companies using language like “best..”, “luxury,” “elite, upscale” and so on. Xiaohongshu tries to prevent companies from misleading users in order to sell their goods.
This is exactly what makes Xiaohongshu one of the fastest growing platforms in China. It only allows reliable content and tries to satisfy its customers by controlling information as well as supply chains.
However, since 2018, in addition to the platform for sales, Xiaohongshu is becoming more of a platform for advertising. However, being committed to maintaining the authenticity of the content, Xiaohongshu does not host it on a large scale.
However, this process may not be the best strategy for Xiaohongshu. First, because this option is new, and user information and their interests cannot yet be effectively used for platform targeting. Secondly, as noted, Chinese users do not have a great deal of trust advertising.
There are two options for companies interested in traditional marketing and advertising:
Pop-ups are displayed when you open Xiaohongshu. The screenshot below is an advertisement for Lancome lipstick. This ad also gives access to the Lancome store directly by pressing a small button at the bottom of the page.
Integrated ads appear in the news on both the Discover and Follow pages, displaying the accounts that the user subscribes to.
Here you see the Louis Vuiton ad. Users are notified of the posts thanks to a small button at the bottom of the page to the left of the photo, which is called “guanggao,” which means “advertising.”
Is SEO used on Xiaohongshu?
First of all, Xiaohongshu is an application used to search for reviews, pictures and tips related to the products of foreign companies. The app is used as a search engine for foreign goods that can be bought online.
Thus, the SEO strategy should be taken into account when developing a company plan for Xiaohongshu.
These strategies are quite similar to the traditional ones used in other search engines.
Here’s what you need to consider:
The power of keywords
The brand should use relevant keywords if you would like to be found by users who haven’t yet heard of you.
In order to maximize the visibility of products on the network, the company should not only use the relevant product/service keywords, but also popular words that will help it appear on the search results page as often as possible.
Take a look at the browser screenshot below to see what Chinese users are looking for.
Just like the SEO of traditional search engines, long-tail key words can help companies occupy their niche in the market.
Here are two examples of popular Xiaohongshu queries and ways to select the most appropriate keywords for a company or product.
The word “fangshai” means “sun protection.” As you may already know, most women in China prefer a lighter skin colour. In this regard, they are very interested in sunscreen products.
For this keyword, the number on the right shows the number of posts on the topic (940,000).
Along with fair skin, Chinese women prefer to have full red lips. The search engine in the image above shows us the results of the request for the word “kouhong,” which means “lipstick” in Chinese. Not surprisingly, this request has 1.5 million results! Now how do you use this in your SEO strategy on Xiaohongshu?
SEO strategy for Little Red Book/Xiaohongshu
To be successful on the platform, the company will need to develop a well-thought-out SEO strategy.
To begin with, find popular keywords related to the industry in which your company operates. It is ideal to use words with medium popularity, as through them it will be easier to find this company than with very popular formulations, because they may be too competitive.
Then, in order to attract special potential customers, you can set a number of long tail words.
Why is Xiaohongshu becoming an increasingly popular platform among Chinese?
To understand why Xiaohongshu is so popular among Chinese people, it is necessary to analyze a few features of consumer behavior.
The development of Chinese society
Over the past ten years, the Chinese way of life has undergone profound changes. Economic growth has led to a steady increase in living standards, and at the same time to an increase in the purchasing power among Chinese people. The Chinese are spending less and less on housing and food. Spending on leisure and lifestyle (restaurants, fashion, care, etc.) on the contrary, is increasing.
In this vein, luxury goods are becoming increasingly important to Chinese consumers. In particular, we are talking about young people, which is the new engine of China’s growth.
Face culture and reputation
Also, due to the importance of “face culture” in China, the Chinese strive to always have an excellent impression on others. Reputation is very important, so the consumer pays a lot of attention to the brand and its image.
Some companies may believe that Xiaohongshu users are too young for their products. However, this belief is wrong. Young people have high purchasing power and are able to purchase high-end goods much more than older generations.
According to research by KPMG and Mei.com, more and more young Chinese plan to purchase luxury goods in the coming years. Take a look at the chart below:
Xiaohongshu maintains content authenticity
In order for content to reflect reality, if the platform hosts ads, it is neutral and focused on user content. Thus, the Xiaohongshu algorithm usually takes user-generated content as a basis, instead of relying on the brand’s content.
The platform regularly invites users to interact with posts based on their interests so that the algorithm then better recognizes the content that suits them.
Xiaohongshu is a one-of-a-kind platform that combines a social network and an online store. In this way, the platform gives users access to both entertainment and useful services. This is what makes Xiaohongshu attractive.
How to successfully start an activity on Little Red Book?
Xiaohongshu is an excellent platform to promote your company in China. In order to take full advantage of the platform you need to consider the following:
1.Use both components of the platform
As noted, Xiaohongshu is both an e-commerce platform and a social network. In this regard, one cannot separate one from the other: it is important to use a single marketing strategy that includes both components of the platform – social and commercial.
Work with Xiaohongshu is divided into 4 stages.
An average user behaves in the following way: First, viewing of the platform.
Then, identifying interests (certain posts/articles). This leads to the third step – buying.
Finally, once the product has reached the recipient, the final stage of the cycle is writing a review/comment regarding the purchase.
2. Know your target audience
The company should know its target audience well. The Little Red Book Community is mostly young women.
And although this trend is beginning to change, as the number of users from third tier and lower tier cities is increasing, brands still need to adjust their products to the needs and interests of their target audience.
3. Attract Key opinion leaders to your marketing companies
As explained earlier, Xiaohongshu is the best platform for holding KOL companies and getting quality content tailored to your target audience.
Firms should therefore work with influential media personalities to ensure that their target audience receives quality and relevant content.
4. Focus on creating your content
On Xiaohongshu, content plays a crucial role. Companies should make sure the content is of a high quality.
Write detailed articles about product values, how to use products. Also, make sure you choose the most appropriate images that will emphasize the merits of the brand.
Do not hesitate to write long posts – the key to success lies primarily in deep analysis of user preferences, and in the proximity and relevance of their content.
5. Take advantage of holiday sales
The Chinese e-commerce industry boasts a large number of events and holidays that companies can use to increase brand awareness and sales. The most important dates for Xiaohongshu are as follows:
The most famous day is Singles’ Day (or 11/11 – 11th of November). Usually on this day companies arrange incredible discounts and special promotions. A month later, there are also big sales (12/12), but not as large as those on 11th November.
March 8th is Women’s Day (“NuShengJie”), which is one of the most important for Xiaohongshu, as the main audience of the platform is women.
On Xiaohongshu, “Black Friday” transformed into “Red Friday”.
The anniversary of the creation of Xiaohongshu (June 6) and other events are celebrated on the platform by holding various actions.
6. Learn how to use SEO on Little Red Book
As noted earlier, SEO strategy is very important in order to increase the visibility of the brand on the Internet. Xiaohongshu or Little Red Book is a very competitive platform, so you need to pay close attention to every detail. Keywords should be appropriate and not too popular.
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