Although it's named after XO cognac, XO sauce doesn't contain alcohol. The name is meant to evoke something that's expensive and special.
What is it? It's more a condiment than a sauce. It should always contain dried scallops, but depending on the maker, it can also have dried shrimp, Chinese ham and/or salted fish. These ingredients are cooked with oil, chillies, garlic and other flavourings.
What are the differences? More expensive brands of XO will contain a lot of dried scallop - the most costly ingredient - and none or very little of the other dried ingredients. The best versions tend to be made in-house at top hotels and restaurants.
How to choose: it depends on your budget and taste preferences. With XO sauce, high price can be an indication of better quality, but as with everything, there are exceptions. Because of its intense flavour, XO sauce is usually used in small quantities, making it a long-lasting luxury.
What else? Because it contains seafood products, store it in the fridge. For the best flavour, though, let it come to room temperature before serving.
How to use: it's delicious eaten with certain types of dim sum or stirred into fried rice or fried noodles. Some restaurants stir-fry cheung fan (rice flour rolls) with XO sauce and top the dish with spring onions and shredded dried scallops. For a simple seafood dish, blanch cleaned cuttlefish or shrimp until cooked, then dip into XO sauce. Another simple dish is oysters on the half-shell steamed with a spoonful of XO sauce and minced spring onions.