Digital "hongbao" war extends beyond internet giants

Giving away cash-filled "hongbao" or red envelopes has been a long-established Chinese tradition to celebrate the Lunar New Year. As the internet industry keeps growing, hongbaos have entered the digital era and, in recent years, Chinese internet giants Tencent and Alibaba have developed apps that allow people to give hongbao electronically, as a way of gaining users. Search giant Baidu has joined the war for the first time this year to attract users to its life services apps, announcing it will send ¥6bn ($900m) in red envelopes, Weibo and Didi Kuaidi have also launched hongbao activities. "It's no longer just a game for giants. It has become a Spring Festival tradition for the whole industry now" says analyst Lui Dingding. 

Photo: CFP





China's Internet giants have all announced plans to give away hongbao during the upcoming weeklong Spring Festival holidays, and analysts said Thursday that this is a war Internet giants cannot afford to lose as such promotions have proved highly effective in gaining users.



To give away hongbao, or red envelopes filled with money, has been a long-established tradition in China to celebrate the lunar new year. And as the Internet industry keeps growing, it has now become a tradition for companies to give online hongbao to users during the holidays.



E-commerce giant Alibaba Group unveiled its hongbao strategy on January 25. It announced a partnership with China Central Television (CCTV)'s popular Spring Festival TV Gala and plans to send out red envelopes worth a total of 800 million yuan ($121.6 million) during the gala.



It also came up with a "lucky card collection" campaign to spice up the game - users who have collected all five lucky cards will get a share of 215 million yuan in gift money from the company, it said. Users can get three cards by "friending" 10 people on the company's payment platform Alipay, and can also exchange cards with their friends.



"I've collected four cards, but it is really, really, hard to get the last one. I've bothered nearly all my friends for that card," Yang Chen, a 29-year-old white-collar worker in Beijing, told the Global Times Thursday.



A total of 8,232 people had collected all the five cards as of 10:30 pm on Thursday, which means that at the moment they will get gift money of around 30,000 yuan ($4,560) each. But if more people collect all five cards, the less gift money each of them will receive. And the number of people with all five cards may grow significantly in the next few days, analysts said.



Social network boost



Analysts said that Alibaba aims to promote the social networking functions of its payment tool Alipay by launching the card collection campaign.



Li Chao, an analyst at Beijing-based iResearch Consulting Group, said that social networking has always been a weak point for the giant.



Though Alipay dominates the third-party payment sector, Tencent's WeChat has always come on top in terms of social networking.



"The lucky card collection has educated people about Alipay's social networking functions in a very short time. It has been successful in this regard," Li told the Global Times Thursday.



"But it is still too early to tell what its long-term effectiveness will be, as people may go back to WeChat for social networking after the red envelope giveaway ends," Li said.



Liu Dingding, a senior analyst at Beijing-based industry consultancy Sootoo, noted that Alibaba will launch further promotions to increase user interest in the company's social networking functions.



Arch rival fights back



The online hongbao campaign is generally considered to have been started by Alibaba's arch rival Tencent Holdings.



Tencent launched a hongbao activity in 2014 to promote WeChat's payment functions. It was a considerable success, as many WeChat users have since become used to making purchases via the app.



For this Spring Festival season, WeChat announced on January 6 that it would use 10 days of advertisement income to give away red envelopes to its users, which could be equivalent to hundreds of millions of yuan, according to analysts.



Also, on the lunar new year's eve, WeChat will also roll out a feature that allows users to post blurred pictures, which can only be seen by friends who give hongbao to the poster.



Analysts have said that compared with Alibaba's plan, Tencent's hongbao strategy seems more defensive, and designed mainly to help it consolidate its user base rather than expand it.



Search giant Baidu Inc also joined the war for the first time this year. The company said on January 25 that it would send out 6 billion yuan in red envelopes during the Spring Festival holidays, in the forms of cash and coupons, with the aim of gaining more users for Baidu's life services apps.



Other Internet firms like micro-blogging service provider Weibo and car-hailing app Didi Kuaidi have also launched hongbao activities this year.



"It's no longer a game just for giants. It has become a Spring Festival tradition for the whole industry now," said Liu.