Tech giants lavish lucky money in mobile users race

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A week ahead of Chinese New Year, many Chinese are busy collecting red envelopes, not from their relatives or friends but from deep-pocketed tech firms.

Domestic tech giants are racing to bank on the time-honored tradition to gain users for their products as competition at home heats up.

A new tradition

Giving cash in red envelopes (hongbao) is a traditional practice during the Spring Festival and it has been shifting online thanks to the promotion of mobile payment in which people use apps to send, snatch and draw virtual hongbaos on their smartphones.

The digital red envelope race during the Chinese New Year holiday has become a new tradition since Tencent made a splash in 2014 with the hongbao service on its popular instant messaging app WeChat, drawing millions of new users for its mobile payment service.

The race has been escalating every year since then, with new players, new tricks and record sums of money to attract users to invite their friends to use these apps to boost their luck, an effective means of gaining new users.

Chinese artificial intelligence giant Baidu took the lead this year by preparing a record high of 1.9 billion yuan (US$281.7 million) for digital red envelopes after becoming the exclusive red envelope partner of the China Central Television (CCTV) Spring Festival Gala, the most-watched annual show on Chinese New Year eve.

Alibaba continues its game of collecting five blessings to share the lucky money of 500 million yuan, while Weibo prompts users to retweet certain posts to share 100 million yuan. Many firms put 2,019 yuan into red envelopes as the biggest prize.

"I only got less than 100 yuan from the hongbao race in the past, but actually the fun is not about money. It lies in social networking," said Liu Jiang, a sophomore in Beijing.

Industrial barometer

Behind the red envelopes battle lies the growth priorities of China's tech titans as well as the latest industrial trends.

Baidu's hongbao campaign aims to lure more users to its flagship AI-powered search and news feed app as the company steps up its investment in AI applications, an emerging cash cow for the NASDAQ-listed company.

The bid is also expected to give a leg up to Baidu's financial services platform, as Internet firms are keen to grab more mobile payment market share and tap Chinese people's growing wealth management demands.

Tencent rolled out a specific hongbao service for firms to give red envelopes to their employees in its latest efforts to boost services for corporate customers.

The red envelope battle has an emerging new group of players this year as short videos rise as popular social media platforms.

China's leading short-video platform Douyin has become the exclusive social media partner of the CCTV Spring Festival Gala this year and launched a red envelope game worth 500 million yuan in total. The game is about collecting digital musical notes and aims to encourage users to send short-video new year greetings to expand on its already 500-million-plus monthly active users.

Liu Xingliang, a senior internet industry observer, predicted that the Spring Festival red envelope race will continue in the future, with diminishing momentum in the mobile payment battle field and growing steam in emerging markets.

"The strategy of money for traffic only works in the short term. Companies have to offer genuinely innovative and user-friendly products to retain users and keep them active," Liu said.

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